American Express: Where less is more

In classic American Express Financial Advisors fashion, it is unclear as to whether the financial planning unit of American Express Co. is growing or shrinking under its year-old platform system.

According to the company’s first-quarter earnings report, released last week, the adviser force has shrunk by 600 since the start of the year. AmEx says the decline reflects “reduced recruiting activity and higher termination rates.” But the current tally of about 12,000 advisers still reflects an increase of 9%. And the company states that it still expects “moderate adviser growth.”

In March, Brian Heath, the senior vice president charged with expanding the adviser force to 20,000 by 2008, said recruiting and retention is strong among veteran advisers but retention tapers off when it comes to new hires.

AmEx advisers in the field, however, say that entry-level advisers are experiencing close to 100% turnover and that the newly established franchisee advisers are essentially subsidizing the entire product sales system.

A $182 million pretax loss in junk bonds in the adviser unit played a big part in the quarter’s 18% profit drop.

Re-price line

TD Waterhouse Group Inc. is preparing to re-price its fees and commissions to get them “in line with the industry,” according to a spokeswoman. She says the increases, expected this summer, would be the first since Waterhouse began offering online trading in January 1997. Traders who complete more than 36 trades a month saw rates lowered to $9.95, from $12, but most other rates are likely to rise as the company seeks $50 million in additional revenue. If the New York discounter wants its rates to be “in line” with those of Charles Schwab Corp., it has plenty of room to raise them. The San Francisco giant charges a minimum of $29.95. A limit order at TD Waterhouse costs just $15.

Affinity for trouble

Two brokers in a New York branch of UBS PaineWebber Inc. recently quit the firm under a cloud. Following them out the door of the Flushing, Queens, office was an arbitration complaint alleging they took advantage of almost a dozen clients because of their shared ethnicity.

Christine M. Bae, the lawyer for the investors filing the complaint with NASD Regulation Inc., claims that her clients, who are Koreans, are victims of affinity fraud. According to the Securities and Exchange Commission, affinity fraud refers to investment scams that prey upon members of identifiable groups, including religious, elderly, ethnic and professional groups.

The investors’ complaint alleges that the brokers, Joon Ho Chun and James Kwak, were churning the accounts, charging excessive fees and making trades without the clients’ knowledge. In one account, Mr. Kwak racked up fees that were more than one-third the size of the account, according to the complaint.

A spokesman for PaineWebber declined to comment.

A head start

Bankers last week took their battle cry for Americans to become better money savers to the next generation.

Tuesday was the fifth annual “Teach Children to Save Day,” sponsored by the American Bankers Association Education Found-ation. School kids across the country were visited by volunteer bankers who talked about savings and money management.

Presentations included games and hands-on activities covering the concepts of saving, budgeting and how interest makes money grow.

Considering the nation’s negative savings rate, maybe those kids can teach parents a thing or two.