Edward D. Jones to take its low-key touch to Baltimore

THE BIG SMALL-TOWN BROKER

September 10, 1992|By Ian Johnson | Ian Johnson,Securities Industry Association JEF DAUBER/STAFF GRAPHICNew York Bureau

NEW YORK -- As he finished his bowl of granola at the Parker Meridien Hotel in Manhattan, the head of one of the nation's biggest brokerages shook his head. "Have you seen how much hotel rooms are here?" said John W. Bachmann, chief executive of Edward D. Jones & Co. "It's easy to pay $200, and that's just for a place where you don't have to be scared to go out in the hallway."

New York just isn't his kind of town. In fact, his company, which is growing rapidly by establishing offices in small cities and towns such as Olney, Bel Air and Havre de Grace, doesn't have an office anywhere near Wall Street.

"We had an office in New York a few years back," Mr. Bachmann said. "It didn't work out. I don't know what kind of people they were or what they were doing in that office, but they sure didn't seem like Edward Jones people."

Since that unpleasant experience in the mid-1970s, the suburban St. Louis-based Jones hasn't had an office in New York -- even though the firm accounts for 25 percent of all New York Stock Exchange member firms' branch offices.

Jones has 1,977 branches across the United States, including nine in Maryland. Soon, the number of U.S. branches will top 2,000, as some of its 100 monthly trainees set up new branches -- including nearly a dozen in the Baltimore area.

The big qualifier: Each branch has just one broker. Linked to the stock exchanges with modern technology that allows transactions to take place in 20 seconds, Jones brokers work small towns, suburbs and neighborhoods across the country like a cop on the beat.

Leg work and personal contact are valued. Hot tips are viewed with suspicion. Face it: Jones is a conservative, careful -- even dull -- guardian of ordinary people's investments.

Still, Jones isn't a boring company. Sometimes dubbed the McDonald's of stock brokers, the firm has grown from fewer than 400 branch offices in 1980. It ranks 10th in the number of regis tered representatives and 11th in total employees. And the company plans to reach 10,000 offices and brokers by the end of the decade, a potentially risky expansion for a company built on a reputation for conservatism.

"The changes in financial services will decrease the number of firms operating," Mr. Bachmann said. "We're convinced that we can only survive by growing."

The expansion to Baltimore and other cities works to counter Jones' image as a small-town brokerage. It already has 80 offices in the Chicago area, focusing on self-contained suburbs and satellite cities.

But Mr. Bachmann says expansion will not change the company's focus; Jones will continue to focus on its niche of providing investment advice to the middle class. Relatively small investors, he says, want the same thing -- money for their children's education and financial independence when they retire -- whether they are in Mystic, Conn., or Bel Air.

"Conservative investors are the same across the country," he said. "They just want a steady return over the years, and that's what we do best."

Jones will pursue that strategy when it expands to Baltimore. No big office will open downtown, but about 10 small offices will open in the metropolitan area. Maryland is especially interesting, Mr. Bachmann says, because of its number of two-income families. The state's large number of retirees also fits the company's niche, he says. Exact plans and locations for the new Baltimore-area offices have not been set because Jones is still recruiting, a company spokeswoman said. Trainees have wide discretion to choose locations for new offices.

Bill Mason, who runs Jones' Olney office, said his clients are not ++ the sort of Wall Street investors seen in Hollywood movies. The typical customer is about 69 years old and wants a steady source of income in retirement.

Other customers are younger and saving to put their children through college, he said. Only about a dozen of his 831 clients have more than $1 million in investments; most are in the $15,000-to-$25,000 range.

Like all Jones brokers, Mr. Mason favors blue-chip stocks, utilities and tax-free government bonds. The company's unspectacular stock tip: Buy quality and hold.

"It's not as though we're dealing with captains of industry," Mr. Mason said. "We're dealing with individuals whose CDs are maturing and need to reinvest in something more profitable."

TOP BROKERAGES (as of January 1,1992)

#

Number of offices

Rank

1 Edward D. Jones .. .. .. .. .. 1,734

2 Merrill Lynch . .. .. .. .. .. . 510

3 Shearson Lehman Brothers .. .. . 454

A.G. Edwards .. .. .. .. .. .. . 450

5 Dean Witter Reynolds ... .. .. . 417

6 Griffin Financial Securities . . 320

7 Prudential Securities .. .. .. . 306

Paine Webber .. .. .. .. .. .. . 266

9 Kemper Securities ... .. .. .. . 172

10 Charles Schwab .. .. .. .. .. . 158

11 Murphy Faure . .. .. .. .. .. . 100

Number of Employees

Merrill Lynch . .. .. .. .. .. 38,300

Shearson Lehman Brothers .. .. 31,003

Prudential Securities .. .. .. 17,000

Dean Wiiter Reynolds ... .. .. 15,866

Paine Webber . .. .. .. .. .. 12,927

A.G. Edwards .. .. .. .. .. ... 8,588

Smith Barney .. .. .. .. .. ... 7,200

Morgan Stanley ... .. .. .. ... 6,927

Salomon Brothers . .. .. .. ... 6,823

Goldman Sachs . .. .. .. .. ... 6,733

Edward D. Jones .. .. .. .. ... 5,881

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