Two long-established advisers have left Royal Alliance Associates Inc., one of the broker-dealers in the AIG Advisor Group, citing mistrust of management after AIG's top executive elected to hold onto — rather than sell — the broker-dealer network.
The advisers, Joe Chornyak and James Warren, each had spent more than 20 years with Royal Alliance and its predecessor firm, Integrated Resources.
The departures are surprising because Royal Alliance has an unusually close-knit culture, and representatives enjoy some of the highest payouts in the business, industry observers said.
Others noted that many AIG Advisor Group representatives have stuck around to see who would buy the firms, which were put on the block in October 2008 as part of a broad sell-off of assets by parent firm American International Group Inc., which took a $182 million government bailout.
Mr. Chornyak left Royal Alliance on Oct. 7 and joined Commonwealth Financial Network. His firm, Chornyak & Associates Ltd., manages about $450 million.
Mr. Chornyak has also been a top seller of mutual funds with Royal Alliance in recent years.
Mr. Warren left the firm in September to join Geneos Wealth Management Inc.
He declined to comment on the amount of assets he controls.
Mr. Chornyak said that uncertainty surrounding the ownership and control of AIG's three broker-dealers, Royal Alliance, FSC Securities Corp., and SagePoint Financial Inc., was a strong factor in his decision to leave.
A deal to sell the AIG broker-dealers had been all but locked up until new AIG chief executive Robert Benmosche called it off in August.
Management has made it clear that it wants to keep the broker-dealers, but Mr. Chornyak said that the past year proved the future was anything but certain.
“I needed to make my own decision and make the decision that was best for my staff, my clients and myself,” Mr. Chornyak said.
Mr. Warren said that he had “a degree of mistrust” about the situation at the broker-dealer network, though he had been contemplating leaving the firm since 2007.
If AIG sees the value of the broker-dealer network rebound, management could sell it, he said.
“My concern has always been the distribution of bonuses to management on the back of advisers,” Mr. Warren said.
Another Royal Alliance veteran adviser, Jeffrey Vahanian, said that though Mr. Benmosche's decision caught many advisers off guard, the trend of advisers leaving Royal Alliance isn't intensifying or accelerating. Mr. Benmosche was also well-received at recent meetings with reps, AIG sources noted.
In an e-mail, Art Tambaro, president and chief executive of Royal Alliance, wrote that he wished the two advisers success and that retention is a top priority.
“Attrition has dropped significantly over the last several months, approaching normal levels, which is true at all [AIG Advisor Group] -broker-dealers,” he wrote.
E-mail Bruce Kelly at [email protected].
