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Re: Fwd: Rule Maker: American Express Changes Fees



AYE
>
> -----Original Message-----
> From: G Gainer <ggainer@yahoo.com>
> To: hpd@woodland.org <hpd@woodland.org>
> Date: Thursday, September 28, 2000 8:57 AM
> Subject: Re: Fwd: Rule Maker: American Express Changes Fees
>
>
> >I e-move (if I may) that we stop any action to
> >switch brokers, and reevaluate choices at the
> >next meeting.
> >
> >-G
> >
> >
> >--- Kathe428@aol.com wrote:
> >> Anybody else read this?  ..any thoughts on
> >> this?
> >>
> >
> >> ATTACHMENT part 2 message/rfc822
> >> To: kathe428@aol.com
> >> From: The Motley Fool <Fool@MotleyFool.com>
> >> Reply-to: The Motley Fool <otto@Fool.com>
> >> Date: Wed, 27 Sep 2000 16:52:46 -0400
> >> Subject: Rule Maker: American Express Changes
> >> Fees
> >>
> >> <HTML><PRE>
> >> <FONT COLOR="#000000" SIZE=4><B><a
> >> href="http://www.fool.com/m.asp?i=136745">The
> >> Motley Fool</a>
> >> </FONT><FONT  COLOR="#ff0000" SIZE=3>Register
> >> To Become a Fool -- </FONT><FONT
> >> COLOR="#000000" SIZE=3><a
> >> href="http://www.fool.com/m.asp?i=136746">Get
> >> Free Stuff !</a>
> >> <FONT COLOR="#000000" SIZE=4>
> >> Rule Maker: American Express Changes Fees</B>
> >>  <FONT COLOR="#000000" SIZE=3>
> >> <b>Online brokerage customers are upset about
> >> the company's new fee structure. Phil Weiss
> >> blames the management.</b>
> >> <FONT COLOR="#000000"
> >>
> >SIZE=5><B>______________________________________<FONT
> >> COLOR="#000000" SIZE=3></B>
> >>
> >> <B>Sponsored By:</B> <a
> >>
> >href="http://www.lnksrv.com/m.asp?i=136747">Scottrade</a>
> >>
> >> Trade stocks for $7 at Scottrade.com. 105+
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> >>
> >href="http://www.lnksrv.com/m.asp?i=136748">Open
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> >> <FONT COLOR="#000000"
> >>
> >SIZE=5><B>______________________________________<FONT
> >> COLOR="#000000" SIZE=3></B>
> >>
> >> By Phil Weiss
> >> Wednesday, September 27, 2000
> >>
> >> Recently, <B>American Express</B> (NYSE: AXP)
> >> <A
> >>
> >href="http://www.lnksrv.com/m.asp?i=136749">announced</A>
> >> changes to the fees charged to customers of
> >> American Express Online Brokerage. Today I'm
> >> devoting the column to my reaction to these
> >> changes as a shareholder, as well as what it
> >> says about the company's management.
> >>
> >> American Express <A
> >>
> >href="http://www.lnksrv.com/m.asp?i=136750">launched</A>
> >> its online brokerage service about a year ago,
> >> offering free trades for account holders with
> >> balances exceeding $100,000, and free "buys"
> >> for account holders with balances between
> >> $25,000 and $100,000. Trade commissions were
> >> $14.95 for sales by the latter group of account
> >> holders, as well as all trades for those with
> >> account balances less than $25,000. This fee
> >> structure positioned the company as one of the
> >> lowest-priced discount brokers in the
> >> marketplace.
> >>
> >> If you take a stroll over to our <A
> >>
> >href="http://www.fool.com/m.asp?i=136751">Discount
> >> Brokerage Center</A>, you can pull up a <A
> >>
> >href="http://www.fool.com/m.asp?i=136752">table</A>
> >> showing how American Express Brokerage compares
> >> to some other discount brokers today. Here is a
> >> summary of the primary policy changes that have
> >> been made:
> >>
> >> -If your account balance is more than $100,000,
> >> you're now allowed only 10 free trades per
> >> month.
> >> -If your account balance is between $25,000 and
> >> $100,000, you're now allowed only 3 free "buys"
> >> per month.
> >> -All trades that are not free are subject to a
> >> commission of $19.95.
> >> -All limit orders are subject to a commission
> >> of $19.95.
> >>
> >> Some of you might be wondering why I've chosen
> >> to write about this here. Is it because of the
> >> impact these changes have on the account that
> >> my investment club recently opened with
> >> American Express? No. It's not because of the
> >> impact on our Rule Maker portfolio costs,
> >> either. (The Rule Maker portfolio is also
> >> maintained by American Express.) Based on the
> >> way these portfolios are managed, the
> >> modifications won't have much impact. Both
> >> portfolios typically purchase at market price
> >> and trade infrequently. I suspect that this is
> >> the case for most investors with a long-term
> >> approach to investing.
> >>
> >> I'm writing this column because the changes
> >> leave me with concerns about American Express'
> >> management.
> >>
> >> In August I wrote a Motley Fool Research <A
> >>
> >href="http://www.fool.com/m.asp?i=136753">article</A>
> >> discussing <B>General Electric's</B> (NYSE: GE)
> >> approach towards moving its businesses to the
> >> Internet. My opinion is that GE is doing a
> >> great job converting its business from an old
> >> economy model to a new economy one. Before
> >> making the switch, GE tries to learn as much as
> >> it can about what its customers want and how
> >> its competitors could destroy its business.
> >>
> >> From what I've seen, it looks like American
> >> Express rushed to get its online brokerage open
> >> before it fully understood the related business
> >> model. You could argue that the reason for the
> >> changes is to combat the efforts of day-traders
> >> using it to cut costs.
> >>
> >> Why do I say this? A few months ago, the policy
> >> was changed to charge commissions on same-day
> >> buys and sells of the same security, a
> >> technique favored by day-traders. Many of these
> >> trades were also likely to have been limit
> >> orders, which are more expensive for a
> >> brokerage to process. Now American Express has
> >> decided to charge for <I>all</I> limit-order
> >> trades.
> >>
> >> My view is that, unlike GE, American Express
> >> failed to consider the impact day-traders would
> >> have on a business model it most likely created
> >> to court long-term buy-and-hold investors.
> >> Based on a discussion I had with the company
> >> about this issue last Friday night, these
> >> changes should also provide some additional
> >> revenue to upgrade the services it can offer to
> >> its customers. That actually sounds good, but
> >> I'm not so sure. The problem is that the switch
> >> has likely cost the company a lot of
> >> credibility with customers and shareholders.
> >>
> >> From what I can tell from my survey of the
> >> Fool's message boards, many people moved their
> >> accounts to American Express Brokerage because
> >> of the free trades. (Check out the following
> >> links for discussion board posts.)
> >>
> >> -<A
> >>
>
>href="http://www.fool.com/m.asp?i=136754">http://boards.fool.com/Message.as
> p?mid=13356807</A>
> >> -<A
> >>
>
>href="http://www.fool.com/m.asp?i=136755">http://boards.fool.com/Message.as
> p?mid=13350855</A>
> >> -<A
> >>
>
>href="http://www.fool.com/m.asp?i=136756">http://boards.fool.com/Message.as
> p?mid=13329079</A>
> >> -<A
> >>
>
>href="http://www.fool.com/m.asp?i=136757">http://boards.fool.com/Message.as
> p?mid=13336964</A>
> >> -<A
> >>
>
>href="http://www.fool.com/m.asp?i=136758">http://boards.fool.com/Message.as
> p?mid=13340117</A>
> >> -<A
> >>
>
>href="http://www.fool.com/m.asp?i=136759">http://boards.fool.com/Message.as
> p?mid=13361154</A>
> >>
> >> I realize companies are in business to make
> >> money, but I think these changes go too far.
> >> Worse, it hints American Express didn't think
> >> the issue through, or simply planned the move
> >> all along. Free limit orders were totally
> >> eliminated. In an era when most brokers have
> >> been lowering commissions, American Express
> >> <I>raised</I> them.
> >>
> >> Worst of all, I think the changes were a
> >> violation of the trust that exists between a
> >> company and its customers. It's hard not to
> >> have the perception that a "bait-and-switch"
> >> strategy was used to attract as many new
> >> customers as possible, while all along the plan
> >> was to pull the rug out from under them with
> >> changes like these once the accounts were
> >> established.
> >>
> >> When I called the company I was also told that
> >> complaints about the changes outnumbered
> >> positive reactions by about 20 to 1. This is
> >> also something that troubles me as a
> >> stockholder. The likely outcome of these
> >> changes is that, if they are not either
> >> rescinded or modified, American Express will
> >> lose existing accounts and/or attract fewer new
> >> accounts.
> >>
> >> In addition, the changes to the fee structure
> >> make American Express' position in the
> >> marketplace hard to characterize. Previously, I
> >> would have classified it as a low-cost
> >> provider. Now, it's not quite an
> >> <I>expensive</I> provider, but it's not cheap
> >> either.
> >>
> >> The bottom line is that American Express
> >> management is guilty of some missteps. By
> >> apparently failing to fully understand the
> >> nature of online trading from the get-go, it's
> >> made changes that could result in lost
> >> business. It also raises questions about the
> >> management
> >=== message truncated ===
> >
> >
> >__________________________________________________
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