Brokerage firm A.G. Edwards (NYSE:AGE) has closed out a challenging quarter, filled with good news and bad news alike. While reported revenue was a bit disappointing, earnings still came in on target.

Revenue actually declined by 2% from last year's level and by 5% sequentially. On the expense side, compensation expenses were down 3%, and non-compensation expenses dropped 5%.

Although declining revenue is seldom good news, I think that investors do have some reason to be happy with the makeup of that revenue. Though commission revenue dropped 12% and principal transaction revenue fell 26%, asset management revenue climbed 14%.

Revenue from asset management fees and services has been climbing steadily and making up an increasing percentage of the overall total. And that's no accident -- A.G. Edwards' management has certainly been targeting the growth of this business.

I believe that will prove to be a solid strategy as time goes on. Asset management is generally a more stable business than the commissions business is, and it's a bit less mercenary. Many investors will switch brokers in a heartbeat for slightly lower commissions or margin interest rates, but investors on the asset-management side tend to develop stronger relationships with the company and are less likely to leave just to save a couple of bucks.

Oddly enough, there aren't too many companies quite like A.G. Edwards left these days. True, giants like Citigroup (NYSE:C) and Morgan Stanley (NYSE:MWD) have retail businesses, but these companies, by and large, play in much bigger sandboxes.

Even amongst similarly sized companies, there are differences. Legg Mason (NYSE:LM) is far more of an asset manager than a broker, while Freidman Billings Ramsey (NYSE:FBR) and Jeffries (NYSE:JEF) are more oriented to the investment-banking side. That leaves the likes of Raymond James (NYSE:RJF) and Waddell & Reed as similar publicly traded comparables.

In any case, A.G. Edwards has some room for improvement -- particularly on the margin and return-on-equity lines -- but growing the asset-management business should help. Though the stock doesn't look like a compelling bargain today, the company is improving itself, and sheer scarcity value alone might make it interesting to a larger suitor some day.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).