Saturday, April 25, 2009

Kept a Tight Focus on Customers

An interesting obituary about a businessman who resisted the trends of modern Wall Street, keeping his St. Louis-based brokerage house focused: he "nurtured the firm's reputation for personal service even while increasing the number of branches to nearly 700 from fewer than 50 in 1967, when he became president."

Mr. Edwards took pride in his perch in what he called "the valley between the coasts" and said that his firm served "John Doe American." The firm burnished its reputation as a retail broker with a tight focus on customers. Mr. Edwards answered his own phone, held monthly conference calls with the whole company and spent weeks each year visiting the branch offices. For a decade, A.G. Edwards was ranked in Fortune's annual list of 100 Best Companies to Work for in America.

Imagine many other executives answering their own phones? No, they're too busy.

Yet some considered the firm a bit sleepy for its aversion to Internet trading and the diverse offerings of the large-scale "financial supermarkets" that were starting to take off. When Mr. Edwards retired in 2001, revenues were off in a soft market and speculation was that A.G. Edwards was ripe for a takeover.

The prime financial supermarket was Citigroup, the behemoth that Sandy Weill put together, which is teetering on complete collapse, and would have already failed but for billions of federal bailout funds.

Following Mr. Edwards's retirement, Robert L. Bagby was made chairman and CEO, the first time in the firm's history that it was run by a nonfamily member. Within months, the first layoffs in the firm's history were announced. Aligning A.G. Edwards with industry norms, executive pay went up and broker commissions were cut back.

And where did it all wind up? In disaster.

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