Its sale scuttled, AIG Advisor Group faces heavy lifting to rebuild network

Larry Roth, chief executive of the beleaguered AIG Advisor Group, thinks that within six months, the network of broker-dealers that is home to 6,000 registered representatives and financial advisers will be “hitting on all cylinders.” To reach that goal, he is planning to take clear steps so that the broker-dealer network can regain its footing in an extremely competitive landscape. Mr. Roth is cooking up a competitive recruiting package so that advisers can once again attract talent to their firms. He wants to again have national conferences for advisers and their firms, which has proven a lightning rod for AIG critics. And next month, the firms intend to start advertising in industry publications to put some shine back on the brand. “I'm completely confident we'll get through this and grow this business,” Mr. Roth said in an interview last Thursday. The AIG Advisor Group has clearly lost some of its luster, taking a severe hit when parent company American International Group Inc. of New York last September was forced to take an $85 billion bailout from the federal government.
At that time, the broker-dealer network was put on the block, along with a number of other business groups. After a lengthy and torturous process that raised and dashed the hopes of advisers for months, the network was days away from being sold to a private equity firm when, just last week, AIG's new chief executive and president, Robert Benmosche, pulled it off the block. He is trying to put advisers at ease. In a letter last Wednesday to the reps, Mr. Benmosche wrote: “I have learned many things over the years, but there is one central tenet to the financial services business: The most important person is the person who deals with the clients, you, the financial adviser.” Despite such assurances, the unprecedented turmoil in the financial services industry has pushed many advisers out the door. From October to July, the three firms in the AIG network, FSC Securities Corp. of Atlanta, Royal Alliance Associates Inc. of New York and SagePoint Financial Inc. of Phoenix, lost advisers who generated 18% of the firms' previous year's revenue. Clearly, Mr. Roth has a lot of heavy lifting to do to rebuild the network, advisers and industry observers said. “I think people are tired of being a part of AIG,” said Nathan Bachrach, co-managing partner of the Financial Network Group Ltd. of Cincinnati, which has $850 million in client assets. Mr. Roth is “going to have to convince everybody they'll put up the money to make a Grade A broker-dealer.” Mr. Roth thinks that, throughout the past 10 months, the AIG Advisor Group hasn't taken its eye off the ball. It has continued to invest in technology, and its management and home office teams are for the most part still whole. “The core business is 100% intact,” Mr. Roth said. Still, he does acknowledge the “smog” surrounding AIG and its recent history. The firm plans to rebrand sometime soon. A key issue at the moment is leadership, one industry recruiter said. Mr. Roth has been “caught in the crossfire,” said William McGovern, president of BD Search, an industry recruiter based in St. Petersburg, Fla. “He needs Bob Benmosche to say, "Larry's running the firm, and we're standing behind him,'” he said. “He has to reestablish that” authority, said Mr. McGovern, who formerly was the head of recruiting for Raymond James Financial Services Inc. of St. Petersburg. Last week was clearly tumultuous for management and advisers in the network, and Mr. Benmosche's decision to reverse course on the sale of the network proved stunning. “It was a surprise to us,” said Reeves Moore, an adviser in Canyon Lake, Texas, affiliated with FSC Securities. “The fallout has yet to be seen,” said Jeffrey Vahanian, president of Vahanian & Associates Financial Planning Inc. of Saratoga Springs, N.Y. E-mail Bruce Kelly at bkelly@investmentnews.com.