IRVINE, Calif. — Wachovia Securities LLC’s whirlwind tour of brokers at A.G. Edwards & Sons Inc. has helped calm anxieties about the merger of the two firms, but it hasn’t kept some representatives from abandoning ship. A 40-city tour by six Wachovia executives, including Wachovia chief executive Danny Ludeman and his counterpart at A.G. Edwards, Bob Bagby, is scheduled to conclude this week.
Wachovia brokers were also present at the meetings to answer questions from the nearly 4,000 A.G. Edwards reps who attended, according to David Kowach, director of business development at Wachovia.
A.G. Edwards brokers still have concerns, though they were generally impressed with Wachovia’s management team, some reps said.
Mr. Ludeman is a “straight shooter,” according to one A.G. Edwards veteran in New England, who asked not to be identified.
“For two hours, we pummeled [Mr. Ludeman] with questions,” said an A.G. Edwards branch manager on the West Coast, who asked not to be identified.
“We felt he didn’t give a politician’s type of answers,” the manager said. “He told us what he knew.”
Feeling betrayed
Still, many of A.G. Edwards’ producers feel betrayed by the deal.
“Some just don’t want to be employees of Wachovia,” said recruiter Danny Sarch, founder of Leitner Sarch Consultants Ltd. in White Plains, N.Y.
As a result, St. Louis-based A.G. Edwards has lost some brokers and managers since the merger with Wachovia was announced in May.
One prominent departure was John Lee, formerly the Western regional manager for A.G. Edwards, who left last month to set up an office in Roseville, Calif., for
Stifel Financial Inc. of St. Louis along with his brother James, a former A.G. Edwards branch manager.
John Lee “was well thought of,” said an A.G. Edwards rep on the West Coast, who asked not to be identified. “They’ll probably take a few [Edwards brokers] with them.”
A statement from
Stifel said the firm’s goal is to build up its Western presence.
Last Friday , A.G. Edwards reps had to choose whether to take their stay bonuses as an upfront forgivable loan or in installments spread out over six years.
The retention packages don’t have non-compete contracts, which means A.G. Edwards reps are free to leave as long as they pay back any unearned portion of their loans, according to people familiar with the deal.
A.G. Edwards shareholders will vote on the deal Sept. 28. The expected closing date is Oct. 1.
Rick Peterson, a Houston-based recruiter, estimated that about 150 A.G. Edwards reps have left recently. Normally, the firm doesn’t lose brokers, he said.
“We have no sense of that yet,” said Wachovia spokesman Tony Mattera about attrition at A.G. Edwards.
Managers and brokers at A.G. Edwards said there hasn’t been a big exodus yet.
Some observers predicted that more reps might leave over Labor Day weekend. But Mr. Peterson said he doesn’t expect an uptick. “I think it will be more of a slow drip” over the following months, he said.
Brokers at the firm are waiting to find out about office closures and manager changes, Mr. Peterson said.
Upfront recruitment deals will always be there if they need to move, A.G. Edwards brokers said.
Meanwhile, “recruiters are getting really aggressive,” said the West Coast A.G. Edwards branch manager, who was himself offered a management post at a competing wirehouse. He said that “a couple” of brokers in his office “left to take an [upfront recruitment] check.”
Dennis Zank, president of Raymond James Associates Inc. in St. Petersburg, Fla., said that about 70 A.G. Edwards reps have visited his headquarters since mid-June. The firm requires an office visit prior to joining the firm.
Last month, Raymond James trumpeted its hiring of Martin Smith of Loves Park, Ill., a 30-year A.G. Edwards veteran with more than $150 million in assets.
Ron Kruszewski, chief executive of Stifel, sent a letter in June to all A.G. Edwards brokers, telling them to call him directly. He declined to say how many A.G. Edwards reps have joined Stifel, but he said he “got a lot of response on that letter.”
One point of contention A.G. Edwards reps have been raising with Wachovia management is their concern about Wachovia’s cash sweep program.
Like other large firms, Wachovia pays a lower rate to small accounts. Edwards brokers are pushing for Wachovia to abandon that policy.
So far, they haven’t gotten any commitment to change.
“It will take a while to get [policies like the tiered-rate program] figured out,” Mr. Kowach said. “We don’t have all the answers to things like that.”
A.G. Edwards rolled out its own bank sweep program this year, but it pays a rate competitive with those of banks and money markets. Some brokers at the firm use it as a tool to gather assets.
Separately, last week, 2,600 technology and operations employees at Wachovia’s headquarters in Richmond were told that 2,200 positions there would be eliminated.
Mr. Mattera said that it is too soon to tell how many jobs will be available in St. Louis and how many Wachovia employees will relocate. The firm is working on an incentive package to keep Richmond employees on the job until the transition is complete, he said.
