American Express Co. is betting that a veteran of its card business can turn around American Express Financial Direct, the company's struggling discount brokerage unit that offers services and products via phone, Internet, and fax.
But industry experts said Brian Kleinberg will have his hands full with the 15-month-old business.
The fact that Financial Direct was folded into American Express Financial Advisors a month ago signals that the unit has lost the faith of its parent, industry watchers say. Financial Advisors, based in Minneapolis, provides financial planning and a range of financial products.
Financial Direct, which provides brokerage for securities, mutual funds, and annuities, needs to expand its marketing to capture more customers, said Perrin H. Long Jr., an independent analyst in Darien, Conn., who follows the securities industry.
"They're really up a creek on the revenue side," said Mr. Long. "The key to longer-term growth in any discount brokerage operation is to grow yourcustomer base."
The company also must cut prices, said Julio Gomez, president of Boston- based Gomez Advisors, a consulting business that specializes in Internet financial services.
"The problem is they can't come in and steal customers (from big rivals like Charles Schwab & Co. and Fidelity Investments) without a better price," he said.
Mr. Long questioned Amex's choice of Mr. Kleinberg to lead the business.
"Why not go out and hire a third-tier executive from Schwab, Quick & Reilly, or Fidelity instead of transferring someone on the card side?" he asked.
But American Express spokeswoman Susan D. Miller pointed to Mr. Kleinberg's proven success in building the card business, as well as his leadership skills. Mr. Kleinberg, with American Express since 1980, led a successful repositioning of the Optima Card in 1992 and 1993.
And Ms. Miller said Amex remains confident in Financial Direct. "We are very committed to this business."
She declined to say how many customers Financial Direct has or to give sales figures. Mr. Kleinberg took over a month after American Express announced that William Heron Jr., the executive hired to launch Financial Direct, was leaving the company.
