Guard Changes At A.G. Edwards

It’ll be official in February.

Jim “Doc” Holladay will completely retire from A.G. Edwards & Sons Inc. in Fayetteville, one of the company’s oldest and most successful shops. A broker there since its 1964 opening and branch manager from 1991 to 2000, Holladay has of late kept a Punch Rare Corojo cigar in one hand and a short list of special accounts in the other.

Come February, he’ll forego even the occasional stops by the office on the downtown square before adjourning to a day of dominoes, dining or downright revelry.

Colleagues and investors say he’s earned the break. Holladay, 65, said his successor, Brian Keck, earned the opportunity to replace him. And even though the torch has effectively already passed at what was Fayetteville’s first real brokerage house, it’s clear one thing will not change — the boys from St. Louis aren’t going anywhere.

Unlike a litany of financial services firms that in recent years have flown Fayetteville’s congested downtown coop, Keck said his branch is staying put. Keck, 60, is a senior broker, a certified life underwriter and himself a 30-year veteran of the investment business.

“We are exploring options for a renovation or even a relocation downtown,” Keck said. “But we are absolutely dedicated and committed to staying in downtown Fayetteville. Everyone thinks they need to fly up to Rogers, but we’re staying here.”

Northwest Arkansas competitors — Merrill Lynch, Morgan Stanley, Stephens Inc. and even Bank of America’s Wealth Management Group — have in recent years relocated to the expanding north side of town or even up to Benton County’s “greener” market. Edwards has remained a fixture in Fayetteville’s historic district and continues to grow its presence across Northwest Arkansas.

With more than $600 million in local assets under management, Edwards’ 6,500-SF Fayetteville branch boasts 20 employees, including 11 brokers. Keck said the shop has about 7,500 client accounts.

Three other autonomous Northwest Arkansas offices add 13 brokers in Springdale, 13 in Rogers and four in Bella Vista. Market-wide, Edwards has about $2 billion in local client assets under management.

Big Picture

As a publicly traded corporation, A.G. Edwards enjoyed 2004 fiscal gross revenue of $2.5 billion, up 13.6 percent from $2.2 billion in 2003. Its net earnings were up 34 percent from $118.8 million in 2003 to $159.5 million this year, and its earnings per share climbed 35 percent from $1.46 to $1.97 during the same span.

The corporation itself boasts $4.4 million in assets, and its total commissions grew 23 percent from $895 million in 2003 to $1.1 billion this year.

Companywide, Edwards has 7,000 brokers in about 700 offices in all 50 states, not counting shops in the United Kingdom. It has zero long-term debt and Jim Underwood, author of “What’s Your Corporate IQ,” named Edwards as one of the “Top 10 smartest companies in America.”

Edwards’ research department routinely receives No. 1 rankings on Wall Street by a variety of publications and services, and its new 1 million-SF A.G. Edwards University facility in St. Louis offers the latest training in all things investment.

Every broker to come through the company’s training program in the last five years holds the designation of accredited asset management specialist (a portion of the CFP designation). Fayetteville’s branch even has two CFPs in veteran brokers Gary Tucker and Michele Sears.

The firm’s cadre of services includes everything from basic trades to commercial products such as employee and executive benefits plans, and it has a full-service, in-house trust department.

There are 16 Edwards shops in Arkansas including ones at Berryville, Holiday Island, Harrison and Fort Smith. Keck said the reason the wire house continues to gain market share is because of its unique approach to customer service.

Objective Advice

Unlike most brokerages, Edwards does not own or sell its own proprietary products, Keck said. With no internal pressure to sell off “preferred lists,” the firm’s brokers are free to focus in on what customers need rather than trying to cram them into cookie-cutter investments.

Springdale lawyer Jim Blair, the former general counsel of Tyson Foods Inc., has been a customer of the Fayetteville Edwards branch since it converted from a Rauscher Pierce & Co. shop in 1964. Started locally by the late Donald Trumbo in 1958, Rauscher was the city’s first brokerage, and Holladay became a protégé of Trumbo the same year as the conversion.

Blair said he long ago told other wire houses they could stop wasting their time cold calling him for business.

“Edwards has never been a company that was driven by investment bankers,” Blair said. “It’s always been based on the retail trade concept, and so to me that makes them a whole lot more investor friendly to the man on the street than the average broker.”

Edwards doesn’t just target high-net-worth clients such as Blair. Keck said it works with everyone from young couples starting out to speculative day traders and retired executives.

Jean Totemeier, a Fayetteville Edwards’ client for the last decade, said when her husband Carl died unexpectedly in July, the firm “just took over the care of [her finances].”

“They got me through the legalese of everything and helped me get everything organized in once place so that it’s easy to care for,” Totemeier said.

Marcia Wells, another long-time Fayetteville client, said her Edwards’ broker, James Agler, and his assistant, Michelle Thompson, have gone way above just executing her trades. She’s also glad Tucker, the CFP, has been added to her “financial team.”

“Years ago my lawyer and a bank president in another state said to go with Edwards and no one else,” Wells said. “After I tried another company for a little while I learned why. I came to Edwards, and they have just been outstanding.

“They stood by me when I had other troubles not connected to money, and they’re my friends as well as my brokers. They made good money for me, but they’ve also been as loyal to me as family.”

Brokers Haven

Customers aren’t the only ones loyal to Edwards.

Keck, who was a regional manager for Edwards in Memphis before joining the Fayetteville office in 1998, said his branch is pushing 200 years of brokerage experience. It’s common at company conferences, he said, for half the crowd to have been with the firm for a couple of decades.

In addition to what is considered by many to be a generous benefits and retirement program — including a tiered matching 401(k) program that contributed $89 million for its employees last year — Keck said Edwards’ corporate culture is centered on independent-minded brokers.

“We’re always looking for brokers who are interested in working in an independent environment where they can operate the kind of business they want to,” Keck said. “If we can’t provide brokers with an environment that makes them happy and them able to earn a good living and do good work for their clients, then shame on us.

“We don’t throw out restraining orders or injunctions. If we haven’t done a good enough job as an employer, then you’re free to leave.”

Keck said the biggest pressure on brokers today is compliance. Most of his job as branch manager now deals with that issue rather than production. But he said Edwards’ whole focus on individuals and one-on-one customer service mitigates many potential problems.

Emerging markets such as China and the continued stability of Russia are two areas Keck said will hold investors’ attention in the coming years. The key will be identifying emerging markets at the right time and participating in them wisely.

“People have gotten over the shock of the dot-com collapse in 2000,” Keck said. “They’ve realized you have to be investing for the long run. Over time the market will go up, and if you’re not on the bus you’re not going to be there. They’ve realized they need to get off the sidelines and back into the market.”

Stock “Doc” Prescribes R&R

Jim “Doc” Holladay became an A.G. Edwards broker right out of Arkansas Polytechnic College in 1964. Prescribing investments in the unmerciful stock market is the only job he’s ever known.

“The stress is why only about one in six make it as a broker,” Holladay said. “When it goes bad, you’ll wake up at 3 a.m. and think, ‘Now why in the hell did I do that?’ But when it’s blowing and going and you’re hollering into the phone, it’s a hell of a lot of fun. I used to have three or four cigarettes going in the ash tray at the same time.”

To deal with the stress, Holladay immersed himself in a number of hobbies over the years. He’s collected fossils, got into woodworking and perfected the culinary art of grilled pork tenderloin with baked apples. But second only to his family, his biggest love has been travel.

Holladay has stood on all seven continents and in 22 of the world’s 24 time zones. He lacks one down the middle of the Pacific Ocean, and the zone that includes Iraq, Iran and Madagascar.

“My goal is to hit 100 countries, and I’ve made 68,” Holladay said. “Coming up, we’re going to Ireland and then to Tibet, Mongolia and hopefully Butan. Then we’re going back to South Africa, and I’m going on a fishing trip in February to Brazil. After that, we’re doing ‘The Stans.’ That’s Uzbekistan, Kazakhstan, Turkmenistan, Tajikistan and Kyrgyzstan.”

On Nov. 3, Holladay was en route to Churchill, Canada, with Springdale lawyer Jim Blair to look at polar bears. The two have been pals since 1964, when the first local Edwards office occupied the building that’s now Fayetteville’s A Taste of Thai restaurant.

Holladay saw Edwards become a secondary underwriter for the IPO of Tyson Foods Inc. (Rauscher Pierce & Co. was the lead), and then the lead underwriter for Tyson’s secondary offering in 1968. He was one of about 20 people at the first Wal-Mart Stores Inc. shareholders meeting. He remembers the market’s first seven million-share day and old timers who used to say it would never hit the milestone of 16 million again — first set on 1929’s Black Tuesday crash.

“They do that much now in the first five minutes,” Holladay said.

Holladay said with so much money on the sidelines today, the market still offers the possibilities of a run like the 1990s boom.

“After the real estate boom and bust of the 1980s, interest rates went through the roof and you couldn’t give government bonds away,” Holladay said. “There weren’t any foreign markets big enough to handle all the cash on the sidelines. It was just the stock market’s turn, and kabam! Am I ever glad I was there.”