In the ongoing consolidation of the independent B-D space, insurer AIG's acquisition of Woodbury Financial Services brings the smaller firm in from the cold where it has become increasingly challenging to survive without a larger parent company.
"It's very difficult to operate an independent B-D profitably," says well-known planner and media personality Ric Edelman. Edelman, founder of Edelman Financial Services, sold off his independent B-D arm earlier this year, claiming that the model for the industry was broken for all but he giants. "I can only assume that [Woodbury] is experiencing the same challenges as everybody else."
Edelman Financial was owned by AIG's Royal Alliance for seven years up until being acquired by a new parent in 2005.
The Woodbury acquisition had been expected. "AIG has been involved in the IBD market for a very long time and has always been one of the largest players," Edelman says, "so it's perfectly understandable that they would be seeking to continue their growth."
In the deal, AIG's life and retirement arm SunAmerica Financial Group will add more than 1,400 Woodbury advisors to the 4,800 existing independent advisors already in the fold. In addition to Royal Alliance, SunAmerica owns FSC Securities and SagePoint Financial. With Woodbury, AIG joins Cetera Financial Group, MetLife, Securian Financial Group and National Planning Holdings in becoming one of five networks on Financial Planning magazine's 2012 list of the largest independent broker-dealers with four separate independent B-Ds. On the same list, Woodbury Financial currently ranks No. 22 on with total revenue of more than $253 million.
Financial terms of the deal were not disclosed, but company officials said in a statement the acquisition will close by year's end.
Patrick McEvoy, who will continue to serve as Woodbury Financial's president and CEO, cited technology as a major factor in the alliance. "Joining Advisor Group provides us with incredible access to technology, an open architecture platform, thousands of diverse products and the ongoing flexibility that allows Woodbury advisors to continue running their businesses in a way that makes the most sense for them and their clients," McEvoy says. "It's clear that Advisor Group is committed to the independent financial advisor business and we are excited to join an organization that shares our passion for the important work financial advisors do."
Larry Roth, president of AIG's Advisor Group, says that AIG particularly values the insurance expertise of Woodbury advisors. "Woodbury Financial's advisors are smart, talented professionals, many of whom have great experience working beyond traditional advisory roles, including specialization in life insurance and retirement income products," Roth says.
He added that AIG is committed to maintaining Woodbury's culture. McEvoy echoed that sentiment: "We'll be able to provide our advisors with the best technology and services, all while maintaining our identity." he says.
The transaction is expected to be finalized by the end of 2012, subject to required regulatory approvals. Located in Oakdale, MN, Woodbury Financial Services has more than 200 home office employees nationwide for its independent representatives. The roots of Woodbury Financial date back to 1910, with Montana Life.