American Express fin. advisor good or bad start?

Discussion in 'Professional Trading' started by edollaz, Feb 11, 2005.

  1. execute2


    February 18, 2005 - from WSJ

    NEW HAMPSHIRE regulators accused American Express Co.'s financial-advisory unit of defrauding customers by giving its sales force secret incentives to sell poorly performing in-house mutual funds, rather than investments from competitors.
    American Express Financial Advisors awarded bigger bonuses for selling the proprietary funds, investigators said. E-mails collected by the state show supervisors praising advisers who sold American Express funds and chiding those who didn't. In one sales contest, American Express offered advisers
    free one-year leases on Mercedes-Benzes as prizes for promoting a new in-house fund.
    The New Hampshire Bureau of Securities Regulation said in an administrative complaint that the American Express unit violated state and federal securities laws requiring advisers to act in clients' best interests and to disclose conflicts of interest that could taint their recommendations. The agency, which investigated practices from 1999 to 2003, asked a hearing
    officer to impose penalties of up to $17.5 million, including restitution.
    "We have been cooperating with the state of New Hampshire on this matter and we will continue to work with the state to help bring this matter to a resolution," said David Kanihan, a spokesman for American Express's financial-advisory business. He declined further comment.
    The complaint, which provides an unusually detailed look at incentives offered to sell in-house funds, comes at an inopportune time for the company. Earlier this month, American Express said it planned to spin off Minneapolis-based American Express Financial Advisors, which analysts value at about $10 billion. New Hampshire regulators are attacking the integrity
    of the unit's signature product: financial plans that the company promotes as tailored to customers' needs but that regulators say were used primarily to push American Express mutual funds.
    "American Express had a pervasive sales culture that was established and managed with one thing in mind -- to push American Express products and other products that in many cases benefited American Express at the expense of its clients," Mark Connolly, the bureau's director, said in an interview.

    Other regulators also are scrutinizing the company's sales practices. Last year American Express said the staff of the National Association of Securities Dealers recommended an enforcement action against it concerning payments it receives from outside mutual-fund companies to sell their funds
    -- money that regulators also believe can taint advice. American Express also has said that the Securities and Exchange Commission is investigating its fund sales practices.
    Securities firms get commissions for selling both in-house and outside mutual funds, but they can profit more from selling in-house offerings because they receive continuing money-management fees as long as the customer stays in the fund. At American Express, which has 12,000 advisers, proprietary funds make up less than half of mutual-fund sales, the company's
    Mr. Kanihan said.
    New Hampshire regulators said investors were harmed because American Express funds had lackluster returns. Over the five years ended Jan. 31, fewer than a quarter of the company's funds beat the average investment performance of
    comparable funds, according to Chicago researcher Morningstar Inc.
    Disclosure materials given to American Express customers note that bonus programs are based in part on sales of proprietary products and "present a potential conflict of interest in choosing your products." But New Hampshire's Mr. Connolly said earlier disclosures were less detailed and generally have "evolved from nonexistent to vague legalese." Jeffrey Spill, the agency's deputy director, said that because American Express acts as a
    registered investment adviser -- not merely a broker -- securities law requires it to act in a client's best interest, in addition to disclosing conflicts.
    American Express Financial Advisors had $7 billion in sales and $700 million in net income last year. In an interview earlier this month, James Cracchiolo, who runs the advisors unit, said: "We do not pressure advisors to sell proprietary products at all."
    But New Hampshire regulators say the firm gave more emphasis to sales of proprietary funds in calculating bonuses to senior executives. In 2003, Larry Post, American Express Financial Advisors group vice president for New England, received more than $1 million in compensation, including roughly $900,000 in bonuses, some of which were tied to sales of proprietary
    products, the state said in its complaint. Mr. Post didn't return a call seeking comment.
    Five years ago, the company held a contest to encourage sales of its new AXP European Equities Fund. Advisers could get points for sending clients to seminars that pitched the fund, and the 10 who got the most could win a luxury-car lease.
    "You have the opportunity to drive a Mercedes-Benz for one year FREE . . . that's right, your own 2001 Mercedes-Benz C230 sedan," read a memo e-mailed to American Express financial advisers in 2000. "Drive your client portfolio with AXP European Equities Fund."
    In an August 2003 e-mail, a supervisor sent around a list of names and the following message: "Congrats to the following advisors for achieving 90%+ Proprietary Investment Mix (And thanks from the company -- its [sic] how we make money . . . "
    In a July 2003 e-mail cited by regulators, Robert A. Bonfiglio, a supervisor in American Express's Bedford, N.H., office, asked an unnamed financial adviser to explain why he had put his clients in non-American Express funds.
    "I noticed about half of it [sales] went to non-proprietary business," he wrote. "Can you share with me what the case(s) were? We're working hard to see if we can use American Express products to help you[r] clients." Mr. Bonfiglio didn't return a call to his office for comment.
    #21     Feb 20, 2005
  2. trade24


    the cfa makes you over qualified for what is basically a sales position - american exp. is a great firm - at the end of the day its all about relationships and doesn't matter who work for, but rather who you are - american exp is a name on the card - you're tne name behind the card - the only differance between many f the firms is basically the money the pay you while u train there and the training itself - for an overall training program check out merrill lynch - they really have the best program around - good luck
    #22     Feb 20, 2005
  3. cashonly

    cashonly Bright Trading, LLC

    If you like cold calling, this is the position for you!

    A friend of mine went with Amex to do the same thing. He took all the tests, got all his licenses, and then was ready to start. He had been layed off from Ericsson and IBM and had the idea that he wanted to organize presentations to give to groups and work that way.

    But, they wanted nothing to do with it. They demanded that if he was going to work with them, his first 6mos to a year was making cold calls from lists. Thats it, on the phone all day long doing only that.

    He dropped them like a hot potatoe!
    #23     Feb 20, 2005
  4. LaSalle


    I worked as a FA for Morgan Stanley during the bubble years.

    During your first year, unless you have wealthy friends and family, expect a gruelling regimine of: cold calling, cold calling and cold calling.

    As trainees we spent probably upwards of seven to eight hours per day making cold calls. This included Saturdays and evenings between 6PM and 8PM.

    Very much like trading, the business is a "numbers" game. For example, you make 300 cold calls per day of which 1% of the calls generate a legitimate lead. Of the 3 legitimate leads, 50% lead to an actual sales call. Of the 1.5 sales calls, 33% lead to a new account. My numbers are hypothetical, but this mentality is what they pushed on us.

    My trainee class had some pretty brilliant and accomplished people (many made the career change and became brokers during the bubble)-- they often were TERRIBLE sales people. The most successful trainee was formerly a vacuum cleaner sales guy at Sears or something.

    Watch the excellent movie Glengarry Glenross for a quality introduction into the world of cold calling and sales calls.

    And remember.. coffee is for closers.
    #24     Feb 20, 2005
  5. RXIS


    What state does your girlfriend work in?
    #25     Feb 23, 2005
  6. qtip


    She is registered in Maryland, Virginia, Texas, and D.C. Based out of Maryland.
    #26     Feb 23, 2005
  7. RXIS


    I was just wondering because $14.58 an hour doesn't sound bad at all to me for the first year.
    #27     Feb 23, 2005
  8. sonnet


    If you want to get a cfa, that is a totally different track unless you plan on making a career change in the future. "financial advising" is by and large not what it is cracked up to be.

    A better idea might be to get with a company that has a good in house managed funds dept. Like maybe fidelity or a big broker. then, as u get your cfa certifications, you can leap to another position in house.

    However trying to build a book is hard if you intend to switch careers to an analitical position in a few years. If you want to be a true financial advisor and actually work in your clients best interest and not a a salesperson.. Good luck, maybe if u started your own firm someday.
    #28     Feb 23, 2005
  9. qtip


    When you look at it from that standpoint, it doesn't seem bad. But, is there anywhere else you can make $3,500 a month or more and only work 40 hours a week? I guess that is the question.

    Of course, the potentional of income can be great.

    Also, keep in mind that American Express Financial Advisors are now on their own. Interesting to see what will happen.
    #29     Feb 23, 2005
  10. tomeradv


    hi there, I used a service called Leadsco and they did all of my cold calling for me and as a result I was able to have good quality investment leads and as an advisor I was very pleased with this service. They can be reached at
    #30     Mar 19, 2007