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September 01, 2006 at 04:00 AM
High-level business executives like James R. Cannon tend to shun hyper-caloric business lunches. Besides, coming from Phoenix, where AIG Financial Advisors is headquartered, you no longer get awed by fancy restaurants. Still, it takes a measure of austerity to order a Caesar salad and a cup of herb tea at Keen’s Steakhouse, one of New York City’s oldest and most famous eating landmarks, patronized by the likes of Teddy Roosevelt and Babe Ruth, who probably went for the mutton chops.
To be a gracious host, I settle for a Cobb salad for myself. It won’t do cutting into a succulent prime rib while my guest is picking at lettuce leaves. But perhaps it is not such a bad idea for my waist line.
For all his herbivore eating habits and a boyish smile, you somehow wouldn’t be surprised to find out that the President and CEO of AIG Financial Advisors majored in justice studies in college and spent some time working for the State of Arizona’s securities regulator, catching crooks and fraudsters.
In an industry where successful professionals tend to change affiliation at will, Cannon’s career is testimony to persistence and determination. He has worked for a number of companies, but that’s mostly because his place of employment has tended to change names and owners. His first private sector job two decades ago was at an independent broker-dealer owned by Kaufman and Broad, which then became Broad Inc., Anchor National Life Insurance Co. and SunAmerica.
Cannon believes that consolidation among broker-dealers in the independent financial advisor field, underway for a number of years, will continue unabated. Eventually, he expects five or six major players to handle around 90 percent of all business, with the rest parceled out among true niche companies.
This is where AIG Financial Advisors comes in. Even before we get in our drink orders — ice water for Cannon, ice tea for me — he starts talking passionately about the need to leverage the brand name and the resources of a bigger organization. AIG Financial Advisors is very much his brainchild. It came into being last year, after three or four years of hard work, bringing together the assets of three broker-dealers owned by AIG Advisor Group: Sentra, Spelman and SunAmerica.
AIG is the kind of brand you can hang your coat on. Its AIG Financial Advisors subsidiary can benefit from a leg up from the parent’s name and reputation. Proudly, Cannon recounts that the company will be running AIG television commercials in regional markets — similar to ads the parent ran on national TV during the recent World Cup, but with a twist. It will give local financial advisors a twenty-second slot in which they can introduce themselves and their services.
At the firm’s national conference in June, Cannon’s wallet swelled with the business cards of those who expressed an interest in participating in the ad campaign.
The financial muscle, the synergies of some 4,000 businesses operating under the AIG umbrella, the products and the technological platform are all important resources backing up financial advisors. But Cannon is emphatic about the fact that they run independent businesses and it is entirely up to them how much they want to take advantage of the AIG name. They can do business under their own brand, or they can operate with AIG stationary and business cards.
Fee-based business accounted for 15 percent of business at AIG Financial Advisors two years ago, rising to 24 percent currently. Cannon expects fee-based business to reach 35 percent within the next two years.
The fee-based pay structure is more transparent, giving the client a clear understanding of what the advisor gets paid for and helping avoid conflicts of interest.
