Laredo's A.G. Edwards firm: three decades of sound investment service
despite peso devaluations & market volatility

By María Eugenia Guerra

Over three decades, the Laredo offices of A.G. Edwards have been at the center of the city's financial expansion. When downtown was the heart of the city, the company's offices were on the ground floor of the historic Hamilton Hotel.
Outgrowing its downtown location and following the northward trajectory of Laredo's growth, the firm moved to the corner of San Bernardo and Mann Road in 1991, initially occupying 1,000 square feet at that location and subsequently expanding to 2,500 square feet in 1997.
The company's most recent move to Springfield and Village Boulevard in Regency Square in June of this year has placed the firm once again at the epicenter of Laredo's northward expansion.
Branch manager and vice-president of investments Oscar Lopez, who has been with the firm since July 1984, provided a tour of the spacious new location and a narrative for the growth of the local branch of A.G. Edwards. Including himself, the company offers the services of six brokers who hold a Series 7 General Securities License. The other brokers are Michael Portman, Jesus Gutierrez, Jake Spruiell, Lydia Sanchez, and Raul Martinez. Gutierrez, Portman, and Lopez have over 55 years experience in the sale of securities. They, along with the other brokers at A.G. Edwards, are licensed to sell all insurance products.
In addition to the six brokers in the firm, there are five other employees, including wire operator and cashier Diana Mireles, financial associate Norma Sanchez, financial associate Brandon Mockus, summer intern Javier Molina, and physical plant manager Eugenio Torres.
A.G. Edwards operates over 700 wholly owned offices throughout the United States and has been in business since 1887 as, Lopez said, "a conservatively run, full-service financial services company."
Laredoans comprise about 80 percent of the local A.G. Edwards customer base, Lopez said, adding that the remaining 20 percent are non-Laredoans, including Mexican nationals. He typifies local customers as business owners, health and legal professionals, educators, retirees, landowners, and ranchers with an average age of about 50. The Mexican client base, Lopez said, "is comprised primarily of business owners who already have money in the United States. In general, their goal is to protect their money against devaluations and to construct a diversified investment portfolio."
Lopez, a 1983 graduate of the University of Texas with a BA in economics, said that one of the goals of the firm is to help its clients become better investors by helping them to set financial goals and helping them build a diversified investment portfolio.
"Nowhere in our corporate mission statement do we talk about profit margins for ourselves. We are financial consultants, not stockbrokers. We work by the Golden Rule, and that's a standard. What has changed over the years, however, is the investment needs and goals of our clients," Lopez said.
"Prior to the 90s, our business was more transaction-oriented, motivated by a buy and sell mentality," he continued. "Nowadays we have extensive training and education that allows us to answer a the big life questions like: How much will it cost to send my child to college, how much do I have to save? If I die now, what are the estate taxes going to be for my heirs? Do I have enough life insurance? Have I built up enough retirement savings? Will I outlive my retirement income?" Lopez explained. "Among the products we offer to address individual situations are life insurance, annuities, the 529 College Savings Plan, as well as stocks, bonds, mutual funds, long term care insurance, and 401K and 403B plans. We also offer the services of trusteeship for estates and trusts," he said.
"We have the technology to know what the market is doing at that very moment and the ability to track a stock for the last 60 days or the last 15 years. The work station of every broker in this office is hooked up with the St. Louis home office by satellite and a T-1 line," Lopez said, adding, "The screen of my work station tells me everything. In addition to market information, I get a production run of all transactions made in this office." Lopez raised the volume of a squawk box perched on the edge of a credenza behind his massive mesquite desk. An A.G. Edwards investment specialist in St. Louis was answering the called-in question of an affiliate. "With interest rates at a 41-year low and with a stock market in pendulum swing mode, this is a very important tool, as is the real-time information from A.G. Edwards on our computer screens," he said.
Lopez said that newly hired brokers immediately begin to study for the Series 7 broker's exam while going through a local orientation and training. "They then spend a week in St. Louis for further coursework and then return to the branch office for five weeks before returning to St. Louis again for two more weeks of training by the company. Before they take the broker's exam, they have undergone a good amount of training. They complete their training by being on the floor and getting experience," Lopez said, adding that new brokers begin by "making cold calls, warm calls, prospecting, and holding investment seminars."
"We all develop our book of clients, and some of us have clients who have come to us by referrals from other A.G. Edwards customers," Lopez said, adding that the firm uses marketing, advertising, and soliciting techniques to court new customers.
"I believe there is more money to be invested in equities today there was 20 years ago, but at this moment some of that money is on the sidelines for all the reasons we read in the headlines -- the volatility and uncertainty of the market, 9-1-1, sabre rattling with Iraq, and the corporate accountability scandals. Much of that money available for investment, however, has gone into the market by way of equity mutual funds. Because interest rates are at a 41-year low, people are looking at the market," Lopez said. Despite the stock market's volatility, he was optimistic about the economy in general. "The market works like a pendulum. Market prices appreciate like a pendulum. You'll see a swing the other way in a bear market. The question is where are we today in the swing of the pendulum? The crash of 1987 was short lived, but it was a violent drop. In October of 1987, the market dropped 23 percent in a single day. A year later we had recovered. This volatile period is like torture. It's a long bear market in which bit by bit you are getting pounded, but history tells you the market will correct itself and that long-term equity investors will be rewarded," he continued.
"There is some unease in the market, and it is necessary. The market is shaking all the short-termers out, the ones who aren't committed to the long-term benefits of equity investing. Those who can't take the market's volatility cash out. It's Economics 101. There are more sellers than buyers, and the sellers are in control. The sellers are saying we have to get out," Lopez continued.
"Things will get so overdone that it will be compelling for buyers to get back into the market at some point. At some point stocks will be so inexpensive, and there will be plenty of buyers," Lopez said, adding, "Accounting errors or misstatements of income withstanding, these companies are going to stay in business."
According to Lopez, "Experience tells us that equity investors have been winners in the long run. In the short run, you can be a loser and be hurt severely if you have just put money in the market. The committed long termers will tell you it's a good ride, and that it has been rewarding in spite of the last two years. It comes down to a choice. Would you rather stomach the volatility at an opportunity to get a10 percent return or have the security of no volatility and a return of only five percent or less?
"At A.G. Edwards, we try to get a good look at the whole picture of the individual investor's assets. Do you have any debt? What is your cash flow like? What other investments do you have? Are you finished educating your children? Do you have a child who will need to be cared for in a trust? We will likely recommend investment products complementary to the investments the client already has, products with growth possibilities, products that will see to their long term needs," Lopez said.

MICHAEL PORTMAN
"I came to Laredo just after I graduated from SMU in 1970," said broker Michael Portman, who establisheda branch of the regional brokerage firm of Lentz Newton & Co. on the ground floor of the Hamilton Hotel. "Research told me that Laredo was the largest city in Texas without a brokerage firm and that there were 200 people in Laredo with incomes over $200,000. A point of comparison at that time would be that Dallas had one broker for every 400 households with incomes of over $20,000. Though I saw the economic opportunity, it was a step off the edge of the world as I had known it," Portman continued, adding, "I became general partner in the firm, but after indications in late 1973 that all was not well with Lentz-Newton, I left my partnership interest on the table along with my letter of resignation," Portman said.
"Just after that, I interviewed with Presley Edwards of A.G. Edwards. These two things resonated about what Mr. Edwards told me -- you raise capital when you don't need it, and you can't have too much capital. It was of interest to me that A.G. Edwards had the best back office accounting system that I knew of and that the company didn't have a profit center outside of the branch office. The only client was the client. At A.G. Edwards, brokers were not, and are not, clients. There was not, and is not now, a conflict of interest between the firm and the client. There was no interpositioning, no markup and no house brand for mutual funds. The best buy for the client was the best buy," said Portman, who holds a bachelor of business administration from SMU.
"We opened the A.G. Edwards office in the same location in the Hamilton Hotel in 1974, giving Laredoans a locally operated venue for investment products not available at banks," Portman said.
Portman reflected on the 30 years of investment experience in Laredo. "Laredoans are more likely to be investors than traders. They generally call me when the market is down to buy. It's been as much an education for me as for the investors," he said, adding, "The level of interest in investments was very low 30 years ago, but it's higher now, which could be testimony to a public more savvy about investments or perhaps to my improved skills. It's been fun. I look forward to many more years," he said.
"I've just written up a 529 College Plan, which represents for this particular family the fifth generation that has done business with A.G. Edwards. The relationship began with my client, this child's great-grandfather," Portman said.

JESUS GUTIERREZ
"I have two major responsibilities as a broker," said Jesus Gutierrez, a 10-year veteran with Laredo's A.G. Edwards office. "One is to advise my customers about their financial affairs by helping them to identify their financial goals. My other responsibility is to come up with a sound plan for how to maximize these goals," he said. "What I have liked so much about this position is that I have had the opportunity to apply different areas of university knowledge, A.G. Edwards training, and accumulated real life experiences to what I do as a broker," said Gutierrez, who graduated as an attorney from Universidad Autonoma de Nuevo Leon in 1971 and then went on to complete a master's in Latin American Studies from the University of Texas at Austin in 1979 as well as a UT doctoral program in economics in 1985.
Gutierrez' doctoral studies culminated in a dissertation entitled "The Mexican Fiscal and Monetary Policies and Its Repercussions on International Capital Outflow." He practiced criminal law and banking law in Mexico City for seven years prior to completing his master's at UT.

JAKE SPRUIELL
"I have been with A.G. Edwards for four years now," said broker Jake Spruiell. "I firmly believe in our corporate philosophy of providing trusted advice and exceptional service. I feel that our level of personal service is what differentiates us from other firms. That, and that we take pride in the fact that our clients aren't just a social security number or an account number. They won't get routed to a call center in some other state and speak to someone whom they don't know. We're in our clients' back yard, and they like the fact that they can drop in and we can meet face to face. From a simple investment to a comprehensive estate plan, we're right by their side," said Spruiell who holds a bachelor's degree and an MBA. "Although at times this is a very demanding profession, the psychological rewards from this line of work are quite fulfilling. I enjoy helping clients by analyzing their current situations and helping them devise strategies to help them meet their life goals. I help young parents, people my age, who want to save for college, middle-aged people who want to plan for retirement, and retirees who want a greater income stream or want to transfer their wealth," Spruiell said of the diversity of his client base.
"The company offers an extensive array of products and services which enable me to facilitate my clients needs. We aren't limited to offering stocks, bonds, and mutual funds. We can address everyone's needs: from the most conservative individual to the most aggressive investor," he continued.
"We provide many financial instruments which the general public often doesn't associate with us. For example, FDIC insured certificates of deposit (CDs). Oftentimes, our rates are more competitive than local lending institutions. Looking for an annuity -- fixed or variable? Do you have adequate life insurance coverage? Are you buying a new house and do you need mortgage financing? Are you going to deplete your retirement nest egg or are you going to invest in long-term care insurance? We can help provide answers to all these questions and raise others that you may not have considered," Spruiell said, adding, "We welcome anyone who already has a financial consultant. Meet with us for a second opinion. I'm confident you'll join our strong and growing nationwide family of 2.7 million clients."

LYDIA SANCHEZ
Lydia R. Sanchez, a graduate of Texas A&M International University and a three-year veteran with A.G. Edwards, said she finds fulfillment in her job as a broker because it gives her the opportunity to help her clients achieve some of their goals for the future.
"I like the fact that we offer conservative products such as certificates of deposit and fixed annuities, products that let the client know you can make gains without being in the stock market," Sanchez said.

RAUL MARTINEZ, JR.
Raul Martinez, Jr., came to A.G. Edwards a little less than a year ago after a three-year sales stint with Morgan Stanley in San Antonio, where he received the company's Sales Excellence Award in 1999. He is a 1993 graduate of St. Augustine High School and a 1997 graduate in finance from Texas Christian University.
"I work with people who are serious about investing for their retirement or over the long term and are not overly affected by daily or weekly market events. Once I put into effect my clients' investment plans, I keep in touch with them quarterly to review their progress," Martinez said.

Lopez said the trust of his clients has been a source of strength in his 18 years in business. "It makes me surefooted and it makes me look for opportunities for them. There's a lot of bad advice out there, and there are pitfalls if you go at investing alone. The late 90s conditioned us for quick, profitable market returns , but that is not today's market," he said, adding, "I have faith in the market because I have 100 years of history backing me up. Equities investments have survived world wars, assassinations, political unrest, hurricanes and tornadoes, and 9-1-1."
Lopez invites clients, friends, and prospective investors to the ribbon cutting and grand opening of the new A.G. Edwards offices on Wednesday, September 4, at 10 a.m.