With a number of observers predicting that other midsize brokerages will pursue deals like A.G. Edwards' agreement to be sold to Wachovia Corp., the top executive at one of the brokerage firms continued to assert its independence.
"This deal with Wachovia is not going to impact how we do business," Jim Weddle, the managing partner at Edward Jones, said in an interview. "We have a great, unique business model and have had fabulous success this year, and a plan for how we will maintain that momentum."
Mr. Weddle said he is not getting inundated with calls from would-be acquirers because, quite simply, the company is "not interested."
"We are a private partnership and we are owned by people that work here and people that used to work here," he said. "There is no stock to buy and no potential for a takeover."
Edward Jones, which like A.G. Edwards is based in St. Louis, would not be a good fit for a company looking to add scale, Mr. Weddle said. "If you merge organizations, you get a compromise of cultures and values," he said. "We are not willing to compromise who we are."
Nonetheless, many think the A.G. Edwards deal, set to close next quarter, will have an impact on Edward Jones and Raymond James.
"I'd love to be a fly on the wall at Raymond James or Edward Jones right now," said Anthony Greene, a vice president at the wealth manager Reliance Financial Corp. of Atlanta. "This puts a ton of pressure on companies like them. If you look at Raymond James and Edward Jones, they are in a lot of the same markets as A.G. Edwards. They have to worry that with Wachovia in those markets now, they could get priced out."
Raymond James' stock surged after A.G. Edwards' $6.8 billion Wachovia deal was announced Thursday. That prompted its chairman and chief executive officer, Thomas James, to issue a statement that day in which he said the Tampa company "remains committed to independence."
"Our culture of putting the client's interests first and providing exemplary service to our clients and financial advisors through a series of affiliation options is only more attractive in the marketplace," the statement said. "As I have repeatedly said, there are no major economies of scale when you reach our size."
Analysts said Raymond James, which had $198 billion of assets under management through March 31, would be more attractive to buyers than Edward Jones because its business model is far less complicated.
Edward Jones, which managed $486 billion as of March 31, has small branches scattered throughout the nation, each accommodating one broker and one full-time service specialist.
"Our model is completely different than our competitors'," Mr. Weddle said. "Our goal is to be convenient for our clients and give them the opportunity to get face to face with a financial adviser. This model has helped us build amazingly strong relationships."
Consolidation in the brokerage world was a concern for Edward Jones four or five years ago, when it had fewer advisers, but "now that we have 10,500 advisers and plans to add between 750 and 800 financial advisers this year, after adding 550 last year, we aren't as worried," Mr. Weddle said.
Nor is he worried about the prospect of larger rivals pricing his company out of the market, he said. "We don't compete on the basis of price," he said. "We never have. As long as we deliver superior service, we will continue to compete with anyone."
Ken Phelps, the chairman of Reliance Financial, which has $42 billion of assets under management, said small and midsize brokerages will have an opportunity to scoop up advisers and clients from A.G. Edwards.
"Without question, there will be defections from A.G. Edwards," Mr. Phelps said. "The culture at A.G. Edwards is distinctly different from Wachovia, and financial advisers may look for another way to manage their clients."
Alois Pirker, a senior analyst with Aite Group LLC, said that by adding A.G. Edwards, Wachovia Securities would have more than 3,300 brokerage offices nationally, more than $1.1 trillion of client assets, and nearly 15,000 financial advisers — second only to Merrill Lynch & Co. Inc. He said the deal would give Wachovia access to some secondary markets not well penetrated by other national brokerages — if it can effectively manage the integration.
"A.G. Edwards had established itself in smaller markets as a strong alternative to Merrill Lynch," Mr. Pirker said. "Now Wachovia has the challenge of bringing these two cultures together."
These smaller markets are crucial said Andy Crane, a wealth strategist at Reliance. "What people want is to work with the guy they see at church. They want the adviser that is at their Little League games," he said. "People in smaller markets want local advice and local products."
Mr. Weddle agreed that with a major competitor being acquired, Edward Jones faces a new and perhaps more open playing field.
"We have competed every day for 50 years with A.G. Edwards," he said. "It was a rivalry based on mutual respect. They did a good job for their clients, and it is going to be interesting to see what kind of retention program they put in place. That program will play a big role in whether anyone can attract clients away from them."
For now, Edward Jones is focusing on its strategy. Mr. Weddle said he wants to expand nationally.
"We still think there is a lot of potential for us in larger markets in the U.S.," he said. "We want to develop our presence in markets such as Boston, Philadelphia, Pittsburgh, and Los Angeles. We have a presence there, but it is not nearly big enough."
Edward Jones does not even have an office in New York City. "We are in Long Island and upstate New York, but as you get closer to the city, we just aren't there," Mr. Weddle said. We'd like to develop a presence in and around the city."
Edward Jones also plans to ramp up its operations internationally. He said the company wants to increase its adviser force from 565 advisers to 2,500 in Canada and from 220 to 5,000 in the United Kingdom in the next few years.
