American Express Offers Free Online Trading to Affluent Customers
1.54 p.m. ET (1754 GMT) October 6, 1999
MINNEAPOLIS, Minn. — American Express Financial Advisors is offering free Internet stock trading to customers with account balances of $100,000 or more.
The company, which has overseen American Express Co.'s online trading business since 1997, announced the move on Tuesday. The perk is being offered as part of an upgrade of the company's online investment services.
It is believed to be the first company offering free online trading, although some businesses have reduced commissions to as little as $4.95 a trade.
Customers with at least $25,000 in their accounts will be able to buy stocks for free, but a sale will cost $14.95. Those with accounts below $25,000 will pay $14.95 to buy or sell stock.
American Express Financial Advisors has been trying to increase its client asset base of $230 billion in an effort to compete against such mutual fund giants as Fidelity and Schwab that have aggressively built online businesses.
"We think by offering this price model, what we in fact will get are people who will want to move significant assets to us," said spokesman Tom Joyce.
The company, which stressed that the upgraded services will include advice from professional financial planners, said new customers will "over time need the help of an adviser, or want to do other things besides simply trading stocks."
The free trading, to be launched this fall, is expected to be a loss leader to bring customers through the doors.
Free trading is not likely to become the norm said analyst, Tim Klein of U.S. Bancorp Piper Jaffray.
"There may be some followers on this free pitch, but I wouldn't expect it to become a wholesale trend," Klein said.
Klein said a more important trend in the brokerage industry is wrap accounts, in which clients pay a fee equal to a percentage of their assets in exchange for unlimited trading.
Online trading makes up 37 percent of all retail trades, according to Piper Jaffray.
© 1999, News America Digital Publishing, Inc. d/b/a Fox Market Wire.
All rights reserved. Fox Market Wire is a trademark of 20th Century Fox Film Corp.
© 1999 Associated Press. All rights reserved.
This material may not be published, broadcast, rewritten, or redistributed. |
