For the first time in its 115-year history, A.G. Edwards is cutting its workforce, but the St. Louis-based company says its broker force of around 7,300 will not be included in the reduction.
The firm says it will slash 400 jobs, or 2.35 percent of its work force, because the lack of customer trading and account activity “is cutting into profits,” according to the company.
The omission of brokers in the job cuts is not uncommon, since most brokers' salary is based on the customer activity they generate and not a traditional salary.
“[Securities firms] don’t save too much by firing brokers, but they do tend to lose a lot in the leaner years because lower-producing brokers don’t earn enough and eventually leave the business,” says an A.G. Edwards broker on the West Coast.
But the cuts do affect brokers. “Sure it does,” says one in the Midwest. “It’s a sad day. It’s a sad year. A horrible year. And everyone’s been affected—adversely affected. It’s not good for morale to let people go, but every firm has done it, and we knew this coming for us.”
Most of Edwards’ cuts will come from its St. Louis headquarters, which employs approximately 4,800 of its staff of 17,000.
Brokerage firms have been cutting jobs to cope with steep declines in commission and investment banking revenues. Merrill Lynch, for instance, cut 15,000 jobs last year.
Edwards will eliminate jobs through layoffs, a voluntary retirement plan and attrition, according to the firm. The company reported a 61 percent decline in quarterly earnings in December 2001, the fifth consecutive quarter that its profit had fallen. At the time, the firm said it was looking at a series of cost-cutting measures, including job cuts, but did not disclose any job numbers.