A.G. Edwards Inc. Business Profiles in American Enterprise A.G. Edwards Inc. The industry for securities is undoubtedly an exciting and fast paced industry.
This means that brokerage firms such as A.G. Edwards and Sons must always be watching the stock prices on every stock in the market so that they can give their clients maximum profit. When A.G. Edwards and Sons clients do well then in turn so does the brokerage firm. A.G. Edwards Inc.
is not the biggest corporations in America, but yet it is still a very large corporation and has great importance in the industry for which it participates. This paper will give an in depth explanation about how A.G. Edwards functions as a cor-poration. Along with competition from the government, banks and other brokerage firms there is also probably the biggest factor involved of interest rates. Interest rates are indi-rectly proportional to the activity in the stock market. This means that when the interest rates fall the market for securities becomes active.
This is due to the fact that people want the highest yield on there money and when interest rates are low, investing money into a bank would yield less money then it would have before at a higher interest rate. So people tend to want to put there money into something that will give them a higher yield and stocks are just that. An example of this inversely proportional relationship is always being demon-strated and was demonstrated in the past few years. At the end of 1992 to the beginning of 1993 the volume in most businesses was at record levels obtaining a pre-tax net income for the whole industry of 9.1 billion dollars setting a new record for the second year in a row (Hoovers Company & Industry Database, 1993, p. 1 (Hoover, 1993,p.1)).
This trend continued when in the beginning half of 1993 offerings (new business for the com-pany) exceeded those of 1992 (Hoover,1993, p. 2). Examples of this are as follows; more than 700 billion dollars of debt was issued in 1992 and then in the first half of 1993 an-other 440 billion dollars of debt was issued (Hoover, 1993, p. 2). More than half of this debt was due to asset-backed debt such as credit cards and other charges made to credit (Hoover, 1993, p.
2). These debts were included because the debts were more or less sold to banks and other money lending institutions who were more willing to take the risk for the high interest rate. This drop in interest rates did wonders for the brokerage firms involved and also corporations that had acquired debt over the years. The fall of interest rates was great for the brokerage firms because of the increase in business with the publics desire to invest. So the corporations used it to issue off more stock to the public to pay off their debts (Hoover, 1993, p.
2). As if interest rates didnt have enough effect on brokerage firms, there is also the heavy competition that was involved. This competition is not only from other top broker-age firms such as Merrill Lynch, Morgan Stanley, Primerica (Smith Barney Shearson), Salomon, and Goldman Sachs, but there is also competition from big banks and securities over seas. Banks have a number of ways to compete with security firms, but the most prevalent and direct is through mutual funds. Since the late 1980s banks have been ag-gressively competing with mutual fund sponsors by issuing there own mutual funds to the public (Hoover, 1993, p. 3).
Mutual funds that are issued by banks are now the fastest growing part of the mutual fund industry, with 10.6 percent of total assets and 30 percent of new sales (Hoover, 1993, p. 3). There has just recently been a large amount of compe-tition from markets overseas and this competition continues to increase. There are a few theories as to what has caused so many U.S. investors to invest in foreign markets. It is supposed that it is either individual investors who want to further their portfolio or in-vesting in foreign markets to try and avoid interest rates and changes in currency (Hoover, 1993, p. 4).
The investment in foreign markets has also been attributed to technology and the fact that up to date information can be obtained instantly from any place in the world (Hoover, 1993, p. 4). But whatever has caused it global securities have skyrocketed. Before the organization and structure of the company a brief history and explana-tion of the company will be discussed. A.G.
Edwards & Sons was founded in 1887 by Benjamin Franklin Edwards making A.G. Edwards & Son the first St. Louis brokerage to handle trades for the local banks on the New York Stock Exchange (Flagg, 1994, p. 56). Then three years later Benjamins younger brother joined the company changing the name to read A.G. Edwards & Sons (Flagg, 1994, p. 56).
In 1898 Edwards bought a seat on the NYSE and then in 1900 opened its first office in New York (Flagg, 1994, p. 56). In 1925 Benjamins son joined the team and later became a managing partner (Flagg, 1994, p. 56). One of A.G. Edwards & Sons greatest accomplishments in the past was the fact that on Black Thursday the single most largest lost was 5,000 dollars out of more than one million dollars (Flagg, 1994, p.
56). This well managed event proved that A.G. Edwards had what it took back then to make it in the stock brokerage industry. Later down the line A.G. Edwards & Sons formed a type of mother company entitled A.G. Edwards Inc. which now oversees many other businesses.
To this day the company still displays these similar types of skills and that is why the industry has continued to excel. Despite the fact that most people havent heard of A.G. Edwards Inc., it is actually quite a large company. The corporation is described as a “holding company (Compact Disclosure, 1996,p. 1 (CD, 1996, p.1)).” The corporation contains many subsidiaries which are the following: A.G.
Edwards & Sons, Inc., Ceres Investment Co., Indianapolis Historic Partners, AGE Commodity Clearing Corp., A.G. Edwards Life Insurance Co., Edwards Development Corp., A.G. Edwards Trust Co., A.G. Edwards Asset Performance Monitor, Inc., A.G.E. Properties, Inc., A.G.E. Reality Corp., A.G.E. Redevelopment Corp., Gull-Age Capital Group, Inc., AGE Investments, Inc.
(CD, 1996 , p. 12). All of these subsidiaries perform the following tasks: provide security and commodity brokerage services for individual, corporate and institutional clients; distribute mutual funds, handle corporate and municipal unit trusts, tax incentive investments, life insurance and annuities; provide investment banking services for corporate, governmental and municipal clients; and operate as a futures commission merchant (CD, 1996, p.1). As you can see A.G. Ed-wards Inc.
is indeed a big company and has tremendous assets. Since A.G. Edwards & Sons is the principle subsidiary, when discussing the functions of the corporation the func-tions of A.G. Edwards & Sons will mainly be discussed. A.G. Edwards Inc.
is the full name of the corporation and is based out of St. Louis Missouri. The primary office of the corporation is One North Jefferson Avenue, St. Louis MO, 63103-2205. The primary SIC Code is 6211 Security Brokers and Dealers. The other two SIC Codes are: 6411 Insurance Agents, Brokers, and Service; and 6719 Hold-ing Companies, nec (CD, 1996, p.
1). A.G. Edwards Inc. currently contains 11,279 em-ployees. Since A.G.
Edwards Inc. is a corporation it does contain numerous officers the following is a list of the main officers: Name Age Title Salary Edwards, Benjamin F. ,III 64 Chairman of the Board, President, Chief Executive Officer, Subsidiary Officer $1,512,627 King, Eugene J. 64 Vice President, Subsidiary Officer NA Proost, Robert L. 58 Vice President, Subsidiary Officer NA Avis, Robert 64 Vice Chairman of the board, Subsidiary Oficer $1,174,034 Dissett, Robert C.
58 Subsidiary Officer $893,849 Mesker, David W. 64 Treasure, Subsidiary Officer NA Ewdards, Mary G. 53 Treasure NA Sisler, David M. 60 Vice President NA In the subsequent paragraphs the organization of the company will be discussed. From reading over all of the sources that have been compiled for this paper it is relevant to me that A.G. Edwards Inc. is a good solid company that treats its customers well and contains employees who are on top of things.
One of the biggest problems that brokerage firms are facing is the complexity and strict rules and regulations that are now being pressed upon the firms (1996 Annual Report, 1996, p. 5 (1996 Report, 1996, p. 5)). Since this is occurring in the industry of securities it is very important for A.G. Edwards to stay on top of everything in order to keep up with the competition and stay in business.
The following is a quote from A.G. Edwards annual report: To remain flexible, offer the services investors need and deliver value for what is charged. A.G. Edwards is prepared to meet these challenges. We are confident our service-oriented philosophy, along with our ongoing efforts to provide our in-vestment brokers the latest technology and support resources, will position us well as we look toward the next century (1996 Report, 1996, …