American Express (NYSE: AXP) announced today that it will expand its online trading presence by launching a new online brokerage. The new American Express Brokerage, set to debut later this fall, will combine online investment and financial planning tools with access to financial advisors.
Ruediger Adolf, senior vice president for strategic planning and business development at American Express, says the new service “is a key part of our Internet strategy and complements a series of recent introductions, including Membership B@nking — a direct bank with attractive rates and quality service — and Blue — a new card with special features for people interested in shopping online.”
Unique Commission Structure
American Express Brokerage will feature a unique commission structure that could encourage customers with a minimum balance of $25,000 (US$) to buy and hold securities. Customers who maintain this balance will not be charged commissions when they purchase up to 3,000 shares of a stock. There will be a $14.95 commission for sell orders that are executed.
For customers with account balances of less than $25,000, both buy and sell orders are $14.95. For customers with account balances of more than $100,000, both buy and sell orders are commission-free. There will be an additional charge of three cents per share for orders of more than 3,000 shares.
Additionally, American Express Brokerage customers will be able to choose from more than 2,000 mutual funds. The service will also feature financial planning tools in areas such as retirement planning, tax planning and protection planning.
“Clients can ‘do-it-themselves’ with the help of our interactive tools and proprietary research, or they can use American Express Brokerage with the help of an experienced, professional American Express financial advisor,” said Doug Lennick, executive vice president for the advice and retail distribution group at American Express.
Customers with accounts of more than $25,000 can receive an American Express Gold Card without having to pay the $75 annual fee. Charges made on the card will be deducted from the customer’s brokerage account monthly, eliminating the need for mailing payments.
American Express first added online investing to its business in 1996 with a service called Financial Direct. Customers using that service will be automatically upgraded to the new American Express Brokerage service.
Shares of American Express gained more than three percent in early trading today after the news, climbing 4-3/16 to 141 . Some analysts are predicting that American Express will unlock shareholder value by spinning off its online operations if the new online brokerage takes off.