A number of representatives and advisers at Woodbury Financial Services Inc. will soon see a cash bonanza — a happy result of the announcement last month that American International Group Inc.'s Advisor Group is buying the firm.
According to industry recruiters, many of Woodbury's 1,400 reps recently have been approached by management to discuss deals commonly known as stay, or retention, packages. The terms essentially double the stay bonus that many reps received in the spring, recruiters said.
Giving reps stay bonuses while Woodbury was on the block was considered highly unusual at the time. It was, however, a smart way to keep brokers from leaving before a sale was announced.
The first bonuses were distributed after Woodbury's parent company, The Hartford Financial Services Group Inc., said in March that it intended to sell the broker-dealer as part of a company restructuring.
That deal gave reps generating about $220,000 in fees and commissions annually a bonus of 15%, or $33,000. Under deals being discussed now, those same reps would receive another $33,000, according to Jonathan Henschen, owner of an eponymous recruiting firm, who has discussed the Woodbury bonus plan with several people involved in negotiations.
The bonuses are in the form of forgivable notes that expire after about 30 months, Mr. Henschen said.
“This is a pretty effective retention bonus,” he said, noting that it goes a long way toward twisting the arms of advisers still skittish about the Advisor Group.
“Money overcomes a multitude of sins,” Mr. Henschen said.
Hartford spokesman Robert DeMallie declined to comment.
AIG almost went under during the financial crisis and received an $85 billion bailout from the federal government through the Troubled Asset Relief Program. Even though AIG has repaid that money, he said, reps in general have remained leery of signing on with the broker-dealer.
AIG spokeswoman Linda Malamut said she wasn't aware of the bonuses.
The new stay packages have made a difference for many reps, said Jodie Papike, executive vice president at recruiting firm Cross-Search. “That extra kicker made a world of difference for many advisers who had made backup plans” to leave Woodbury, she said.
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