On March 21, The Hartford announced it would be exiting the variable annuity and life insurance businesses to focus on its property and casualty insurance business. In addition, The Hartford said it would sell its independent broker-dealer, Woodbury Financial Services, in what is the latest in a string of cases where an insurance company parent has sold, or said it intended to sell, a subsidiary independent broker-dealer.
Since that time the leadership of The Hartford and of Woodbury (a 2011 Broker-Dealer of the Year) has not spoken to us about the parent firm’s decision or how the BD and its reps are responding to its proposed sale. However, Patrick McEvoy (left), president and CEO of Woodbury Financial, did respond to written questions in an e-mail exchange. Below are the questions and his responses to those questions that were received today.
Q. What are you telling current reps about how the business will operate during the next 6-12 months? In the Broker-Dealer of the Year roundtable last year [in the September 2011 issue of Investment Advisor], you talked about the importance of rep retention.
Patrick McEvoy: We have been conducting conference calls with our reps continuously to communicate with them and answer their questions. Our focus continues to be business as usual and we will continue to operate with open communication on the process in front of us.
We are a successful company with a unique brand, which holds strong relationships with our reps. We believe that we can create the greatest value for our reps and our future parent by continuing to focus on our growth strategy.
Q. What happens to your recruiting efforts in the light of the uncertainty surrounding the future of Woodbury?
Patrick McEvoy: The reasons why an advisor considered Woodbury prior to the announcement should be the same reasons they would consider us today as well as in the future. Our relationship-based independent culture will continue to deliver ultimate choice in affiliation, business structure and entrepreneurial model. Our commitment to recruiting top advisors will continue and we have already received indications from recruits that they are still interested in joining the Woodbury family.
Q. Woodbury hired Gary Bender last year to help its growth strategy; any change of direction on the business development front?
Patrick McEvoy: Bringing Gary on to lead our recruiting effort was perfect timing for us and he has done an outstanding job. He has played an integral role in developing our new OSJ strategy and has also enhanced our regional recruiting results. We remain committed to the direction of our business development plan.
Q. Woodbury has made an effort to increase the average GDC of its reps and has also increased revenue. Will that make Woodbury more attractive to a potential buyer?
Patrick McEvoy: We believe so. Our strategy has always been to have a relationship-rich culture that is focused on growth. Our model has been to recruit and retain a relatively small number of high-quality advisors who want to spend the rest of their career with us focusing on growing their business together.
For example, in 2000 we had 1,700 reps with an average of $40,000 GDC; clearly our strategy has been successful as evidenced in our 2011 results showing an average annual GDC of $165,000 with 1,600 reps.