Bank customers have been fleeing from investment products, but that doesn't seem to be worrying an American Express Corp. unit that markets financial planning services through banks.

American Express Financial Advisors expects to boost its roster of client banks this year from 60 to 200, according to a senior executive.

Much of the growth would come from community banks, which now make up the bulk of the clientele. Additionally, the company expects to expand its dealings with large banks.

"In the coming two to three years we'd like to blanket the U.S. with four to five major relationships at the regional banking level," said Mark Alfutch, general manager of the financial institutions group.

The Minneapolis-based company, formerly IDS Financial Services, is a leading financial planning firm. The company emphasizes plans based on a client's investment needs and risk tolerance, and uses the plans as a springboard for offering mutual funds and other investments.

Mr. Alfutch said the company's "needs-based" approach to financial planning is what banks are looking for.

"We're not into hot products; we're into making sure people reach their goals," Mr. Alfutch said.

Indeed, a recent American Banker survey showed that financial planning topped the list of nontraditional services that bank customers want from financial institutions. Nevertheless, only 10% of the 599 consumers surveyed said they had bought a financial plan at their bank.

Mr. Alfutch maintained that financial plans can help banks keep customers in investment products even during periods of market turmoil. "We keep rolling along in good or bad markets. That's something we can offer the banks."

To be sure, the financial planning firm's two-year-old push into the bank market hasn't been all smooth sailing.

A highly touted alliance with Minneapolis-based First Bank System, announced in 1993, unraveled last September. First Bank System said American Express didn't help boost sales of investment products enough to merit sharing revenues.

Mr. Alfutch characterized the relationship as "dabbling" in the regional bank market. American Express had planners in only two branches, he said.

He has higher hopes for an alliance with Shawmut National Corp., of Boston and Hartford, Conn. Under that arrangement, unveiled last March, American Express has stationed seven financial planners in the $30.6 billion-asset banking company's New Hampshire offices.

"We're going in there with every intention of this being a huge opportunity," Mr. Alfutch said.

The planned acquisition of Shawmut by Fleet Financial Group, Providence, R.I., won't hamper the alliance, he added. Mr. Alfutch said Fleet has agreed to honor Shawmut's one-year contract with American Express.

Indeed, the merger of Fleet and Shawmut could create even bigger opportunities for American Express Financial Advisors.

"American Express would get a huge lock on the New England market," said Geoff Bobroff, a mutual fund consultant based in East Greenwich, R.I.

The acquisition, expected to close in the fourth quarter, would make Fleet the largest bank in New England, with $80 billion of assets - and would potentially give American Express access to customers at 900 branches sweeping across a region with pockets of great wealth.

Mr. Alfutch added he expects to sign on another major bank "soon," but he would not reveal its name. But he emphasized that big banks aren't the financial planning company's whole focus.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.