With the Wachovia purchase of A.G. Edwards (for $6.8 billion) in the fourth quarter, it’s not just A.G. Edwards reps (some of whom fear that the AGE corporate culture will change) who are worried. So are acquired firm’s branch managers. And for good reason. They have a tough job to do: retain the best of the A.G. Edwards reps even as other firms work to lure them away.

The combined brokerage unit, which will operate as Wachovia Securities and be headquartered in St Louis, joins Merrill and Smith Barney as the largest in the business. The new firm will have 3,300 branches nationwide, more than $1.1 trillion in client assets and nearly 15,000 financial advisors. Full integration is expected by early 2009.

Wachovia and A.G. Edwards brass tout the deal’s cultural synergy. Wachovia itself is a Frankenstein of mergers of smaller b/ds and so has retained a regional culture, they say. Some reps agree. As a result of all of these mergers, says one rep, “[Wachovia] doesn't feel like a wirehouse to a financial advisor."

But what will happen to BOMs once Jim Hayes, a new hire from Merrill who will run the branch system, begins to roll up his sleeves and get to work? An anonymous industry insider believes that Wachovia BOM’s, at least, needn’t fear for their jobs. “They have met a whole host of criteria to become and remain managers,” he says. “And, they competed effectively with Prudential’s managers in the last merger. I don’t think A.G. Edwards managers are even in the same ballpark. And the people at Wachovia know it.”

The burden of “proof of excellence” will be on the A.G. Edwards mangers, he says. “A.G. Edwards offices are on the smaller side, and many of their managers produce,” adds a Wachovia BOM from New York. “How are they going to compensate them?”

It’s a question many at both firms are pondering. Ultimately, the future of A.G. Edward’s BOMs will depend on their ability to retain the brokers in their offices, says Rick Peterson, president of Rick Peterson & Associates, a Houston-based industry recruiting firm. And that might not be an easy trick to pull off: Other firms are going to be offering some generous packages to A.G. Edwards reps with $400,000 or more in annual production, he says.

“Despite the fact that the Wachovia broker retention deal is probably the strongest ever offered in a takeover situation, deals on the Street have doubled” since last year, when UBS bought two brokerages (Piper and McDonald Investments), Peterson says. “Unless they’re willing to double their upfront offer, I think Wachovia may lose a lot of A.G. Edwards people. Plus, they’re asking these people to give up their company name, fill out all new forms, possibly change physical locations, branch managers, the list goes on. It’s pretty traumatic stuff.” (Granted, recruiters have an incentive to predict mass exodus, since the more reps decide to switch firms, the more business recruiters get.)

One A.G. Edwards rep in Mesa, Arizona says it’s the unknowns that fan her fears. “We don’t really know what’s going to happen. When I joined this firm four years ago, I didn’t sign on at a bank. It’s very frightening.” The same is true for many branch office managers. “We and our clients have still not gotten much concrete information,” says an A.G. Edwards branch manager in Fairfield, N.J. “We feel we’ve gotten a lot of rhetoric from lawyers and PR people—and really not a whole lot of facts.”

It doesn’t help matters that some A.G. Edwards folks feel betrayed by Bagby. “It was just last fall that he said this firm was not for sale,” says a rep in the Midwest. “And, nothing in our internal memos is being said about this being the best thing for our clients. That should be at the forefront of a deal like this.”

Not everyone at Wachovia is thrilled by the move, either. “This is he second time this has happened in a few years,” says the Midwestern BOM, referring to his firm’s merger with Prudential Financial in June 2003. “Wachovia stock hasn’t risen in three years, which is where most of our options lie. And, our retention package is deferred five to eight years from now. We expect to wind up with more work, and we don’t know if we’ll ultimately keep our jobs.”

But there are optimists in the mix. One Edwards rep in St. Louis thinks the deal is for the best. “We’re stuck with Bagby either way. At least this merger will give us more and better business options.”

And a Wachovia BOM in New York says Wachovia’s history of acquisitions will give it a leg up in this latest deal. “Wachovia has been doing this for a while now—adding on companies. We’ve been through this before, so I’m taking a wait-and-see approach. And, I don’t feel I’m in competition with A.G. Edwards managers.”