Lightyear Capital to Offer Retention Deals to AIG Advisers

By Veronica Dagher and Michael Wursthorn 

Private-equity firm Lightyear Capital Group LLC plans to offer retention deals to many of the more than 5,000 independent advisers who work with AIG Advisor Group.

On Tuesday American International Group announced the sale of AIG Advisor Group to Lightyear Capital and PSP Investments, the Canadian pension investment manager. Terms of the deal weren't disclosed.

Executives from Lightyear declined to share terms of the retention deals. They will start their conversations with advisers on Wednesday, the firm said.

The AIG unit's four brokerages--FSC Securities Corp., Royal Alliance Associates, SagePoint Financial and Woodbury Financial Services--provide customer-account custody and other services to advisers who aren't employees but rather own their own businesses.

Financial packages that encourage advisers to stay at a firm for several years are typical at the largest brokerages, whose financial advisers are employees. They are generally less common and smaller at brokerages that service independent advisers, industry recruiters say.

Advisers at those smaller firms "are evaluating their choices constantly, " and a firm's resources are "what often keeps them in their seats," said Danny Sarch, a financial-adviser recruiter for Leitner Sarch Consultants in White Plains, N.Y.

Meanwhile, an executive named Tuesday to oversee the brokerage unit being sold by AIG said she doesn't expect the transaction to bring big changes to the advisers who work with the firm.

Advisers tend to brace for changes when a brokerage company is sold or there is a management shake-up. But the AIG Advisor Group sale won't have a big day-to-day impact on advisers, said Valerie Brown, the incoming executive chairman. Under its new ownership, the firm will invest in technology, add products and help advisers better serve clients, Ms. Brown said.

Ms. Brown is a former chief executive officer of Cetera Financial Group, another brokerage network.

Erica McGinnis will continue as chief executive officer of AIG Advisor Group.

Lightyear has more experience in the wealth-management space than most private-equity firms. Lightyear Chairman and Founder Donald Marron had been chief executive of PaineWebber Group Inc., a major brokerage that was acquired by UBS AG in 2000 for $10.8 billion. Leaning on Mr. Marron's expertise, Lightyear used some of its capital in 2010 to buy three brokerages from ING Group NV to form Cetera Financial Group. Lightyear sold Cetera to RCS Capital Corp. in 2014.

Mr. Marron said that while his focus will be investing in the existing AIG Advisor Group business, he would consider making more acquisitions of brokerages in the future. "Every firm wants to expand. It's a matter of timing," he said.

Write to Veronica Dagher at [e-mail] and Michael Wursthorn at [e-mail]

(END) Dow Jones Newswires

January 26, 2016 19:01 ET (00:01 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.