A.G. Edwards reps await retention package

NEW YORK — Wachovia Corp. last week put the finishing touches on its retention package for brokers with A.G. Edwards Inc., and the company plans to announce details as early as today or as late as Wednesday.
Although Charlotte, N.C.-based Wachovia didn’t release any of the particulars of the retention package, some potential details were widely discussed by A.G. Edwards’ 6,618 representatives and recruiters at competing firms who are talking to those reps.
According to two industry recruiters who asked not to be identified, one scenario could hurt small producers, with reps producing less than $350,000 in fees and commissions getting no bonus, and bigger producers in the range of $800,000 to $1 million getting a bonus of 100%.
Another potential retention bonus could have brokers receiving 40% of their fees and commissions, one of the recruiters said.
“The package is in draft form,” Wachovia spokesman Tony Mattera said.
“I wouldn’t comment on what people are guessing. The facts will be disclosed next week,” Mr. Mattera said Friday.
Wachovia announced plans to acquire A.G. Edwards for $6.8 billion late last month. The new broker- dealer, called Wachovia Securities and based in St. Louis, will be a behemoth, second in size only to Merrill Lynch & Co. Inc. of New York with more than 15,000 reps and advisers operating through a variety of business channels.
Wachovia has set aside more than $1 billion for broker retention over the next six years.

Culture shock
Meanwhile, the registered reps at St. Louis-based A.G. Edwards have experienced a wide range of positive and negative emotions, and thoughts concerning their fate as part of Wachovia, a giant bank that has built up its retail-brokerage group, Wachovia Securities LLC, through a number of acquisitions.
Some Edwards reps are fearful of the firm losing its close-knit culture when it becomes part of Wachovia.
“My initial reaction was shock,” said one Edwards rep, who asked not to be identified. “But as this begins to unfold, I’m looking at this very enthusiastically.”
The key to a successful merger would be to combine the client-focused culture of A.G. Edwards with Wachovia’s deep pockets, said the rep, who added that such a change creates “nervousness” among the brokers.
“The mood is a little guarded right now,” said another rep, who also spoke on the condition of anonymity.
“We’re waiting,” this rep said. “It seems the information is slow in coming.”
The rep said that key questions included what parts of the A.G. Edwards philosophy would change. For example, the rep asked, will Wachovia make the reps “push” its products?
Other reps expressed a strong sense of disillusionment in their reaction to the deal, which will include closing 259 A.G. Edwards offices.
“There’s a tremendous sense of betrayal that’s almost universal,” said another broker, who also asked not to be identified. “When [former chief executive Benjamin F. Edwards III] said that the company was not for sale, we knew it was true.”
Wachovia is well aware of how important issues of culture are in this deal for the A.G. Edwards brokers, said Mr. Mattera, who stressed that Wachovia is aware of concern among the reps.
“Nobody [understood] more than [Wachovia Securities chief executive Daniel] Ludeman, who grew up in a firm like A.G. Edwards and lived through an acquisition,” he said.
That experience “has always shaped [Mr. Ludeman’s] approach to the integration of our companies as we merged,” Mr. Mattera said.
As the brokers last week awaited details of the transition package, industry recruiters said that the quality of the deal very likely would determine how many reps stay with the new firm or look to leave.
“It remains to be seen how much interest there is by the brokers because of the change in culture,” said Gregg Johnson, vice president of branch office development for Securities America Inc. of Omaha, Neb.
Over the past week, Mr. Johnson said that he and his team had spoken to more than 15 A.G. Edwards reps about the deal.
“Will they be employees who don’t own their book of business, or will there be freedom there?” he asked.