AmEx Rolls Out Online IRA Service in Effort to Grab 401K Assets
The service aims to capitalize on 401K assets in an increasingly mobile job market.
"Our goal is to make it as easy as possible to roll over 401K assets. Some people who have changed jobs just let their money sit and gather dust," said David Kanihan, spokesman for American Express Financial Advisors, Minneapolis. "When investors first enroll in a 401K plan, their employer usually fails to discuss what to do with the money when they leave the company."
The service -- free at www.americanexpress.com/trade -- allows consumers to apply for an IRA and provides them with telephone contact information for the company's 11,000 advisers to help with the rollover process.
American Express is targeting the service to middle- to upper-middle-class investors ranging from their late 20s to their mid-40s.
"People earlier in life are generally job changers and are beginning to invest for the long term," Kanihan said. "We are looking for investors with enough financial savvy to know that they should invest for retirement, but who may not have enough savvy to do it on their own."
In 2000, roughly 42.5 million U.S. households had IRAs, with an average of $85,600 in each account, according to an IRA ownership study published by the Investment Company Institute in October. Forty-six percent of all households owned traditional IRAs containing assets rolled over from an employer-sponsored retirement plan.
American Express is in the midst of a direct mail and e-mail campaign alerting customers to the new offering. American Express earlier this month sent 300,000 direct mail pieces to clients with existing brokerage accounts or relationships with financial advisers.
This group of clients is already investing and therefore is generally more receptive to these types of services, Kanihan said. The postcard mailing directs consumers to the Web site to learn more about the service.
Last week, the company also sent an e-mail alert to 300,000 clients linking them to the Web site. Later this month, the company will place inserts in 300,000 brokerage and adviser account statements, Kanihan added.
American Express is concentrating its marketing efforts from early March until tax day, April 15, because IRA activity is highest during the tax season, Kanihan said. Investors who open IRA accounts before the April 15 tax cutoff will receive tax benefits, he added.
American Express will waive account custodial fees for those who open IRAs with a minimum of $10,000 before April 15. The company is notifying its customers of this offer via the direct mail and e-mail marketing campaigns.
American Express would not disclose any marketing projections for the new service.