The decision by American Express Co. to make a $1 billion plunge into middle America by purchasing Investors Diversified Services Inc. is a sign that the financial services industry's elaborate hunt for the upscale consumer may be running out of steam.

At a time when brokerage houses and other financial conglomerates are wooing the relatively well-to-do, the credit card giant is stepping down from its affluent perch and going after the great middle class.

American Express's acquisition is focusing renewed attention on the question of whether financial institutions can successfully cross-sell financial services--that is, market products from one of their businesses to customers of another of their operations. Cross-selling, considered pivotal to the success of financial supermarkets, has yet to be accomplished to a significant degree by American Express, Sears, Roebuck & Co. or Prudential-Bache Securities, the three companies that symbolize the new alliances that are revolutionizing financial services.

The IDS purchase is also notable because it comes as many money mavens are looking at home technology as a way to reach customers more cheaply and efficiently. IDS continues to provide the bulk of its financial planning and investment services by face-to-face, door-to-door selling.

Some observers who have studied the deal are raising questions about the synergy between the two concerns, noting that American Express has cultivated its upscale image since banks first went into the credit card business 15 years ago.

"It may be a market where American Express just doesn't belong," said analyst and Salomon Brothers vice president A. Michael Frinquelli, who recently lowered his stock rating for the company from buy to hold after the deal was announced.

"It's image is not directed there," he said. "They are moving into a huge but very competitive market. It is very unclear what kinds of products you can provide that market. Perhaps they ought to look at IDS as just a good stand-alone investment which may some day offer synergy."

American Express executives, like company Chairman James D. Robinson III, say the IDS move does not represent a change in strategy, only a logical market expansion. "We have focused on and concentrated on the affluent, active, upscale market," Robinson says. "We have the major product position in that market and we damn well intend to keep it."

For the last two years, the company has studied financial services markets and concluded that since the 35 million households that earn $25,000 to $60,000 a year contribute over 60 percent of financial services revenues, it is time to move into the middle class. "It looked like a market we could understand and one that is big enough to be very attractive for us," Robinson said.

"We do not in any way view this as a major departure, said Louis V. Gerstner Jr., chairman of the American Express executive committee. "We're saying the products and reputation we have can be brought to a band of customers that kind of sits at the bottom of, but adjacent to, our current customers, and we can leverage those relationships and products very successfully. It is an extension and enlargement of our franchise."

Robinson said IDS with its 4,556 members sales force "is far and away the biggest and most aggressive factor serving the market we had identified. What it would give us is overnight critical mass. We get into it with a large established brand name serving that market their way."

American Express hopes it can give IDS the resources to expand that network, new products to distribute and the accompanying prestige that both Amex and Shearson executives say they have brought to Shearson since Amex purchased the brokerage house in 1981 for $930 million.

For example, Robinson says, IDS might want to offer a "junior FMA"--a version of Shearson's Financial Management Account without the $20,000 minimum balance now required and without all the sophisticated features of those money fund accounts. Gerstner suggested that IDS is very interested in getting its hands on tax-advantaged products, like real estate syndications and unit trusts.

It is also possible, Gerstner said, that the IDS force might be interested in selling American Express travel packages. And only about 20 percent of IDS' 1.3 million customers currently hold American Express cards.

"For years, the brokerages have tried to sell insurance with little success," Gerstner said. "The insurance companies have tried to sell investment products with little success and IDS has been quietly selling both. It is a very unique selling organization."

Why sell door-to-door in this era of personal computers and automatic teller machines? "We have said consistently that we don't believe in terminals doing business with our customers," Gerstner said. "We do business with our customers. The personal relationship is essential to this marketplace."