The AIG Advisor Group Inc. said last week it is making more widespread changes by cutting staff and consolidating operations among the back offices of its three broker-dealers.
The broker-dealer network is cutting 62 back-office and operations positions at its three broker-dealers: Royal Alliance Associates Inc., FSC Securities Corp. and SagePoint Financial Inc.
However, as part of the realignment, the network said it plans to add 38 positions, for a net decrease of 24 positions.
According to the latest
InvestmentNews survey of independent broker-dealers, the three AIG broker-dealers had 738 home office employees, so this round of job cuts accounts for about 3% of the network's total staff.
The layoffs are heaviest in New York at Royal Alliance, which is losing 10% of its staff.
Some observers said the job cuts, though painful for employees, would be a non-event for advisers.
“The timing is terrible in the sense that people will lose their jobs,” said Rita Robbins, president of Invescor Advisory Services, which is affiliated with Royal Alliance. Her firm, with 66 advisers, is one of the largest Royal Alliance affiliates, but she declined to state its assets under management.
The cuts were planned prior to last month's decision by new American International Group Inc. chief executive Robert Benmosche to call off the sale of the AIG Advisor Group, said Ms. Robbins, adding that any “interface” with advisers will not be affected by the job cuts.
To others, the job cuts were a signal that more changes could be coming.
“They're probably preparing for a roll-up of some sort, if not by AIG, but a new owner,” said Stephen Winks, publisher of Richmond, Va.-based SrConsultant.com.
He added that each of the three broker-dealers have strong brand names, with FSC in particular playing a fundamental part in the history of financial planning and advisory services.
The changes in the network are widespread, AIG Advisor Group chief executive Larry Roth wrote in a letter sent to representatives and employees last week.
Commissions processing in Atlanta and Phoenix will now be transferred to New York, where all compliance functions will also be housed.
Brokerage processing services in New York will be moved to Atlanta and Phoenix, Mr. Roth wrote.
He stressed in the letter that these changes affect the back offices only, and the brands of the broker-dealers will be maintained.
“While it was a very difficult decision to eliminate positions, it has always been our desire to develop the strongest, most capable back-office support for our broker-dealers,” Mr. Roth wrote.
The 6,000 or so reps and advisers with the AIG Advisor Group broker-dealers have already experienced significant changes in the past year.
After parent company AIG was bailed out by the federal government last September, the broker-dealer network, along with other AIG assets, was put on the block.
A deal for the broker-dealers was believed to have been all but completed last month, but Mr. Benmosche unexpectedly pulled the network off the table.
This month, a plan to give bonuses to a limited number of the firm's reps and advisers caused more confusion in the ranks.
E-mail Bruce Kelly at [email protected].
