American Express returns to financial planning

The company unveiled a new tool, called My Financial Plan, that is certainly akin to the work done by financial advisers, but is stressing publicly that it is not eying an avenue back into the wealth management business.

A decade and a half after spinning off its wealth management business in a transaction that had an impact on thousands of financial advisers, American Express Co. is tiptoeing back into financial planning with a new digital tool aimed at a short list of card members.

American Express is stressing publicly that it is not getting back into the wealth management business, which has bolstered company earnings at financial service competitors like banks and broker-dealers during the Covid-19 pandemic because of the fees earned on client assets.

But the new tool, called My Financial Plan, is certainly akin to the work done by the more than 9,000 financial advisers currently working at Ameriprise Financial Inc., which the card giant spun off in in 2005 in a successful initial public offering. Shares of Ameriprise, which debuted 16 years ago at $41, on Monday afternoon traded above $266.

“It’s a little bit of ‘back to the future,’ but I’m not surprised American Express has entered financial planning because planning has become more accessible,” said Dennis Gallant, senior analyst at Aite Group. “The tools can be made for a do-it-yourself experience or some kind of hybrid. That’s different from the old American Express financial advisers and the whole structure of brokerage and compliance to support that.”

“What American Express is doing is more scalable and at a lower cost,” Gallant said. “And it’s a consistent experience for clients because it is an app.”

Wealth management involves the buying and selling of securities and making recommendations to clients, services that American Express will not be offering to clients at the moment.

“We are not entering the wealth management space with My Financial Plan,” Stephanie Schultz, head of emerging strategic partnerships, wrote in an email. “What we are doing is democratizing financial planning to those for whom it’s been previously cost-prohibitive, or who simply prefer to use a digital solution.”

American Express worked with BodesWell.io to co-develop My Financial Plan and is not saying how much it spent on the new venture.

“BodesWell.io is not a robo-adviser,” Schultz wrote. “The company does not buy or sell stocks for its users, nor does the company recommend what assets to hold. We believe the visual picture of a consumer’s financial health that My Financial Plan provides, along with the ability to plan for important life events, makes the product unique.”

Meanwhile, American Express isn’t the only major financial institution that sold off a significant retail brokerage operation years ago that is looking to build a greater presence in the broad categories of financial planning or investment advice.

Citigroup Inc., which sold retail brokerage giant Smith Barney to Morgan Stanley in 2009, appears to be making plans to reenter the wealth management business in earnest, with CEO Jane Fraser calling wealth management an “unstoppable trend” in an investor presentation in June.

Earlier this year, Citigroup combined its private banking arm with its wealth management offerings to create a new global wealth unit led by Jim O’Donnell.

“We see tremendous opportunity as we continue to build out our wealth offering,” David Poole, head of Citi U.S. Consumer Wealth, wrote in an email.

“We are providing our clients with a high-tech, high-touch experience, in which advisory and digital investing complement one another,” Poole wrote. “And as we build out our digital offerings, such as Citi Self Invest which launched in July, we are also increasing the pace at which we are hiring financial advisers.”

Poole did not give specifics about the number of financial advisers Citigroup may hire in the future.