Biggest Little Brokerage

By Wendy Cole

Broker Jerry Tachick depends on a rugged four-wheel-drive Chevy Suburban to reach the homes of many of his clients who live along the unpaved mountain roads of Cody, Wyo. (pop. 8,093). His colleague Jim Sipp of Rexburg, Idaho (pop. 12,084), often dodges feisty farm dogs as he hikes across sprawling potato fields to meet with customers. Meanwhile, Jim Bashor of Anacortes, Wash. (pop. 10,060), spends a good deal of time riding ferries off the Northwest coast to catch up with the salmon fishermen he hopes will buy stocks and bonds from him.

This adventurous trio works for Edward D. Jones, a most unusual brokerage house dedicated to the proposition that eager -- and well-heeled -- investors can be found almost anywhere among the hills and dales of America. Jones' energetic corps of 1,273 brokers, who almost never set foot in towns with more than 25,000 people, has enjoyed solid success in outposts from Spearfish, S. Dak., to Broken Bow, Neb., that such big-time competitors as Dean Witter Reynolds and Merrill Lynch have virtually ignored. Based in the St. Louis suburb of Maryland Heights, Jones ranks just 43rd among brokerage firms in total capital ($82.5 million), but no investment company is represented in more places. Jones has 1,227 offices in 37 states, covering most of the country except the Northeast. Second-ranking Dean Witter has about 660 branches.

Edward Jones, a former bond trader, founded the brokerage in St. Louis in 1922 and ran the business like any big-city firm until after World War II. In 1948, son Ted joined his father and came up with the idea to seek business in the hinterlands. "There were a whole lot of farmers, storekeepers and small- town professionals out there that brokers weren't calling on," recalls Ted Jones, 61, now the firm's senior partner. In 1955, Jones opened its first branch office over the Woolworth's in Mexico, Mo. After growing slowly at first, the company has almost exploded in recent years. A decade ago Jones had revenues of only $12 million. Last year the firm made a profit of $34 million on revenues of $240 million.

The company has prospered by catering to the conservative inclinations of its small-town clientele. "Other firms were advising people to buy and sell," says Ted Jones. "Our advice was to buy and keep." Currently, Jones brokers tend to recommend such blue-chip stocks as McDonald's and BellSouth. By putting down roots in small communities, Jones brokers can get to know their customers especially well. Says Bill Janssen, the Jones man in St. Peter, Minn.: "I can work with a customer Friday, fish with him on Saturday and sit next to him in church on Sunday." Last year the average Jones broker made $105,000, which went a long way in a place like Devils Lake, N. Dak.

Despite its down-home strategy, Jones is no bumpkin in the new world of high-tech stock trading. The company has spent more than $30 million to become computerized, and plans to lay out an additional $100 million for advanced equipment, including satellite links between headquarters and the branch offices, over the next four years. Jones has expanded cautiously into the suburbs of Chicago and Kansas City, but the firm still primarily looks for homes where the buffalo could roam. Says Jones Managing Partner John Bachmann: "We're not going to fiddle with the formula that has proved successful."

With reporting by Lee Griggs/Maryland Heights, with other bureaus