Wachovia Securities LLC says its gradual integration with A.G. Edwards, which Wachovia Corp. bought in June 2007, has enabled it to retain and attract advisers and positioned it for growth when it completes the back-office phase of the integration next year.
Danny Ludeman, Wachovia Securities' president and CEO, "is not comfortable being the second-largest brokerage firm in the country," said Peter Miller, co-president of the financial service group. "If you look at our track record over the last 10 years in terms of recruiting and expansion, I think it really speaks for itself."
The St. Louis company, which has $1.1 trillion under management, trails Merrill Lynch & Co. Inc. and Citigroup Inc.'s Smith Barney in number of licensed financial advisers, though it tends to jockey back and forth with Smith Barney for the second slot.
Wachovia Securities has 15,000 advisers and, despite the ongoing A.G. Edwards integration and tough market conditions, has increased recruiting 54.5% this year. It reported record hiring of advisers in March, April, and May, hiring 156 in May. "Customer retention and adviser retention has gone extremely well," Mr. Miller said in an interview last week. "When we compare how we've fared against what we forecasted, we have exceeded our expectations."
Analysts praised Wachovia Securities' hiring of Tom McManus last week as its chief investment officer and director of its advisory services group. He had been managing director and chief investment strategist at Banc of America Securities until he left the Charlotte company in April.
In his new job Mr. McManus succeeded Wachovia Securities' equities director, Gregory Sigmund, who had been the advisory services group's acting director since Michael Jones left to start his own advisory firm, Riverfront Investment Group LLC in Richmond, Va., in April.
Mr. McManus, 51, was "probably the most critical hire that we needed to make," Mr. Miller said. As with the A.G. Edwards integration, Wachovia Securities took a deliberate approach to the hire.
It "targeted executives at buy- and sell-side firms" and interviewed 30 candidates, Mr. Miller said. It wanted someone with strong investment experience who "could also relate to financial advisers and clients from all spectrums, from mass affluent to ultrawealthy to institutional."
"We knew we wanted to make the right hire rather than just making a hire," Mr. Miller said. "This was the last piece of the puzzle to bring this team together."
Analysts said Wachovia Securities' executive offices have a mix of people from its own ranks, A.G. Edwards, and elsewhere. But only three A.G. Edwards executives, including Mr. Miller, have top jobs at the combined company.
Mr. Miller said Wachovia Securities, which moved to St. Louis after the acquisition, has tried to "adopt the best practices" and the best executives from both firms.
It expects to complete the back-office integration at the end of February. After that it will be able to focus on growth, Mr. Miller said. That will mean continuing to add advisers, he said, but he would not rule out further acquisitions. "When you look at our histories, we have a reputation for being able to integrate," he said. "We have a location in St. Louis and a platform that is well centralized. … When you couple the strengths of both firms, we are definitely going to be able to grow and expand."
