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The major firms are rolling out a long list of automated functions that seem promising for reps and clients alike. Coming up are:* Better online account statements that incorporate either delayed or real-time quotes;* Software tools that allow brokers to create customized newsletters or home pages, or to collaborate with their clients online;* Client e-mail alerts;* Downloads of documents, such as

The major firms are rolling out a long list of automated functions that seem promising for reps and clients alike. Coming up are:

* Better online account statements that incorporate either delayed or real-time quotes;

* Software tools that allow brokers to create customized newsletters or home pages, or to collaborate with their clients online;

* Client e-mail alerts;

* Downloads of documents, such as mutual fund or IPO prospectuses, and routine forms, such as a change of address or power of attorney; and

* More research online.

Online trading is last year's news. This year, the broker-client connection is top priority. Upgrades that make information exchange easier are almost ready. Finally, firms are finding ways to use the Internet to their reps' advantage.

PaineWebber's Marten Hoekstra, the firm's vice president and director of marketing for its private client group, predicts that "communication and collaboration tools will become much more powerful" in the year 2000. He says "mirror screen" technology that enables a broker to push a particular Web page through to the client's browser so both can view anddiscuss the same information will be fairly common in the industry by the fourth quarter.

Both Hoekstra and Murali Balasubramanian, formerly Prudential Securities' first vice president and manager of strategic client initiatives, cite the technology created by WebLine Communications of Burlington, Mass., as the coming thing. Balasubramanian, who joined Goldman Sachs this past month, suggests that brokers take a look at the site for catalog retailer Lands' End, which is already using the WebLine program (, go to Lands' End Live section).

If a customer has two phone lines, a service rep will connect with both the voice line and the customer's Web browser so the two can talk over the phone while the service rep sends pages to the customer's browser. For customers who have just one phone line, communication is done via text-based chat.

Hoekstra also sees online collaboration going a step further, to the point where brokers will be able to direct their clients to third-party pages of interest through electronic "Post-it" notes. When a client logs on, he'll see on his home page the note from his broker attached to an article or Web page that might be of interest.

Like the idea of reaching clients wherever they are? That's coming, too. The entire Prudential organization (including brokerage, insurance and real estate) has announced that it will provide online services over the Palm Pilot 7.0, a wireless handheld computer. The rollout is expected this year.

"The future is wireless," Balasubramanian says. "People are using [wireless] phones like nobody's business."

Morgan Stanley Dean Witter already has Palm Pilot access through its TradeRunner service, though for the moment it's limited to clients who use MSDW Online, says Sandy Motusesky, the firm's first vice president and manager of interactive marketing. But Palm Pilot access will be made available to other clients as the integration of its discount brokerage unit proceeds, she says.

The point of these initiatives is quite simple: To give more clients an incentive to go online--not necessarily to trade, but to make use of a firm's other services. The thinking is that client satisfaction and retention will improve, while brokers and their assistants are relieved of a lot of time-consuming chores.

"There's no real revenue associated with getting clients online," says Andrew Williams, Merrill Lynch's first vice president in its client solutions group. But Merrill did an internal study a year ago and found that "clients who have online access do more business with us, have more assets with us and are 50 percent less likely to leave," he says.

Neat Stuff Coming Soon Merrill Lynch's fits and starts with online trading and its launch of Merrill Lynch Direct dominated the news this past year. Forgotten were the firm's upgrade of its Trusted Global Advisor (TGA) broker workstation to a Web-based platform, and the simultaneous upgrade of Merrill Lynch OnLine (MLOL), the Internet service for full-service customers. Merrill has now taken the portfolio management and analysis tools that were developed for TGA and transported them to users of MLOL. By upgrading and blending TGA and MLOL functions, brokers and clients can collaborate more closely, Williams says.

"We've taken a number of the account management screens that we were providing to financial consultants and provided almost the same screens to clients," says Todd Weidman, product manager for MLOL. The only real difference is that the client side includes an educational component, with links that explain basic terms like asset allocation.

So, for example, if a Merrill client has five accounts and each has 100 shares of IBM, those can be aggregated into one 500-share lot. With a click of the mouse, the client can see the cost basis and the unrealized gain or loss for the entire 500-share position.

The new version of MLOL also gives clients the same morning call notes and special intraday bulletins that their brokers get, Weidman says. In the first quarter of 2000, Merrill will be adding e-mail alerts that notify clients if a stock is up or down a certain percentage, along with more research.

Also with the new version, Merrill is for the first time allowing downloads into Quicken (matching Salomon Smith Barney, which has had Quicken since 1995). Merrill clients will be able to download mutual fund prospectuses and use new charting and screening tools.

In October, PaineWebber introduced a new "Managed Accounts Online Center" as part of its EDGE service. That, too, allows affluent investors (defined as having 500,000 dollars or more in assets) to monitor performance of multiple managed accounts across various periods, and review asset allocations and reports of individual money managers.

PaineWebber says it will institute early this year similar online centers for its Vantage clients, those with more than 2 million dollars in assets, and its Best Years clients, participants in an affinity program for people over age 60 with more than 500,000 dollars in assets.

Salomon Smith Barney is also customizing its services in a number of ways. "We're pretty much reworking the whole site so it's very personalized," says Steve Clifford, senior vice president and director of interactive marketing and services.

The first step toward greater personalization was taken this past summer. SSB created the mechanism that allows clients to view all household accounts as a group. Accounts can be viewed together,but the household can also have subusers who log on just to see their own accounts, Clifford says. (Merrill, as of Dec. 1, is also allowing clients to see all of their accounts as a group, and Prudential says its clients can do that as well.)

Clients want research, too, but risk being inundated with it. So in early September, SSB announced it would be using technology developed by the ReachCast Corp. of Pleasanton, Calif., so that reps and their clients can search effectively for research on the firm's site. ReachCast will produce short summaries, and then the client or the broker can get more information. That's scheduled for a rollout early this year.

SSB is also planning on using personalization software so clients will be able to select what they want to see on their home pages--for instance, their top 10 positions. Clifford says this service is coming early this year as well.

Two broker newsletters are going electronic this quarter, Clifford adds. With the printed paper versions, a rep had to order at least 100 copies. With the electronic version, a broker "will be able to create a customized newsletter on the fly" in any quantity with little lead-time, he says. Brokers will be able to search the firm's online inventory of available articles.

When it comes to mutual funds, SSB beat Merrill to the punch. It uploaded an entire library of mutual fund prospectuses and charts to its client site in late September.

A.G. Edwards is starting a rollout of its new, Pentium III-based "ClientOne" workstations next month, and will be completed in six months, says Mary Atkin, corporate vice president and director of information technology. Tied to that rollout are a number of enhancements for the firm's brokers, including Internet access and e-mail for all of its branches. (Right now, there's access in some branches, but it's limited.) Reps will also get a "totally new navigation system that will be much more user-friendly," she says.

And they'll get their own personalized Web pages--a unique offering in the full-service world. Once the broker home pages are up and running, "when clients boot up, they'll be presented with their FC's home page," Atkin says. "We're keeping the FC front and center in our Web presence."

On the client side, the firm's AGe-connect online client service will be expanded to offer more market data, with real-time quotes and interactive charting; more research, including third-party research; online portfolio updates based on intraday delayed quotes versus a one-time update based on the previous day's close; and downloads into Quicken and Microsoft Money.

Later in the year, the firm will add collaborative tools such as online funds transfer and bill payment, Atkin says. Edwards also expects to have a fee-based account that includes online trading in the first half of this year.

Loose Ends to Be Tied Meanwhile, major initiatives begun in 1999 won't be forgotten. In the year ahead, all of the firms that have instituted online trading will be expanding online product offerings. Clifford says SSB will be adding mutual funds, options and some fixed income. Merrill is talking of adding options. Prudential will be instituting online options trading for its Advisor and PruTrade accounts before summer, and may add mutual funds later this year.

Extended-hours trading is "on the docket" for 2001 at Merrill, Williams says. SSB, which already has it off-line, is going to make it available over its Web site, Clifford says.

Meanwhile, following on ichoice and MSDW Online, MSDW is in the process of designing pilot offices that will have kiosks and customer service reps in a storefront environment with "lots of glass and visibility from the outside," Motusesky says. The pilot includes 15 offices around the country. "We will see what kind of effect it has on the offices' productivity, profitability and customer reaction, and then determine if we do more," she says.

On Dec. 6, MSDW became the fourth top-tier firm to launch a free research trial through the Multex service for individual investors, joining Merrill, SSB and Prudential. And MSDW has become the third firm to initiate a test of the Vignette software as a tool for broker home pages, joining Merrill and PaineWebber.

At press time, Merrill was planning a January launch of an online IPO center (available to all of its clients) with some sort of lottery distribution system. Prudential, which put a list of upcoming IPOs and downloadable prospectuses online this past August, will be moving to the next phase--accepting indications of client interest online--probably in the first half of this year, Balasubramanian says.

MSDW, which started posting IPO information to its Web site this past February, is "knee-deep" in trying to determine how the online allocation procedure will work, Motusesky says.

Merrill is also automating a lot of the clerical work that goes into servicing an account by allowing clients to download forms such as a power of attorney or an order for more checks. The forms are already online, Williams says. This year, Merrill will be instituting a second phase, in which it will fill in some information for clients when possible.

In the third and final phase, at the end of this year and into 2001, Merrill is hoping to institute the somewhat futuristic technology of digital signatures, Williams says. That's dependent on legislative and regulatory changes at both the federal and state level, but Weidman expects that by this time next year, digital signatures will be permissible in some states.

And, of course, by this time next year, multimedia will be in wider use as bandwidth improves. "Little by little, multimedia will be creeping its way into the full-service environment," Balasubramanian says.

The full-service firms have all had their online client services for several years now. But the year 2000 may be the year when those services are used not just by a small percentage of early adopters, but by a much larger share of firms' clients.

Generally speaking, less than 10 percent of clients are using the Web to access their accounts.

Full-service firms are working on the same basic problem: For all of their efforts, the percentage of the client population that's signed up for online access is still surprisingly small.

PaineWebber has two million households that are eligible for its online EDGE service, but only 149,000 or 7 percent have enrolled to date, according to a spokesperson. Salomon Smith Barney has more than 700,000 online accounts out of six million, representing about 8.5 percent of its client base.

Morgan Stanley Dean Witter and Prudential Securities don't release comparable numbers. However, Prudential has seen a five-fold increase in daily enrollments to its account access feature since this past summer, when the firm's home page was redesigned to make signing up easier.

At MSDW, online client enrollments have jumped from about 300 a day in October to about 1,300 a day.

Of the top six firms, Merrill Lynch has been on the Web the longest, since June 1, 1996. Yet as of December, out of the 3.7 million households that were eligible for Merrill Lynch OnLine, only 650,000, or a little more than 17 percent, were registered for online access. "We're growing it," says Andrew Williams, Merrill Lynch's first vice president in its client solutions group. The firm is averaging about 2,500 new enrollments a day.

Investors can get real-time quotes, one stock at a time, from any firm that offers online trading, whether full service or discount.

But what if a client wanted to watch their entire portfolio in real time? Forget it.

Most online discounters, including Charles Schwab & Co., use delayed quotes for account updates. Full-service firms, with their close-of-business or twice-a-day updates, have generally lagged discounters in this area due to the burden of updating older technology. So far, MSDW is the only full-service firm to offer real-time updates.

But another issue firms must deal with are exchange fees. The NYSE and Nasdaq charge for each real-time quote, while delayed quotes are free.

Prudential Securities, Merrill Lynch and Salomon Smith Barney are all trying to renegotiate their deals with the exchanges to eliminate those per-quote charges, on the argument that they already pay huge fees for daily quote feeds. If that happens, statements that incorporate real-time quotes will become more common in the year 2000.

Schwab has been complaining the loudest. Last June, Schwab petitioned the SEC to consider new rules relating to market data, including lower fees.

The exchanges, meanwhile, are hesitant to cut tape revenue and thereby possibly reduce an important source of income. (In 1998, the sale of Nasdaq market information accounted for 21 percent of the NASD's total revenues.)

The SEC is addressing the controversy. In December, the agency asked for comment relating to market data fees and the role these revenues play in funding market operations and regulation. (Go to, and look under current rule making for concept releases. Comments are due March 31.)

Public demand is forcing the evaluation of quotation pricing. Clients are most excited with "having everything online, in a real-time fashion," says Sandy Motusesky, MSDW's first vice president and manager of interactive marketing.

"[Lower quote fees will be] like the fall of the Iron Curtain," says Sam Scott Miller, a partner at Orrick Herrington & Sutcliffe, Schwab's law firm. "Once it starts to crumble, it might go pretty quickly."

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