Robert Bagby took over as chairman and CEO of A.G. Edwards on March 1, 2001. Bagby, a former broker, was most recently vice chairman and director of branches.
Registered Representative caught up with him in May.
RR: Will the firm continue to differentiate itself from the wirehouses?
Bagby: We're going to keep the culture at A.G. Edwards. We enjoy the environment of freedom, of caring about one another — the Golden Rule approach. I don't think it's just our brokers. It's also our staff in the home office. It's everyone.
RR: Chairman Emeritus Ben Edwards always said reps were free to copy their books and leave. Do you agree?
Bagby: We always embrace the client-broker relationship. Brokers are going to continue to have the ability to keep copies of their books, should they determine that Edwards is not the right firm for them.
RR: Ben also said the firm's refusal to pay sign-on bonuses hurt recruitment efforts. Any changes planned there?
Bagby: No. If we're going to pay anybody, we're going to pay the [loyal] people who brought us the income. We do that through our 401(k).
RR: In a recent financial release, you said the firm will focus on “controlling expenses” in the future. You specifically mentioned the costs of retaining quality professionals. Where are you cutting?
Bagby: What I intended to say was that we put on a hiring freeze. We're trying to reduce our fixed costs where prudent. We're not growing our [corporate] staff at this point. The pressure on compensation came from our home office, from banking and research, as we built our banking model and improved our research quality. Pressure on compensation had nothing to do with brokers. That statement was misread, even by our own people. Our intent is to grow our branch system aggressively and grow our broker population.
RR: Even in a slow market?
Bagby: We're particularly able to grow in bad markets because the front money goes away, and people look for career fits and what's best for the client. Our turnover rate is low — 8.9% in 1999, versus an industry average of 14%.
RR: How do you keep good brokers?
Bagby: By sharing the wealth and not overcompensating senior management. We treat everyone the same. People appreciate that constant approach.
RR: Any other ways you plan to grow the company?
Bagby: I want to make acquisitions if I find they are culturally acceptable to our current model.
RR: Some brokers still remember a memo you co-authored with Tad Edwards (now president of the firm) in February 1997 suggesting that veteran reps doing less than $225,000 in production might ponder a different career.
Bagby: I know certain brokers took offense to that memo as a cultural change. All we were saying was, “Be accountable.” Accountability is not a dirty word. We're spending all this money on technology, and all we're asking from our brokers is to bring yourself up to where you're capable.
RR: But still no minimum production requirements.
Bagby: We're not going to have minimums. We're going to manage our people.
RR: How about account minimums?
Bagby: Other firms say certain clients need to go to service centers, but we're not going to use that approach. If you have a financial need, we want to be the broker that develops a solid financial foundation and future for you. We want to grow with you. I wouldn't want to be snubbed if I didn't have $100,000. I think I would remember that.