|
 |
CIVIC CHAMPION
|
Bachmann
turns to overdrive, growing Edward Jones and supporting St. Louis.
By Kevin Kipp
Anyone with a pot to pitch a potato in knows the first rule of investing:
Diversify.
But Edward Jones makes money one way, and one way only. “Investment
representatives are our only profit center,” says the brokerage
house’s managing partner John Bachmann. “Everything we do depends
on how effective they are at serving the serious, long-term, individual
investor.”
Tweedy academics, one might think, would abhor such heterodoxy.
But at least one high falutin’ professor loves it.
Harvard professor Michael Porter “is a well-known guru of business
competition,” says RCGA President and CEO Dick Fleming. “He teaches
a two-day seminar at Harvard on competition and strategy in financial
services. On the first day, they do case studies...Morgan Stanley,
Merrill-Lynch, Citibank; it’s a litany of major Wall Street firms.
The second day they do one case study: Edward Jones.”
The notoriety proceeds from what Bachmann calls “daring to be different.”
It’s working out—thank you professor—in the real world, too.
While even some mid-size firms pursue being all things to all people,
Edward Jones focuses exclusively on individuals—not traders, not
institutions, not options, not Internet. “It enables us to align
our resources and activities more crisply,” Bachmann says. “Everything
we do is addressed to that one customer.”
The firm now has 8,200 IRs (IR: investment rep. Jones people use
the term as often as baseball fans use ERA and RBI combined.) in
more than 7,700 offices worldwide. That’s up from 300 IRs in 240
offices when Bachmann rose to managing partner in 1980.
Watch out Starbucks. Bachmann says the company’s goal—to achieve
25,000 brokers in the next decade—is only the same 16.5 percent
compounded annual growth rate of the last 22 years.
Edward Jones’ promotional materials say this growth is all about
“bringing Wall Street to Main Street.” And Elm Street and Maple
Street and the south outer road, too.
If there’s a third leg to Bachmann’s daringly different milking
stool, it’s the proliferation of one-broker offices in communities
throughout 50 states, Canada and England. The offices are next to
barber shops, Chinese restaurants and groceries in strip malls and
town squares alike.
In fact, Edward Jones dropped the founder’s middle initial, D.,
and “& Co.” so that would-be clients could read the larger lettering
across the parking lot.
And besides, some people were confusing Edward D. Jones & Co. with
some other outfit, perhaps Dow Jones & Company founded in 1882 by
Charles H. Dow, Charles Bergstresser and Edward T. Jones.
Our guy, Edward D. Jones, Sr., founded his company in St. Louis
in 1922. His firm eventually grew to the 10th largest brokerage
house in St. Louis operating on a standard, centralized model.
“He believed you had to offer every product to every market,” Bachmann
says. “He also ran Griesedieck & Western Brewing, the people who
made Stag Beer when it was the best-selling brand in St. Louis.”
IRs back then may have pressed flesh in the field—an in-person version
of dialing for dollars—but they came home to roost at Fourth and
Olive in downtown St. Louis.
“That was the nature of the firm when I arrived,” Bachmann says.
In 1959, according to his bio, he was a college intern at the firm.
He says, “I took a job as a summer replacement for the messenger.
We did a little sweeping up around the office, too. We did all those
jobs.”
But he was pursuing his bachelor’s degree in economics at Wabash
College in Indiana at the time. He played a little baseball there,
too. “I pitched whenever it was clear who was going to win the game,
whether it was us or them.”
He also holds a master’s in finance from Northwestern University,
and is a graduate of the Institute of Investment Banking at the
University of Pennsylvania’s Wharton School of Business.
(Bachmann is a straight shooter. Commenting on the Wharton thing,
he says, “I don’t know why the PR people insist on including that.
It didn’t amount to much more than a seminar.”)
Decentralization began to emerge with Edward D. “Ted” Jones, Jr.
“Ted loved agriculture,” Bachmann says. “He really wanted to be
a farmer, I think. He studied agriculture at Mizzou, and he ended
up in New York for an apprenticeship. He was the only son, and his
dad clearly wanted him in the business. When he came back, he lived
in Montgomery, Mo., and traveled a route. He believed that you could
build an investment business where you’re part of the community.”
Young Jones put offices in Mexico, Hannibal, Sedalia and Litchfield,
Ill., Bachmann says. “Putting one representative in each community
worked and that came to be the model. It was different. No one else
was doing it, and it worked. We built that model to about 100 offices
between 1958 and 1970.”
Bachmann ran one of them as an IR in Columbia, Mo., from 1963 to
1970. He knew right from the start, “I enjoyed being around the
markets. I find investing is fascinating.”
He returned to St. Louis as a general partner, and took on the responsibility
for fixed-income product marketing. Growing up in Salem, Ill., near
Mt. Vernon, prepared Bachmann for the clients he served. “Jones
was growing in rural America,” he says. “We had to offer things
that were comfortable and would wear well over time. We were naturally
drawn to conservative investments. As the firm grew we had success
in that segment of the market and developed that part of the market
where we seemed to do best.”
Part of Bachmann’s appreciation for investing the Jones’ way might
be his granddad’s doing: “He always encouraged savings at the building
& loan, and had a few dollars invested in Union Electric and Central
Illinois Public Service. They were safe companies and he was familiar
with them.”
(Part of Bachmann’s appreciation for making a living in investments
might be his dad’s doing, too: “He owned a furniture store, and
I worked on a delivery truck. I knew I didn’t want to do that all
my life. It was hot, nasty work.”)
Though he returned to St. Louis just in time for the big early ’70s
slow-down in markets, those events got Jones to look at insurance
products and mutual funds. Now, serious, long-term individual investors
can even get a mortgage from Jones.
Bachmann says he “has never been a big bond buyer. I invest in good
quality securities for the long term. I believe they will perform
better over time.” The Edward Jones model portfolio nowadays features
equities in dozens of industries, and seems to win smart money awards
every year or so.
Even so, Bachmann’s assessment of the attacks of September 11 is
that “the whole market has to adjust to a different reality. The
market may turn more quickly than people assume, too: the airline
rescue package, the federal stimulus package, and fairly quickly
large sums of money will be invested in rebuilding in New York.”
Bachmann’s experience of the attacks was closer than he would have
liked. “I was in the chairman of Morgan Stanley’s office, in Midtown
New York on the 39th floor,” he says. “Phil Purcell is an old friend.
When we saw the flames, we could only look on in disbelief.”
Like us all. Bachmann says he and Purcell had gotten together to
“think through how our industry can address issues surrounding Social
Security.”
As chairman of the Securities Industry Association in 1987 and 1988,
Bachmann also played a leading role in the sector’s response to
the turbulence of the crash in October 1987.
He’s also served in various board and leadership advisory positions
with both the Chicago and New York Stock Exchanges and the National
Association of Securities Dealers.
His involvement in national and international events paid off unexpectedly
and personally. He met Kay, his wife of half-a-dozen years, when
they were Carter Center observers of Bulgaria’s first free election
since the Soviets began calling the shots.
Even without the out-of-town, overseas and industry-oriented activities,
Bachmann’s resume is impressive. He is a member of Civic Progress,
a trustee of Washington University, a trustee of the St. Louis Science
Center and former board member of the St. Louis Symphony Orchestra
and of the Saint Louis Art Museum. Bachmann also chairs the region’s
Aviation Task Force for Civic Progress and the RCGA; is a director
of AMR Corporation (American Airlines’ parent), and is chairman
of the RCGA.
“John is extraordinarily passionate about the future of the city
of St. Louis as a viable part of the region,” says RCGA’s Fleming.
“He lives in the city. I think that speaks to his commitment to
this region. But what he does is what is truly impressive.”
Museum director Brent Benjamin says of Bachmann, “He has a genuine
interest in the organizations he’s involved with, and is a great
believer in their capacity for high achievement. He believes that
St. Louis deserves the best, and I’ve seen him work to make it true
at the museum.”
What’s more, Benjamin allows, “He has a specific interest in and
knowledge of American painting.”
“His leadership on airport expansion is the issue where I’ve seen
him in action over the longest period,” Fleming says. “When we recruited
him for his leadership on airport expansion five years ago, he brought
an intellectual rigor to the issue that really has made him a credible
civic champion. He got inside the issue, even talking at length
to airport expansion opponents, and decided W-1W was the best expansion
option.”
More Fleming: “He brings due diligence, a clarity of purpose, and
a systematic, measured approach to everything I’ve seen him involved
with. He achieves closure.”
Recently for instance, Bachmann helped bring diverse players together
to help each other pursue distinct downtown development goals: Cupples
Warehouse partners, the Cardinals, Downtown Now!, St. Louis 2004,
McCormack Baron (Ballpark Village proponents) and the city itself.
“Each had a separate plan with separate merit,” Fleming explains,
“but they needed to be articulated together to realize their full
potential. Absent that, it might have been so confusing that nothing
would be done. Instead John’s efforts to wrap a ribbon around the
whole thing allowed each advocate to articulate his portion of the
exciting plans so that it came together as a reasonable, rational
whole.”
And it is that rational whole—of which a new ballyard is only a
part—that Governor Bob Holden, Mayor Francis Slay and County Executive
Buzz Westfall have agreed to in principle.
Bachmann also provided leadership that positioned TWA for its marriage
with American Airlines’ parent AMR. He was a board member of TWA
before accepting AMR’s invitation to join that board.
Bill Compton, former president and CEO of TWA Inc., and now president
of TWA LLC, a wholly owned subsidiary of AMR, says, “The TWA purchase
was an absolute home run for virtually all our constituents: the
state, the community, the customers, the employees.”
TWA’s strength was not financial, Compton acknowledged. “It was
running a good airline, and having a modern fleet. The board knew
investing in new jets was the right thing to do, but with a shortage
of capital it was nonetheless a hard decision. John understood how
important strong management and modernization were, and he had a
very proactive role on the board in making those happen.”
The hard decisions paid off: TWA was positioned as an attractive
property. And once the negotiations got under way, Compton says,
“John provided a high level of support and trust as we closed the
deal. He provided a lot of direction, encouragement and coaching:
getting people to understand how good the transaction would be.”
True to his reputation as a tireless St. Louis champion, when Bachmann
points out that Edward Jones is one of the two largest investment
brokers outside Manhattan, he adds that A.G. Edwards is the other...and
by the way St. Louis-based Stifel, Nicolaus is a crackerjack firm,
too.
Kevin Kipp runs Bubble Communications, a creative services and
community relations firm in St. Charles. |
|
|
|
|
-
- - - - - - - - - - - - - - - - -
-
- - - - - - - - - - - - - - - - -
-
- - - - - - - - - - - - - - - - -
-
- - - - - - - - - - - - - - - - -
|
