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ROBERT L. BAGBY
chairman and CEO, A.G. Edwards |
Investment ICON
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A.G. Edwards
is the largest publicly held brokerage firm in the nation outside
New York with $2.2 billion in revenues in fiscal 2003.
By Kevin Kipp
If you put the client first,
...if you take that relationship and your job seriously,
...if you are willing to learn more know-how,
...then Robert L. Bagby, chairman and CEO of
A.G. Edwards, might ask you to work for him.
But yourself, you don’t have to take too seriously.
To kick off its United Way campaign last year, Bagby donned a referee’s
shirt to officiate an inter-divisional basketball game in which
the spheroid was replaced in turns by Nerf footballs, stuffed animals
and big plastic fish. Go dribble.
Fun like that may contribute to A.G. Edwards’ selection as one of
the “100 Best Companies To Work For In America” in two editions
of a book and six annual Fortune Magazine surveys of the
same name. Twenty percent employee ownership, flexible work rules
and access to senior management don’t hurt, either.
Bagby gets his lunch at the company cafeteria once or twice a week,
and hosts monthly “lunch with Bob” sessions, attended by a dozen
fellow employees from various levels of the organization. “We want
people to know they can approach me,” Bagby said, “and I want to
know their needs. It’s a way to communicate. The more we communicate
the better off we are.”
Donnis Casey, executive vice president and director of the A.G.
Edwards staff division, has been with the firm since 1966. (“I was
born on the steps,” she jokes.) She says Bagby is direct when he
communicates. “It’s part of what makes him a great CEO. I feel like
I can lay it on the line and be candid with him. And I feel like
he can lay it on the line and be candid with me. I’m never guessing
where I stand.”
There’s more. “He has a great sense of humor and it comes out almost
daily,” she says. “He laughs at himself, and that makes him approachable.
I’m impressed by what employees are willing to tell him.”
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A.G. Edwards employ 5,100 at its headquarters on the
western edge of downtown St. Louis. |
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She attributes some of that rapport to his tenure and track record.
“After 28 years in the company, he has a lot of relationships, here
and in the field. He’s highly regarded, because people know he had
a huge impact on building our branch system.”
A.G. Edwards went public in 1971, four years after Benjamin F. Edwards
III (great-grandson of founder Gen. Albert Gallatin Edwards) was
appointed chairman and CEO. The prospectus says the capital was
intended to expand the branch system. It did. The company is the
largest publicly held brokerage firm in the nation outside New York.
Among A.G. Edwards’ roughly 16,000 full-time employees are 7,000-plus
financial consultants–or FCs–in 700-plus branches in 49 states,
Washington, D.C., and London. More than 50 senior analysts toil
at A.G. Edwards, covering 700 companies in 35 industries.
A lot of that talent–as well as payroll–is local. The campus at
Jefferson Avenue and Market Street is home to 5,100 jobs.
Vince Schoemehl, president and CEO of Grand Center Inc. believes
that the firm’s mass and its location are crucial to the economic
health of the metropolitan core.
“The footprint of their economic activity ex-pands beyond their
immediate campus to overlap with Harris Stowe College, Saint Louis
University and Grand Center,” Schoemehl says. “That economic corridor
continues west to the Technopolis, to Barnes Hospital, to the Central
West End and Forest Park, to Washington University and ultimately
meets the value radiating eastward from Clayton.
“A.G. Edwards is the final link in the chain of key anchors running
from Clayton to downtown,” he continues. “Not only is it a strong
link and a vital link, it’s a vital component to rebuilding downtown
St. Louis. I’m not sure you could have designed a much better company
to locate there.”
According to A.G. Edwards’ information, the St. Louis payroll—not
including several hundred brokers working in more than a dozen branch
offices in the region—exceeded $246 million in 2002. Its investment
in its 2.7 million square feet of office space stands at $460 million.
The first buildings were begun in 1970. The two most recent buildings,
completed this year, added one million square feet.
Bagby says the headquarters is the firm’s only administrative location
in the region, reflecting a commitment to the city of St. Louis.
“We’ve been rooted in St. Louis since we opened our doors on Third
Street in 1887,” he says.
Important though the midtown HQ is to St. Louis civic leaders, the
branch system is the firm’s bread, butter and meat. It is the delivery
system of retail brokerage services which, company documents state,
account for more than two-thirds of A.G. Edwards’ $2.2 billion in
revenues for fiscal 2003, ending February 28.
Bagby notes that despite recent challenges facing financial markets,
investment banking has contributed to growth at A.G. Edwards. Revenues
have risen from $219 million in fiscal 1999 to more than $250 million
this year. “The past two years have been record years, and we’ll
continue to build on our efforts in that area,” he says.
Bagby started at A.G. Edwards as a branch administrator in 1975.
As for his role in expanding the system, he says, “If I have a claim
to fame, it’s that I opened a lot of offices and have run several
of the firm’s regions.”
It was while running regions in the late ’70s and early ’80s that
he began recruiting talented brokers to develop branch offices.
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A.G. Edwards University, housed in the 200,000-square-foot
Benjamin F. Edwards Learning Center, is the firm’s
national training vehicle. |
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“We would find a key person, and build an office around them,” Bagby
says. “We invested the money, he or she built the branch. You give
me successful people in any city of any size, and if they buy our
culture, then they’ll build a successful branch for you.
“We didn’t have a lot of branches then, so adding them was just
natural,” Bagby says. And it was just natural that he was promoted
to director of the branch division at the A.G. Edwards & Sons brokerage
and appointed as vice chairman of the A.G. Edwards Inc. holding
company board in 1995.
In the eight years since that elevation, A.G. Edwards & Sons branches
have expanded 35 percent, state company documents. Moreover, since
1990, when Edwards had 3,861 FCs in 398 offices, the system has
nearly doubled.
Bagby assumed the top job in March 2001, succeeding Ben Edwards,
after whom one of the two new buildings is named, “in honor of our
chairman emeritus for his 45 years of contributions to A.G. Edwards,”
Bagby says. The remaining buildings on campus are named after letters,
A through F.
Peter Miller, A.G. Edwards’ director of sales and marketing, notes
with a tone of sympathy, “Bob started in his position just as the
bear market was taking hold. His entire career as CEO has been in
a bear market. And a lot of the decisions have not been fun.”
Even so, Miller notes, “Assets under management have held up better
here than the industry average.”
Bagby on the bear market (with a characteristic chuckle): “I’m ready
for a change. [Then in earnest.] And the investing public is beginning
to regain its confidence. We’ve seen some upside momentum in the
market early this summer. The trend is forming, and the fundamentals
are good.”
Bagby on investing: “1998 to 2000 wasn’t normal; long term investing
is normal. What happened in the dot-com era was the do-it-yourselfers
wanted to buy in the morning and sell in the afternoon.”
Bagby on long-term investing: “We are seeing good investments in
good solid companies with good solid management. I don’t know if
it will be five months or five years. But history will repeat itself,
and long-term investing is still the way to build a retirement.”
Clearly bears don’t scare Bagby, who in pre-CEO days was an avid
hunter. “Now I’m an avid collector of bronze wildlife statues,”
he says, although he still deer hunts once a year with his 31-year-old
son.
As CEO he has launched three major projects: a branding initiative,
the Gateway Initiative (a company-wide technology upgrade) and A.G.
Edwards University, to refine and emphasize training.
Miller is in charge of the branding initiative. He says, “The genesis
of this was work we got back from J.D. Power last September. We
tied for first place in client satisfaction among the top 21 full-service
brokerage firms in the United States.
“We also found through internal research that people who know us
love us, but that our market penetration is less than we would like,”
Miller says. “Most companies undertake branding, because they have
a problem. At A.G. Edwards, we have an under-utilized brand that
simply needs amplification.”
Miller says the project will be a long haul, “not a summer ad campaign,”
and in unfamiliar territory. “We historically have not done national
advertising other than Nightly Business Report and Louis Rukeyser,
now on CNBC.”
Maybe you heard: Trusted advice. Exceptional service.
“Otherwise,” Miller says, “advertising has largely been the responsibility
of the branches.”
To help shepherd A.G. Edwards through a thoroughgoing process of
selecting an ad agency and developing their campaign, Miller’s department
hired a couple of Northwestern University journalism professors–Tom
Collinger and John Greening–as consultants.
“They felt we needed a firm big enough to handle national work but
to whom we would be a significant client,” Miller says. The process
led them to Carmichael Lynch, who also handles Harley-Davidson,
Porsche and Gibson Guitars.
“We were impressed with how they build brands,” Miller says.
Miller says he was aiming for a fall launch, but timing was secondary
to getting the message right.
“Our goal is to differentiate ourselves from competitors,” Miller
says. “We will accentuate our client-first philosophy, as well as
the relationship between our financial consultants and their clients.”
He was not prepared to test market new slogans in St. Louis Commerce
Magazine, but he did suggest that as on-point as “Trusted-advice-Exceptional–service”
might be, it might also be too generic.
Bagby says, “Our slogan may change, but every relationship is about
trust. It is fundamental, and it is what this industry is about:
never violate that trust. It’s true in any business.”
Bagby also emphasized that slogan old or slogan new, exceptional
service is central and timeless. “Whether investors have a million
dollars in assets or a thousand dollars, we have a place for them
and we’ll provide professional, sound, long-term advice,” Bagby
says. “That makes us different. We don’t have minimum account sizes
and we’re not GOING to have minimum account sizes.”
(Bagby was once a small investor himself. Working as a gas station
attendant during his undergraduate years, his profit on a single
investment in Tri-State Motor Freight paid for a semester of college
at Pittsburg State in southeastern Kansas, where he earned his bachelor’s
degree in marketing and finance.)
Exceptional service also means highly trained people. Enter A.G.
Edwards University, housed in the 200,000-square-foot Benjamin F.
Edwards III Learning Center, along with the rest of the training
department. It falls under the aegis of Casey.
“A.G. Edwards University is the firm’s national training vehicle
for brokers and managers as well as home office employees up and
down the organization,” she says.
That thrills Schoemehl: “Just having a corporate entity like A.G.
Edwards has such spin-off value for places like Harry’s Restaurant
and Beffa’s. But the training center will only expand that footprint.
“Even with distance learning,” he continues, “they’ll bring in a
substantial number of brokers and other execs on a regular basis.
It isn’t exactly tourism, but it is like having a permanent convention
in town.”
“A.G. Edwards has always valued training,” Casey says, “and since
Bob took over it has been part of the foundation he wants to build.
He wants to have the best trained work force, be they financial
consultants or support staff, in headquarters or branches. It is
really key to our client-first philosophy.”
Bagby compares his FCs to MDs. “We go to physicians we can trust,”
he says. ”We want them to stay current, and we want them to have
their professional designations, and we want them to fix our problems.
Same with our FCs. This business always deals with change. You have
to have continual review.”
Bagby places technology with training in the “value-added” category.
He says, “Our Gateway Initiative calls for extensive upgrades of
our securities processing and information technology platforms.”
The project is budgeted for $183 million, including internal development
costs, and is scheduled for completion before 2006.
“Centralized and improved historical and financial data will improve
FCs ability to analyze a client’s circumstances and to create reports
tailored to those circumstances,” Bagby says.
The new technology should lower costs and reduce risk while preparing
the firm for straight-through processing, an industry-wide effort
to automate as much manual processing of trade settlements as possible.
Bagby also regards the Gateway Initiative as part of the firm’s
growth formula. “We’re modernizing as we move forward, building
a scalable support structure as we continue to grow our branches,
training 600 to 800 new financial consultants each year.
“We’d like to grow one FC per branch per year,” he continues, “but
it’s more important to hire people who fit our unique culture and
represent us with integrity, honesty and trust. If we get that,
the numbers will take care of themselves.”
A.G. Edwards’ seemingly permanent membership in the “100 Best Places
To Work” club should give the firm a leg up in the task.
Lisa Pelikan, vice president of the investment management consulting
department, has been with A.G. Edwards for 16 years.
“In my experience, the company is very flexible,” she says. “Having
two sons has not been an impediment to my career. And senior management–members
of the executive committee and board–has an open door. If you need
15 minutes to talk about something, good or bad, they make themselves
available. You don’t have to go through 18 layers of protocol to
communicate.
“And,” she says, “the firm’s 401k and employee stock purchase plan
is very generous.”
Diffused, too. Little more than one percent of the 20 percent of
shares owned by employees are held by senior management and the
board.
“But more than any single thing,” Pelikan concludes, “A.G. Edwards
has put together enough tangibles and intangibles that people who
could go anywhere stay here, because it is such a good place to
work.”
Casey, the A.G. Edwards lifer, put it this way: “You can’t have
a company that puts clients first if it doesn’t value its employees
and their contributions. Happy employees make happy customers. Even
with all the challenges in the industry in the last couple of years,
it really is still fun. People still look forward to coming in.”
Kevin Kipp runs Bubble Communications, a creative services and community
relations firm.
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