Tracking Clients, Part I

Wouldn't you like to peek over your client's shoulder and watch how he manages his finances and investments online? Now you can. In April, Registered Representative conducted a national telephone survey of 200 clients to see what they are up to on the Internet. Turns out they are quite busy surfing the Web for investment ideas, tapping out e-mails to their reps and writing virtual checks to pay bills

Wouldn't you like to peek over your client's shoulder and watch how he manages his finances and investments online? Now you can.

In April, Registered Representative conducted a national telephone survey of 200 clients to see what they are up to on the Internet.

Turns out they are quite busy surfing the Web for investment ideas, tapping out e-mails to their reps and writing virtual checks to pay bills among other things. Each week, the median amount of time a client spends on financial activities is 1 hour. The mean is 1.6 hours.

There's a sizable opportunity for reps to get involved, too. More than a third (37%) of respondents say they have never talked to their broker or planner about their online financial activities. And two in three respondents say they would like some help and guidance from their adviser related to the Internet. Meanwhile, only about half are getting any assistance now.

Desire for help varies according to age and portfolio size, the survey reveals. Surprisingly, younger investors want help more often than older folks. About 73% of respondents age 40 to 49 would like help, compared with only 45% of those age 60 or older. People with smaller portfolios are more likely to want help, at 72%, compared with 60% of those with portfolios of $100,000 or more.

Monitoring Client Behavior

The most popular client activities online are reading general financial news, doing research about investments, accessing account information, receiving investment newsletters and paying bills.

Making a transaction is far less popular, with only 27% saying they have bought or sold an investment. And despite some brokers' fears, this group of clients is not taking their business elsewhere. Only 11% say they have bought their adviser's idea online.

By comparing current activity to future activity, the research reveals where clients are headed. Particularly notable is clients' interest in using technology to work with their advisers. The biggest jump (21%) comes in people wanting to look at their account online while talking to their broker. Another 17% increase is among people who want to e-mail their rep. Paying bills online and using an account aggregator are also popular future activities.

Interestingly, using online calculators is not nearly as popular as other activities. Calculators for retirement planning, mortgage analysis and taxes have each been used by only about one-third of respondents. Almost 40% of respondents have never used a calculator, and almost the same number (35%) say they don't plan to in the future.

Watching the Clock

Just more than half of the respondents spend 1 hour a week doing financial-oriented tasks online. Another quarter spends between 1 and 2 hours and 13% spend between 2 and 4 hours. The smallest group (12%) spends 4 hours or more.

Differences in the time commitment emerge when comparing groups of various ages, incomes and portfolio sizes. Generally speaking, folks age 60-plus spend slightly less time each week online than younger groups. Those with smaller household incomes spend slightly more time than those earning $100,000 or more. And people with larger portfolios of $100,000 or more spend more time with their finances online than those with smaller accounts.

Rating the Firm

The survey gauges clients' impressions of their primary investment institution's online technology. It asks questions related to value and ease of use. And the feeling seems to be that the sites are mediocre.

Respondents give firm sites' value a slightly better than neutral assessment. On a scale of 1 to 5 with 5 being extremely valuable and 1 being not at all valuable, the mean score was 3.41.

In particular, 43% give firms a 4 or 5, 34% give a 3 and 14% give the lowest scores. Another 9% say they don't know.

Younger age groups rate firm sites' value more highly than older folks, as do those with smaller household incomes.

On the issue of ease of use, firm sites earn a mean score of 3.53 on a scale of 1 to 5, with 5 being easy to use and 1 being overly complicated. Overall, 47% give a 4 or 5, 33% give a 3 and 10% give the lowest scores. And 10% say they don't know.

Ease of use ratings vary according to age, income and portfolio size. Again, the under-40 crowd has the most positive assessment, compared with those 60-plus. Those with larger incomes and larger portfolios also find firm sites more accessible.

Client Online Activities, Online Intentions

Have done

Likely to do

Change

Read general financial news

70%

67%

-3%

Research or read about stocks, bonds or mutual funds

72%

65%

-7%

Buy or sell a stock, bond or fund

27%

41%

+14%

Access investment account information

58%

64%

+6%

Look at account information online while talking to your broker or planner on the phone

19%

40%

+21%

Communicate with your broker or planner via e-mail

28%

45%

+17%

Buy your broker's or planner's investment idea online

11%

16%

+5%

Search for a broker or planner online

8%

11%

+3%

Use a service that brings together different accounts on one Web page

24%

37%

+13%

Participate in a financial-oriented chat forum

8%

14%

+6%

Read or receive an investment newsletter online

47%

55%

+8%

Pay bills online

30%

48%

+18%

None of these

15%

14%

-1%

More ... Page 2

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