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Wachovia adds A.G. Edwards to its portfolio

Alisa Roth May 31, 2007
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Wachovia adds A.G. Edwards to its portfolio

Alisa Roth May 31, 2007
HTML EMBED:
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KAI RYSSDAL: Today’s the last day of May, which means you ought to be getting your bank statements in the mail any day now.

Provided, of course, you haven’t gone paperless in your personal financial life.If you have, then you’re probably a banking minimalist anyway. No full-service for you, you’ll just do it all yourself. Savings and checking accounts, mutual fund investing, stock trading. The whole deal.

You’re also part of the reason why Wachovia decided today to part with more than $6.5 billion. The nation’s fourth-largest bank will be buying A.G. Edwards to become one of the biggest retail brokerages, too. From New York…Marketplace’s Alisa Roth reports.


ALISA ROTH: When Wachovia’s retail brokerage division finishes absorbing AG Edwards, it’ll hold more than a trillion dollars in client assets. That’ll make it the third-biggest retail brokerage in the country, after Merrill Lynch and Citigroup.

Punk Ziegel analyst Richard Bove says Wachovia clients will have access to a full menu of brokerage and banking services.

RICHARD BOVE: The acquisition is to get hold of customers and to then use those distribution points, i.e. the salespeople to sell a wide variety of products that go well beyond anything that AG Edwards was selling before.

Bove says full-service brokerages have lost business to do it yourselfers. Companies like Etrade and Charles Schwab let clients buy stocks and mutual funds directly. They’ve made trading securities very cheap.

But Gerard Cassidy of RBC Capital Markets says there’s a high cost to those cheap trades.

GERARD CASSIDY: The financial advice that you get from an Etrade or a Charles Schwab is very, very limited. A full-service broker-dealer, however, can give you much more in-depth financial planning advice, which many of the baby boomers will need.

He says Wachovia’s guessing by offering investment guidance, it can bring boomer clients back into the full-service fold. As more companies switch to the 401k model of pension plans, people have more choice — and need more help managing their money.

Wachovia Securities will move its headquarters from Richmond to St. Louis, hometown to AG Edwards.

In NY I’m AR for MP.

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