Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 13, 1990 TAG: 9004130248
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
When customers see the movie "Wall Street," they "think we're all greedy. Our only defense is performance and our job would be easier if we had more help," said the chairman of A.G. Edwards, seventh largest stockbroker in the nation.
The best thing the industry can do, he said, "is to clean up its own act."
Edwards, a fourth-generation executive of the largest brokerage firm outside New York City, talked about the market and his company's philosophy during a brief visit to its Roanoke branch this week.
One of his larger competitors recently bragged of last year's sales. "They did five times the business of A.G. Edwards and their profits were lower. Their chairman was paid six times as much as I am and I think I'm overpaid."
Edwards said that chairman "is paying himself over $2 million. What a message to the employees, to brag on performance that is shabby."
The Edwards firm just had its second-best year with earnings of $58.8 million, up from $34.9 million, he said. Revenues rose more than $100 million, to $607 million.
"But revenues should have been up. We have more brokers and more branches. We had a record net income because we paid less taxes."
Officials at the top of the company had very little to do with the gains, Edwards said. "A comparison clerk [in the St. Louis headquarters] had more to do with it than I did. It's nice to take credit."
When the market is depressed it's harder to do business, but you're not a lesser person than you were in 1986 "when you almost had to beat business off with a stick," he told the nine brokers in the Roanoke office.
No matter how hard a business tries, "we still get mud on our skirts," Edwards said. His company had an insider-trading problem and a few other difficult situations.
A.G. Edwards doesn't advertise "because we don't think it helps our credibility." But there has been plenty in the papers about Wall Street, he said. The Des Moines Register illustration of "A B C D E F Hutton" was next to a cartoon about "A B C D E F for fraud. . . . If you're a Hutton customer, how would you like to have that with your morning coffee?"
To illustrate the tendency of large companies to overlook their customers, Edwards told of a high-level dinner in St. Louis at which sales executives of Drexel Burnham Lambert tried unsuccessfully to draw the Edwards company into the junk-bond market. In their 1 1/2-hour meeting, the visitors "never mentioned customers once. It never occurred to them to think of customers."
Edwards executives rejected the offer because "we didn't want to hook up with someone who didn't care how their customers came out.'
Too many high-level brokerage companies had scorecards, he said. Before the market crash, "they weren't out to hurt people. It was an ego thing, from Ivan Boesky on down."
Brokers "have got to exercise more discretion."
Following the golden rule is still the best way to achieve success, Edwards said. The big companies' thought has been, "Will it make money?" not, "Is it right?"
A veteran of 34 years in investments, he talks about having fun in the business because "we've got neat people." A.G. Edwards has more than 7,400 employees in more than 380 locations.
The company started 103 years ago when Edwards' grandfather, also Benjamin F. Edwards, formed a partnership with his father, Gen. Albert Gallatin Edwards, who had just retired as assistant secretary of the U.S. Treasury.
A fifth generation is at work. Ben Edwards' two sons are selling stocks. One stays at the office as late as 9:30 p.m. and the other leaves at the end of the day to work on a low handicap in golf, their father said.
by CNB