WSJ Story: AG Edwards (AGE:NYSE)

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Oct 11, 2006 6:55 am

to use referral bonuses to lure HNW brokers.


Anyone else read this article or have an opinion on it?

Oct 11, 2006 8:10 am

ymX3, do you have the link?  Sorry, read the FT instead.

Oct 11, 2006 8:45 am

I get hard copy---will try to get you a link and send it to you via private e-mail.


I read FT, too.



Oct 11, 2006 9:15 am

thank you.

Oct 11, 2006 8:25 pm


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A.G. Edwards Will Use
Referral Bonuses to Lure
High-Net-Worth Brokers


By EVELYN JUAN
October 10, 2006 8:50 p.m.

St. Louis brokerage A.G. Edwards Inc. is rolling out a referral program that will give its financial advisors a bonus of up to $50,000 for luring high-net-worth brokers to join the regional brokerage firm.


The plan, noted in a report released Monday by Bank of America analyst Michael Hecht, involves rewarding brokers who help recruit advisors who produce at least $300,000 in annual commissions and fees.


The bonuses will be scaled according to the productivity of the recruits. A.G. Edwards will pay out bonuses of $15,000 for recruits who produce at least $300,000 a year. The bonuses rise to $37,500 for those who produce at least $525,000 a year, and $50,000 for those who qualify for the Chairman's Club, who produce at least $800,000.


A.G. Edwards spokeswoman Margaret Welch confirmed the referral bonuses and said half will be paid in cash and half in restricted stock after a year, provided certain targets are met. "We believe this is a good way to energize our recruitment efforts," said Ms. Welch.


"Internal referrals are better hires -- they have more commitment to the firm since they know someone and are usually prescreened to be better candidates," added Andy Tasnady, a compensation consultant who deals with Wall Street firms. The brokerage units of Wachovia Corp. and Morgan Stanley also offer referral bonuses.


A.G. Edwards' move comes amid a continuing decline in its head count. The company not joined other Wall Street firms in offering huge upfront bonuses, sometimes up to 200% of a brokers' production, to entice brokers to move. Since January, the company has lost 158 brokers, or 2% of its work force of more than 6,600, Mr. Hecht's report said.


Aside from rolling out a referral program for brokers, A.G. Edwards also is looking to converting more branch managers into salaried employees instead of serving as financial advisors while also managing the branch. Around 10% of A.G. Edwards' branch managers are currently salaried, and the company expects an additional 5% will be added to the fold, particularly in large cities, Mr. Hecht said. A.G. Edwards has 744 branches in the U.S.


This has been a trend on Wall Street amid growing regulatory and supervisory requirements of branch managers who now oversee sales, recruitment and training, administrative, and compliance issues in a branch.


Write to Evelyn Juan at [email protected]




Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved
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Oct 11, 2006 8:29 pm

Better read it while you can!

Oct 12, 2006 9:07 am

Good point, IH.  This link will be around about as long as Putsy's latest identity.

Oct 12, 2006 9:20 am

UWEC86, thanks for posting that link/clip and paste for everyone. I get my WSJ hard copy (not on line).


It's typically true that internal referrals work better than someone placed by a recruiter. In late 2004 I referred a couple of $1MM plus producers to Bear out of Legg Mason. They happened to know another broker there (Rich Saperstein) and I told them, call Rich if you want. He's happy at Bear and I think you guys will be, too. They called him. He verified what I told them. They're happy, Bear's happy, and I might have to tell Jimmy what's on my "I have been a good girl and here's what I want Santa Jimmy to bring me for XMas!"


The rationale behind existing reps referring their friends being valuable is that most people won't refer bums. Their reputation is on the line and if they refer a bum, it damages their credibility.


FD: I am not a recruiter in this sector. I was a headhunter for a little over a year in my old sector. I do NOT work for Bear Stearns. I never worked for Bear Stearns and am NOT shilling for them (at least not very obviousLEH, that is).

Oct 12, 2006 10:15 am

I would have to agree that internal leads work very well.  Many external recruiters try to throw mud to the wall and hope that it sticks instead of focusing on the specific needs/desires and personalities that will fit in well within a company or specific branch.

Oct 12, 2006 10:34 am

Long term it pays to make sure it's a good fit. If you don't no one wins and no one will do biz with you anymore.


After 5 minutes on the phone with the senior Legg broker, I knew he had BSC written all over him. He happened to know Rich from his Oppenheimer (pre merger) days.


Both former Legg guys are happy they made the move to Bear and Bear's happy they came over. Legg's culture was one of semi-independence and they would not have done well at a MER, MS, SB, UBS, et al. They might have fit in okay at RJF.


Oct 12, 2006 10:44 am
ymh_ymh_ymh:

 Legg's culture was one of semi-independence and they would not have done well at a MER, MS, SB, UBS, et al. They might have fit in okay at RJF.




I really do find your input interesting ymh, but every so often you say things like the above, and since you have no personal experience in any of the firms you mentioned I wonder how you find a foundation for the claim. Seriously, where did you come up with the idea that MER, MS, SB, et al aren't "semi-independent" and have a different culture than Legg?

Oct 12, 2006 10:53 am

I have been a BSC client since 1988. I know that firm's culture inside out. I knew those 2 guys would like it there and they do.


I have many friends who are brokers---all firms. I do not think those Legg guys would have been happy in a wirehouse culture. I know MER, MS, SB are trying to change/adapt, but "culture" is hard to change, Mike. Some people fit in well and succeed at wirehouses and others don't.


On RJF, their culture is/was similar to Legg's.

Oct 12, 2006 11:12 am
ymh_ymh_ymh:

I have many friends who are brokers---all firms.


That's true of most of us here, and we have the added benefit of having actually experienced it firsthand.


ymh_ymh_ymh:

I do not think those Legg guys would have been happy in a wirehouse culture.


How about you start by defining that "wirehouse culture"? So far you've mentioned "semi independent", which seems to me to be a hallmark of every wirehouse. 


ymh_ymh_ymh:

I know MER, MS, SB are trying to change/adapt, but "culture" is hard to change, Mike. Some people fit in well and succeed at wirehouses and others don't.


My point is, having never been there yourself, you have no idea what the "culture" is in any of those firms, much less does it make sense to paint them with the same broad brush.


ymh_ymh_ymh:

On RJF, their culture is/was similar to Legg's.



I have friends who went from SB and MER to Legg when they first entered a nearby town. They'd tell you aside from the change of the business card nothing had changed in the daily work lives. Their firms HQ was now in Baltimore and not NYC, and the firm had fewer employees, but the "culture" was the same. You still had clients, an array of tools and a living to make.


I think you're relying on thrid hand accounts and dated stereotypes to make claims most people in the business would chuckle at.

Oct 12, 2006 11:25 am
mikebutler222:
ymh_ymh_ymh:

I have many friends who are brokers---all firms.


That's true of most of us here, and we have the added benefit of having actually experienced it firsthand.


[quote=ymh_ymh_ymh]


I do not think those Legg guys would have been happy in a wirehouse culture. [/quote]


How about you start by defining that "wirehouse culture"? So far you've mentioned "semi independent", which seems to me to be a hallmark of every wirehouse. 


[quote=ymh_ymh_ymh]I know MER, MS, SB are trying to change/adapt, but "culture" is hard to change, Mike. Some people fit in well and succeed at wirehouses and others don't. [/quote]


My point is, having never been there yourself, you have no idea what the "culture" is in any of those firms, much less does it make sense to paint them with the same broad brush.


[quote=ymh_ymh_ymh]


On RJF, their culture is/was similar to Legg's.


[/quote]


I have friends who went from SB and MER to Legg when they first entered a nearby town. They'd tell you aside from the change of the business card nothing had changed in the daily work lives. Their firms HQ was now in Baltimore and not NYC, and the firm had fewer employees, but the "culture" was the same. You still had clients, an array of tools and a living to make.


I think you're relying on thrid hand accounts and dated stereotypes to make claims most people in the business would chuckle at.



I have to side with Mike on this one. He knows the culture of so many firms because he's left a lot of them.

Oct 12, 2006 11:27 am

Mike since your only "experience" is probably StanLEH Morgan what do you really know about ANY other firm to include other wirehouses such as Mother Merrill, Smith Blarney, or UB(e)S(tupid)?


Chuckle all you want, Mike Your boy, Gorman, would have given his left nut (if he still has one) to have snagged those 2 Legg guys. Some MS internal recruiter talked to them a few times. They wanted NO part of StanLEH Morgan or Mother Merrill for that matter.


Oct 12, 2006 11:28 am
My Inner Child:
mikebutler222:
ymh_ymh_ymh:

I have many friends who are brokers---all firms.


That's true of most of us here, and we have the added benefit of having actually experienced it firsthand.


[quote=ymh_ymh_ymh]


I do not think those Legg guys would have been happy in a wirehouse culture. [/quote]


How about you start by defining that "wirehouse culture"? So far you've mentioned "semi independent", which seems to me to be a hallmark of every wirehouse. 


[quote=ymh_ymh_ymh]I know MER, MS, SB are trying to change/adapt, but "culture" is hard to change, Mike. Some people fit in well and succeed at wirehouses and others don't. [/quote]


My point is, having never been there yourself, you have no idea what the "culture" is in any of those firms, much less does it make sense to paint them with the same broad brush.


[quote=ymh_ymh_ymh]


On RJF, their culture is/was similar to Legg's.


[/quote]


I have friends who went from SB and MER to Legg when they first entered a nearby town. They'd tell you aside from the change of the business card nothing had changed in the daily work lives. Their firms HQ was now in Baltimore and not NYC, and the firm had fewer employees, but the "culture" was the same. You still had clients, an array of tools and a living to make.


I think you're relying on thrid hand accounts and dated stereotypes to make claims most people in the business would chuckle at.



I have to side with Mike on this one. He knows the culture of so many firms because he's left a lot of them.



You just have to respect funny when you see it...

Oct 12, 2006 11:32 am
ymh_ymh_ymh:

Mike since your only "experience" is probably StanLEH Morgan what do you really know about ANY other firm to include other wirehouses such as Mother Merrill, Smith Blarney, or UB(e)S(tupid)?


Been there, done that, have the business card. Now, where have you ever hung your Series 7 license?


I'm not trying to attack you, ymh. Like I said, I find you very interesting on some subjects, but on this one, well....


ymh_ymh_ymh:

Chuckle all you want, Mike Your boy, Gorman, would have given his left nut (if he still has one) to have snagged those 2 Legg guys.


I have no doubt that if they were good producers any wirehouse would love to have had them. I hope they're happy wherever they landed. However, that doesn't address my question to you, which was what do you know of the culture of a wirehouse?


Please define it for us.

Oct 12, 2006 11:44 am
ymh_ymh_ymh:

Mike since your only "experience" is probably StanLEH Morgan what do you really know about ANY other firm to include other wirehouses such as Mother Merrill, Smith Blarney, or UB(e)S(tupid)?


Chuckle all you want, Mike Your boy, Gorman, would have given his left nut (if he still has one) to have snagged those 2 Legg guys. Some MS internal recruiter talked to them a few times. They wanted NO part of StanLEH Morgan or Mother Merrill for that matter.




Do you really think that a lost opportunity to recruit two brokers has a material impact on a firm like MS? I imagine that they'll find a way to muddle through, somehow.

Oct 12, 2006 11:51 am

Wirehouse culture:


One where wirehouse brokers spend all day long on a chat forum like this wishing they worked for a real investment bank like Bear Stearns


No, 2 $1MM plus in production brokers probably won't make Jim Gorman (no Series 7 former McKinsey consultant) lose any sleep at night.


Have a nice day, gentlemen...try to find a couple of $1MM per year producers for Jim and he might reward you with a $100K finders' fee like old AGE is doing!

Oct 12, 2006 11:57 am
ymh_ymh_ymh:

Wirehouse culture:


One where wirehouse brokers spend all day long on a chat forum like this wishing they worked for a real investment bank like Bear Stearns


No, 2 $1MM plus in production brokers probably won't make Jim Gorman (no Series 7 former McKinsey consultant) lose any sleep at night.


Have a nice day, gentlemen...try to find a couple of $1MM per year producers for Jim and he might reward you with a $100K finders' fee like old AGE is doing!




You didn't have to waive a white flag like that, I really did assume you had a logical answer....