American Express has been warning its financial advisers for years: If you're concentrating on transactions, you might be working for the wrong firm. So, when the firm launched its new Web-based investment service Nov. 8, offering free online trades for qualified customers and $14.95 trades for others, few advisers were shocked.
"Clients would be doing this somewhere else if they weren't doing it through American Express," says Mindy D'Alessandro, an American Express Financial Advisors (AEFA) rep based in Orlando, Fla. "I really like that the service gives us one more reason to talk about financial planning, and that's really what our focus is here."
The new online service is called American Express Brokerage (AEB). Three pricing alternatives are available to clients and nonclients alike:
1) Maintain an account balance of $100,000 and trade for free.
2) Maintain a balance of at least $25,000 and buy stocks for free, but pay $14.95 for sales.
3) Maintain an account balance of less than $25,000 and pay $14.95 for each trade.
Under all three plans, there is an additional charge of 3 cents a share for trades of more than 3,000 shares.
AEB also provides financial planning calculators and other interactive tools. For live help over the phone, the site offers "free access to tele-advice from financial consultants." Stock trades placed through a customer service representative cost $44.95.
Steve Haas, one of about 200 top producers in AEFA's platinum team, says the introduction of AEB enables him to stop sending clients to other online brokers. "Money has been leaving American Express. I can tell you that for a fact because some of it was mine," says Haas, based in Southbury, Conn.
Haas and other members of the AEFA gold and platinum teams (about half of the firm's 9,300 advisers) are allowed to charge hourly fees to clients who want advice on trades. "Some transaction-based advisers are going to have a tough time adjusting to this," Haas adds.
American Express' new service replaces an existing online trading service called Financial Direct, which it launched in 1996 amid grumbling that the firm was competing against its own advisers.--Michael Hayes
Known as a firm that focused on proprietary funds, American Express Financial Advisors (AEFA) will now offer clients access to 2,000 nonproprietary mutual funds (load and no-load) in Schwab's Mutual Fund Marketplace later this year.
"We're reaching out to all kinds of investors," says AEFA spokesperson David Kanihan. "Clearly, in the online world, no-load funds are king."
The funds will be distributed through the firm's new online discount business as well as through advisers. Before the announcement, AEFA had about 500 funds available to its reps.--Michael Hayes