American Express Financial Advisors
(AEFA) will be shaking up its relationship with the 10,000 plus advisors that make up its network, the company told the MFWire.com. AEFA is a wholly owned subsidiary of financial services giant American Express
All of AEFA's advisors , who had been independent contractors, will be given the choice of three options to continue their relationship with the firm. They can become full employees with salary, benefits and commission -- a Merrill Lynch
like arrangement. They can also become franchisees with more independence, services purchased through the corporate offices, and a larger commission than directly employed advisors. Or they can become independent broker/dealers through Securities America
, which AMEX purchased in 1997, with no brand affiliation and the largest commission.
Previous to the new program, which will go into effect at the end of March, AEFA advisors became employees of the firm for one year and then were hired as independent contractors. A spokesman for AEFA said the changes are being put in place in order to grow the advisor force and address compensation and benefits concerns within the advisor community.
The firm expects to grow the current advisors from over 10,000, or 11,336 including Securities America broker/dealers, to over 20,000 in 2007-8, he said.
He added that AEFA was working on what he called the "platform strategy" for some time and informed advisors of the impending changes late last year in order to effect a seamless transition.
The new franchise platform or Platform Two is the first of its kind, according to the spokesman, and will include ownership of the franchise offices by the advisors, and official brand marketing from the corporate headquarters. Becoming a franchisee will also trigger franchise laws which, among other things, will include minimum satisfaction levels for franchisees monitored by an outside source.
A group of advisors who have chosen the Platform Two option as franchisees have already formed an association for the new order, called the Association of Financial Planning Professionals
(AFPP), in order to benefit its members by economies of scale for services including healthcare, payroll services, and educational seminars. The group has elected Kristen
, CFP, president of the new association and Stephen Wilmot
, CFP, vice-president, with board members from across the breadth of the advisor community, said Highfield. The AFPP already includes over 700 members, said Highfield, with many more being added each day.
"We've been recruiting members since January 1," said Highfield, "but talking to people since last fall. We want this to be a win- win situation for both the AFPP and American Express. Once AEFA sees what we're trying to do, and I'm not sure that they fully understand it, I think they'll be willing to work with us on a variety of issues."
Highfield said that she sees the association as a virtual one in order to take advantage of the accessibility of the Internet. Initially the association will be composed only of advisors previously associated with AEFA, but could be expanded in the future to all financial intermediaries.
The new association (AFPP) is totally common within the franchise community, the AEFA spokesman said. The AEFA is also forming its own association within the firm, in order to explore best practice issues and other issues that affect its affiliated advisors.
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