Royal Alliance Ups Ante For OSJs

AIG Advisor Group‚s Royal Alliance unit is raising the minimum production requirement for reps to open and manage their own office, or "bonus group," in the firm‚s terminology. The move, which is likely to be viewed as both bold and controversial, reflects the desire of Royal‚s management to focus on recruiting larger offices and providing them with upgraded services.

As part of the move, Royal plans to review all manager-based contracts with offices generating less than $400,000 in annual fees and commissions and enter into new contracts generating more than $1 million in annual revenues.

Existing bonus groups under $400,000 may face the choice of having to grow their revenues, merging with another Office of Supervisory Jurisdiction (OSJ), getting grandfathered because of their long history at Royal or leaving the firm. AIG Advisor Group includes two other broker-dealers, Atlanta-based FSC Securities and SunAmerica Securities in Phoenix, and OSJs who decide to leave will be encouraged to move to either of these sister firms.

Mark Goldberg, CEO of Royal Alliance, acknowledges that the new strategy is likely to anger some smaller reps and prompt rival brokerages to portray Royal as elitist. "I expect rivals to recruit small reps against us," he says. "But we have to define who we are in the marketplace. We‚re looking to recruit only 15 to 20 premier practices a year. This strategy enables us to ensure that we can maintain our payouts and service quality."

For more than a decade, Royal Al-liance has offered OSJs some of the highest payouts in the independent brokerage universe. Greater economies of scale among its OSJ network would reduce pressure on its thin margins and also ease the burden of compliance and supervision. Coincidental with this program, Royal plans to slash ticket charges on mutual fund and securities transactions.

At present, Royal has about 2,700 reps dispersed among 320 offices, or an average of just over eight reps per office. Goldberg says his goal is to shrink the number of firms to about 250 while increasing the number of reps to about 3,000, for a ratio of 12 reps per office.

Pivotal to the success of the strategy will be the acceleration of Royal‚s attempt to shift recruitment of reps doing between $100,000 to $300,000 annually from the home office to branch managers in the field.

Should the National Association of Securities Dealers require all brokerages to have a compliance officer in every branch office, Royal would find such a rule much easier to satisfy than most of its rivals, some of which have two or three reps per office on average.

Advisor Group Says Come One, Come All

It appears the crowded field of financial planning designations has gotten even larger. A group called the International Association of Qualified Financial Planners (IAQFP) has announced its designation–QFP–is now available to all qualified financial planners.

To qualify, a planner must have at least one of five designations: CFP, ChFC, PFS, The American College‚s MSFS degree or the College for Financial Planning‚s MS degree, the latter two with financial planning concentrations.