Benjamin F. Edwards & Co. has been picking off Wells Fargo brokers for years

Many of them previously worked at A.G. Edwards, the firm founded by the great-great-grandfather of Benjamin F. Edwards & Co.'s CEO

Oct 2, 2018 @ 1:51 pm

By Bruce Kelly

Wells Fargo Advisors has lost hundreds of brokers and advisers over the last two years to rivals in the wake of scandals at its parent bank, but one firm, Benjamin F. Edwards & Co., has perhaps the greatest long-term success in recruiting advisers and employees from the beleaguered brokerage firm.

The relationship between Wells Fargo Advisors and Benjamin F. "Tad" Edwards IV, the firm's chairman and CEO, goes back more than a decade and involves a series of acquisitions.

A.G. Edwards Inc. was founded by Tad Edwards' great-great-grandfather in 1887. In 2007, A.G. Edwards was sold to Wachovia Securities. At the time, the broker-dealer had more than 6,600 advisers under its roof.

The intention of Wachovia Securities, which had been building a vast network of retail advisers through acquisitions, was to become one of the largest securities houses in the country.

Those plans didn't get a chance to come to fruition though, because Wachovia Securities' banking parent, also named Wachovia, collapsed in the credit crisis of September 2008. The federal government forced Wachovia's sale, including the brokerage, to Wells Fargo & Co.

And ever since Tad Edwards opened his own firm, Benjamin F. Edwards & Co. in 2009, it has routinely recruited advisers and staff from Wells Fargo Advisors, most of whom were legacy employees from A.G. Edwards and/or Wachovia.

Benjamin F. Edwards currently has 357 advisers and employees registered at the firm, according to a list obtained by InvestmentNews. Of those, 250, or 70%, worked at both A.G. Edwards and Wells Fargo Advisors or its predecessor, Wachovia Securities, according to a review of each adviser's and employee's work history on BrokerCheck.

Wells Fargo Advisors said earlier this year that a 10-year forgivable loan for former A.G. Edwards' reps and advisers expired, allowing them to leave without losing any compensation. Industry observers have routinely said that the former A.G. Edwards advisers missed the close culture of their old firm, potentially pushing them to Benjamin F. Edwards.

Adviser headcount is down sharply at Wells Fargo Advisers since news of the banking scandal broker. Since September 2016, the firm has seen a 5.7% decline in its adviser workforce, which fell from 15,086 individuals in September 2016 to 14,226 at the end of June.

"That's been the whole business model [for Benjamin F. Edwards], taking legacy A.G. Edwards guys and bringing them back to the old country," said Louis Diamond, an industry recruiter.

"We would consider Ben Edwards to be a regional firm, like Raymond James, Janney Montgomery Scott and Stifel Nicolaus but much smaller," Mr. Diamond said. "The recruiting deal there is low, but they are having decent success despite the low deal, which must be gratifying to them. The firm is attracting advisers, who are going there for the culture that focuses on the adviser, and also draws on the past history."

A spokesperson for Benjamin F. Edwards, Margaret Welch, declined to comment.

"Tad formed that firm with a group of investors in St. Louis," said Heather Hunt-Ruddy, head of client experience and growth at Wells Fargo Advisors. "And [the advisers and employees] have largely been from legacy A.G. Edwards. That's true."

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