First WB buys AGE...Eddie Jones next?

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Jun 8, 2007 3:25 am

  Wachovia (ticker:WB) recently announced the buyout of AG Edwards (ticker: AGE).  Furthermore, Wachovia announced they would relocate the brokerage arm of the combined company from Richmond, VA, to AG Edwards headquarters in St. Louis.


 This recent merger will create the second largest US brokerage in number of Brokers, second only to Merrill Lynch (ticker: ML).


 Another large Regional Firm is also headquartered in St. Louis: Edward Jones.


  Several posts on this side indicate the AGE brokers were called to a massive kool-aid quenching of their own this past fall...only to have the rug pulled out from underneath them this past week.


  Certainly, Wachovia is known for throwing their money around.   Isn't it only logical that some of this money will be thrown in the direction of Eddie Jones senior partners? 


  Come on.   You can see the picture now:  Jim, Doug, Louis, Kevin, Cahill, all of them being offered big money to get behind the movement to consolidate EDJ into the mothership: AGE/WB. 


 Strategy: close 90% of EDJ offices, consolidate assets, retain 40% of EDJ brokers.   


  The model of single man units is probably inefficient, and already defections are daily common place....and yes, big producers are leaving.


  Edward Jones has heard the trumpet call from over the hill before...but this time it is in its own back yard....and this Wachovia has deep pockets. 


  I've never seen anyone leave Eddie Jones and go to Wachovia and ever lose a dime.....never.


  It's going to be interesting.  The Jones model may work, but I feel confident when I say senior position pay will increase 100% within one year in St. Louis within Edward Jones HQ.


 Eddies been sucking off the innocence of young folks for years.  Now the Edward Jones home office hears a sucking sound....from the back of AG Edwards throat.....it sounds like.........."GULP!"


  Sure, it's gonna taste salty....but they say it's packed w/ protein!


  Will Eddie spit, or swallow?


  My goddamn feet hurt,


 ED

Jun 8, 2007 7:34 am

As an Ex-Joneser and soon to be ex-AGE guy I can only speculate that the WB/AGE merger will only bring thoughts of an IPO to EDJ. 


that would be the next event in my opinion.  Why not go public, monetize the partnership, and keep control?  Go public/sell to private equity 40% of the firm (like LPL).  You get 3x your money and keep control....



mwv

Jun 8, 2007 11:16 am

Edward Jones will NOT be going public, nor will they be bought out and offices closed.  The model at Jones is too similar to independent firms except that the HOME OFFICE gets a much larger piece of the production pie.  Imagine working at LPL with a 60-40 split with 60 going to management.  Right now, Jones is in its highest profitability bracket at the firm, which means money is raining in St. Louis.  The GP's and even the LP's are raking it in right now.  Yeah, that makes teh firm look attractive to potential buyers, but the somewhat Kiwi-asparagus flavor of the green koolaid is too addictive to the partners.  I'm not really sure the GP's could go public without a majority vote by the 10000 LP's.  The same goes for a buyout.  Right now, Jimmy looks to pull in 8 digits this year (assuming the market doesn't recede a ton) so he won't even consider it an option.


As far as growth goes, EDJ will only get bigger and more profitable in the current situation.  They continue to bring out 100+ new "financial professionals" every month and throw them against the somewhat slippery wall.  They don't really care who sticks but they know that eventually someone will.  The recruiting/replacement costs have proven to be worth the trade off for getting someone to finally get that 8 million AUM, five brokers in four years office up to a 30 million aum office and maintain profitability.  i don't even think that Jones cares as much about client retention in those situations because there are plenty of 20k rollover/$50 a month clients waiting to be had for the next guy and no other major firms competing for them.  I would guess that Jones would cost Wach or anyone else far more than AGE did.  So I don't really see it happening. Just my thoughts.

Jun 8, 2007 8:29 pm

EdJehovah:


You typify the general Jones broker: a drone who has no comprehension of equities or capital markets. Merrill's ticker is MER


Go knoock on some more doors or put some aluminum foil on your satellite receiver

Jun 16, 2007 2:28 am
nyhavn17:

EdJehovah:


You typify the general Jones broker: a drone who has no comprehension of equities or capital markets. Merrill's ticker is MER


Go knoock on some more doors or put some aluminum foil on your satellite receiver



 My bad dude.  Your right.  Get faggot spittin mad why dont' you.  Screw your momma too.


 -ed

Jun 16, 2007 7:44 am

Bteam...A general partner (one of the HNIC) told me Jones would be willing to be acquired "at a high price."


Yes, Jones will sell you out just like management at AG and any other firm will. I've heard it from the horse's mouth.

Jun 16, 2007 7:47 am
nyhavn17:

EdJehovah:


You typify the general Jones broker: a drone who has no comprehension of equities or capital markets. Merrill's ticker is MER


Go knoock on some more doors or put some aluminum foil on your satellite receiver



What happens when you put foil on a satellite receiver?

Jun 16, 2007 11:40 am
Bobby Hull:
nyhavn17:

EdJehovah:


You typify the general Jones broker: a drone who has no comprehension of equities or capital markets. Merrill's ticker is MER


Go knoock on some more doors or put some aluminum foil on your satellite receiver


What happens when you put foil on a satellite receiver?



You get a tasty baked potato.  Pass the butter, please.

Jun 17, 2007 12:23 am

Everyone has a price and if the philanthropic GP's get it at some point the old guard will have to give in. I don't think now is the time for them, but who knows with all the capital being thrown around these days. If AGE can go, I suppose Jones can to.


The other important factor to consider  is the monumental task of closing and consolidating offices. No one would want to replicate the costly Jones model. One has to remember the real profit for the GP's isn't the retail brokerage. It's the backdoor where the serious money is made with the agencies they created who wholesale the products to the retail side.

Jun 17, 2007 8:00 am

Maybe at Summer Regionals when we're not doing cheers they will announce the exact dollar figure.

Jun 17, 2007 11:23 am

Faro-


Ahh, the summer regionals.


Hi my name is ________, my can sell date was __________, and the one thing I would like to take away from this weekend is _____________.


Remember, no excessive drinking. You have your reputation to consider...


Jun 17, 2007 11:53 am

I get the sense that the local economies of each city that has a one-man EJ shop would improve - just by collecting sales taxes.


Think about it.  Open up that RETAIL office/store space and let some yogurt shop occupy it.  Put all the brokers into an (heaven forbid) an office building to SHARE.


Lots more activity and money to go in there than with EJ.


Okay, that was a Low Blow, but I still think it would help EJ's bottom line and improve the local economies by moving all EJ brokers into 1 floor of a nice office building.

Jun 17, 2007 12:06 pm

I saved about 25% when I went independent. My satellite costs alone which minimzed my bonuses at Jones was 1300/month. Now they are 150/month.


The rational person would suggest that it doesn't make sense for Jones to have offices on every street corner. It only makes sense for the GP's.


Spiff...you are probably driving home from regionals, what say you?

Jun 17, 2007 2:06 pm

How could it not make sense for Jones, but make sense for the GPs? They

ARE Jones.



Is there any other business that puts an office on every corner? I thought

McDonalds, but they actually limit their expansion. Subway.....no they limit

too.



Why do they put an office on every corner? No other business does that.

Jun 17, 2007 6:18 pm
Edward Pwns:


Why do they put an office on every corner? No other business does that.


Could it be because they want you to think it is "your" business?  That way, you will work harder, AND stay longer to try and salvage "your" business.


At last year's summer regionals (I knew I was going to LPL, so I went through it with eyes WIDE open), during the awards ceremony, the NIRSS kept giving awards to the new IRs and saying "He opened X accounts for HIS business, yes HIS business."  They kept stressing that it is YOUR business. It is NOT your business. You find that out when you leave.  You leave with NOTHING (except the toilet paper, office niknaks, etc.).


Having "your" office reinforces that false concept of ownership. People are more willing to sacrifice to own their own business.

Jun 17, 2007 7:30 pm

Now_indy, what was your average real net %, after expenses, insurance,etc,

at Jones?





Jun 17, 2007 8:59 pm

The return on GP capital was 62% last year. It was 58% the year before.

Why would you give that up? Why would the GP's want to start working

for "The Man"? Yes, they could get a handsome payout. But I think they

are going to expand much further before they sell out. AND, I think some

things will change in the firm before they would go public. They would

NEED to have a competitive advisory fee service (who is going to buy

billions of $$'s in assets with 25bps trails??). They would have to have a

real plan in place for retention, and it would need to include some way of

avoiding the Indy exodus.



I think they have put too many obstacles to acquisition in place.

However, someone MAY want to buy the Revenue Sharing income stream.

Boy, it would be a complicated transaction to navigate. Just too many

things to consider.



BUT, you can never say never.

Jun 18, 2007 10:08 am

Jones will not go public and won't be bought out.  I know that the folks over at AGE said they wouldn't be bought out either, but Jones is just too different to fit with anyone else.  But when Bagby dropped the poison pill a while ago and with the way UBS was buying shares, the AGE people had to know something was brewing.  We don't see anything like that at Jones.  I've heard Bachman say that if someone were to offer us 10X book value we would seriously have to consider merging. 


If that day does come, I'm calling a couple of my buddies that I trust and we're going indy.  Maybe the whole region will just pick up and move to LPL or RJ. 

Jun 18, 2007 10:13 am
skippy:

I get the sense that the local economies of each city that has a one-man EJ shop would improve - just by collecting sales taxes.


Think about it.  Open up that RETAIL office/store space and let some yogurt shop occupy it.  Put all the brokers into an (heaven forbid) an office building to SHARE.


Lots more activity and money to go in there than with EJ.


Okay, that was a Low Blow, but I still think it would help EJ's bottom line and improve the local economies by moving all EJ brokers into 1 floor of a nice office building.



You are absolutely right.  It would help the bottom line.  It's a business decision to be different than anyone else.  The only place it would really matter is in larger cities.  In my area we could put three large offices together and get the job done.  But noone would know about us.  It's interesting that when I talk to someone who says they're with Merrill, they never say the local office.  They say they're with the on over in West St. Louis County.  I don't even know if they know there is a local Merrill office.  But when I talk with someone who is with Jones, 70% of the time it's someone within a mile or two of that house or business. 


We put the offices where they are convenient to people.  Close to the other businesses they frequent.  Name recognition, branding, whatever you want to call it, it works.  

Jun 18, 2007 1:06 pm

 SPiffy, you sound better. Must have just got back from the Summer--just-in-time-koolaid Regional...Eh..do you have your wood plaque up yet?