More than 600 financial advisors will be changing broker-dealers, as another insurance firm exits the space and picks Advisor Group as their destination of choice.
Allianz Life Insurance Company of North America is shutting down Questar Capital and encouraging the IBD’s advisors to join Advisor Group’s Woodbury Financial Services, the firms said on Oct. 11. The firms did not disclose the financial terms of the choice of Woodbury as the “preferred affiliation partner.”
The timing of the moves depends on approval by FINRA and talks between the parties, according to Advisor Group CEO Jamie Price. The deal comes after Woodbury acquired 51 advisors from Capital One’s brokerage and Advisor Group agreed to buy Signator Investors from John Hancock earlier in 2018.
Woodbury and Questar share in common their headquarters in the Twin Cities area, similar regional-level management structures and custodial and advisory platforms under Pershing and Envestnet. Allianz is also one of Advisor Group’s 14 strategic product partners for sales of its annuities, Price notes.
“We come from a history of insurance-owned companies, so we understand the ecosystem of insurance. Woobury clearly has its DNA wrapped in a history of insurance, going back 100 years actually,” Price says. “You take all those things into consideration, and we became the preferred partner.”
Advisor Group, which is backed by private equity firm Lightyear Capital, is not formally acquiring the IBD due to “some nuances in the ownership structure of Allianz and Questar,” he notes. The affiliation deal will compensate Allianz and provide retention bonuses for Questar advisors who join Woodbury.
Allianz’s IBD disclosed 640 representatives producing $110.7 million in revenue for 2017, making Questar the No. 41 IBD on Financial Planning’s annual FP50 survey. Questar’s revenue increased 8% last year, roughly in line with the 9% growth in business across the 50 largest IBDs.
The firm has “produced strong results” and its parent firm is pleased to have found a partner “that can build on these results by providing reps with an outstanding platform for future growth,” Allianz Life CEO Walter White said in a statement.
“The cultural similarities between the two organizations will help smooth the transition, and we are confident that Woodbury will be a great long-term partner for Questar advisors,” White said.
The two firms’ management teams, advisors and employees know each other well, and Questar’s three regional leaders had prior tenures as regional vice presidents at Woodbury, according to Woodbury CEO Rick Fergesen. He will hold meetings with Questar’s advisors in an effort to add as many as possible.
“I think every advisor in that group will find us attractive. And so we anticipate really high levels of retention in that group,” Fergesen says. “We have resources that they’re going to be really excited about, so we see this as a real growth opportunity for these advisors.”
Multinational insurance firms have been stepping away from the IBD space in recent years and, in turn, fueling the growth of the largest IBDs. The Signator deal could add some 1,800 advisors to Royal Alliance Associates, the largest IBD in the 5,000-rep Advisor Group network, upon closing in the fourth quarter.
In addition to Hancock’s deal with Advisor Group, Jackson National Life Insurance spun off the National Planning Holdings network in an asset sale to LPL Financial in August 2017. Lightyear and Canadian pension manager PSP Investments purchased Advisor Group itself from insurance giant AIG in 2016.
“We are perceived as a good buyer. We pass on a lot of things we’re seeing in the marketplace,” says Price. “Our primary focus is on our own advisors’ internal growth and supporting them, but there just happens to be a lot of opportunity.”