Advisor Group, part of the SunAmerica Financial Group, said in late July that it planned to buy Woodbury Financial Services from The Hartford, and top executives at the two independent-advisor firms say they are confident that the firms’ retention efforts and mix of business skills should lead to increased sales, as well as further acquisitions.
“We were very transparent with advisors and upfront with them” since Hartford went public with plans to exit the variable annuity and life insurance fields in late March, said Patrick McEvoy, president and CEO of Woodbury Financial Services, in an interview in early August. “We all agree to overcome three challenges for advisors with this transition: Keep the Woodbury culture, minimize paperwork and distractions for them and their clients and maintain an independent environment.”
The alignment with the 4,400-rep Advisor Group should help Woodbury deliver on these promises with its 1,400 advisors, McEvoy adds. “We are very excited and are getting good support and plenty of congratulations in our calls with advisors,” he said.
Neither McEvoy nor Advisor Group head Larry Roth, who is in charge of the umbrella organization for broker-dealers FSC Securities, Royal Alliance and SagePoint Financial, would disclose the details of any retention arrangements or the number of bidders involved in its acquisition. (The deal should close by the end of 2012, subject to regulatory approval and associated conditions.)
McEvoy said it was a “long, arduous process.” “The Hartford made a commitment to consider all stakeholders, and it delivered on that by putting us in the hands of the Advisor Group,” he noted.
(On March 21, after heavy lobbying by hedge fund manager and major shareholder John Paulson, 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 was the latest in a string of cases where an insurance company parent had sold, or said it intended to sell, a subsidiary independent broker-dealer.)
According to McEvoy, the average level of production, or yearly fees and commissions, for its advisors was about $170,000 in 2011—“a significant rise over the year before,” when production averaged $147,000. And Woodbury advisors have a fairly diverse book of business already, according to the Woodbury executive, who is based in Oakdale, Minn.
“We work with plenty of mid-America clients on their retirement,” he explained. “Yes, this includes lots of insurance, but also wealth-protection products and guaranteed-income products. Life insurance and variable annuities are growing substantially on advisor platforms.”
For Roth, this is an area that can translate into sales growth for the broader Advisor Group reps, who have average production of about $170,000 to $180,000 a year. “This is one reason we are excited to have a new member of the family,” he said in an interview.
Of this overall Advisor Group production, about 35% of sales come from fee-based activities and less than 5% is insurance based. About 12% of Woodbury advisors’ sales are fee based.
“One thing we love is that Woodbury is very focused on financial planning and training that allows its advisors to know and learn about all the clients’ needs … and to support them with access to long-term care, guaranteed income and annuities that can serve the clients over the next 20 years,” explained Roth.
Thus, Woodbury can boost the Advisor Group’s retirement focus, while Advisor Group can help Woodbury reps expand fee-based wealth management results. “This will be one area that will be good for us as we look to grow the business,” said McEvoy.Advisor Group recently introduced its reps to a new wealth management platform. About $14 billion of the group’s $100-billion-plus assets are now on it. (Woodbury has client assets of roughly $26 billion.)
Both executives expect further consolidation in the independent-advisor space. “We are working hard to attract small- and midsize firms and would love to acquire more firms and fold them into our operations,” said Roth.
Joyce Hanson and John Sullivan contributed to this report.