Edward D. Jones & Co., the brokerage firm renowned as a fierce rival of small-town banks, is now setting its sights on big cities.
The St. Louis-based firm, which has more than 3,300 offices nationwide, plans a major expansion next year in several East Coast cities, including Boston, Pittsburgh, Philadelphia, and Hartford, Conn., company officials said.
John D. Beuerlein, a partner who oversees 800 offices in the region, declined to say how many new ones will open in 1995. But he said Jones' aim is to triple its presence on the East Coast in the next six to eight years. That translates to an average of at least 16 new offices a month.
The brokerage company expects to provide stiff competition for banks in its new markets.
"They are our toughest competition, no doubt about it," Mr. Beuerlein said. "Banks already have the rlationships they can draw business from."
But, he maintained, while banks "do a good job of keeping people's money safe" in deposit accounts, consumers seem to like what Jones & Co. has to offer: a broad investment line with no proprietary products, and one-on-one relationships with brokers.
For their part, banking executives say they are unshaken.
"It's certainly a firm that has a good reputation, but I don't consider them competition [for banks] just yet," said Robert F. Brawders Jr., president of the Connecticut Bankers Association's brokerage subsidiary.
The focus on major cities is a new one for Jones & Co. the firm built its reputation in small towns and suburbs, and is famous for setting up shop right across from bank branches.
The Jones branch network is the largest in the brokerage industry, and its sales force is the ninth largest. It caters to the conservative investors who typically save and invest at banks.
To that end, Jones & Co. brokers, most of whom operate one-person offices, are encouraged to establish themselves as members of the community before making any sales pitches. The low-pressure sales strategy has been a hit with investors, enabling the firm to expand to 49 states and Canada.
Jones & Co. has even taken a stab at banking, recently announcing plans to buy Boone National Savings and Loan, a small thrift in Columbia, Mo.
The firm plans to use the thrift as a springboard for marketing trust services nationwide. Company officials expect the deal to be approved by regulators next summer. Meanwhile, the firm is actively searching for an executive to run the operation.
But Jones & Co. may feel some growing pains from its latest plans for expansion, said Geoffrey H. Bobroff, president of Bobroff Consulting Inc., East Greenwich, R.I.
To compete in big cities, he said, the brokerage giant will have to forgo its solo shops for more heavily staffed offices.
"It's counter to the way Jones has worked in the past, but if any company can do this, Edward D. Jones can," Mr. Bobroff said.
The company decided to expand into large cities after a successful test run in Atlanta last year, according to Mr. Beuerlein. The company now has more than 60 one-person offices in the metropolitan area.
By opening a large number of offices in rapid succession, the company was able to achieve "critical mass in a short period of time," Mr. Beuerlein said.
Jones & Co. expects to begin its expansion in earnest in Massachusetts, and has already begun training and hiring brokers there. The company also has its eye on Connecticut and Pennsylvania. The Keystone State alone "holds as much business potential as the whole Eastern seaboard," Mr. Beuerlein said.