Nearly 1000 of American Express (AmEX) Financial Advisors’ 7100 franchisees have taken a stand against the AmEx head office.
The advisers have united in a non-profit group called the Association of Financial Planning Professionals (AFPP), which was set up a year ago as a place where disgruntled AmEx advisers can express their opinion free of corporate involvement.
Since March 2000, AmEx has given more than 11,000 advisers the choice to belong to one of three different career paths. One was that advisers stay with the financial services group as a company employee. Another path allowed advisers to become owners of their own franchises, while another alternative allowed advisers to become independent contractors affiliated with Securities America, a broker-dealer owned by AmEx.
A great majority, or more than 7100 advisers, opted for the franchise route, while the corresponding numbers of advisers opting for the first and third career platforms pales in comparison, with only 3700 remaining with the company and another 1200 becoming contractors.
But what the advisers who opted for the franchise option were not aware of, or so says the AFPP, was that head office would be charging each franchisee a monthly technology fee of US$95 in addition to the monthly association fee of US$390.
The AFPP, which has put on five part time assistants to assist with administration as well as hiring representation from a law firm, has written a letter of opposition to AmEx senior vice president Brian Heath about the technology fees.
Heath responded with a letter stating that the franchise agreement clearly allowed AmEx to charge the technology access fee.
“In providing the AEFA (American Express Financial Advisors) documents, we urged advisors to read the documents in their totality,” he wrote.
However, the AFPP says the AEFA did not give advisers enough time to read the lengthy documents outlining the terms of the franchises, and were told to sign the document or be fired.
AmEx, in return, disputes this, saying that advisers were given several weeks to read the agreements, and could have hired a lawyer to assist with it.
The AFPP plans to expand its numbers with more recruits from AmEx advisers. AFPP president S Kenneth Wilmot says that before the organisation will be in a position to effect change, it will need to be much larger. The main task at the moment is to be taken seriously by head office.
“They (AmEx) don’t want to recognise us because they don’t control us,” Wilmott says.
