Talk about a study in contrasts.
On Oct. 20, Morgan Stanley Dean Witter went all out to promote the launch of its new ichoice Internet trading service with a huge press conference broadcast live to 20,000 employees.
At the same time, the firm renamed its Discover Brokerage discount unit to MSDW Online and revealed its strategy to serve do-it-yourselfers in MSDW branches (see "MSDW Online Coming to an Office Near You," Page 32).
A week after MSDW's announcement, Salomon Smith Barney made online trading available to all clients--both fee- and commission-based--and didn't even issue a press release. A new "trade online" link just popped up on its Web site.
SSB also quietly revamped its AssetOne account to include unlimited online stock trading, along with a waiver of IRA fees. The account will make other products available online next year.
The biggest change for SSB reps is the added flexibility to discount fees. According to Pamela Parker, SSB's senior vice president for small business services/ marketing, reps can now discount up to 50 percent on all
AssetOne accounts (not just larger ones) without penalty.
SSB's new fee starts at 50 basis points for fixed income and 150 basis points for equities. The minimum account size is $100,000.
MSDW's ichoice account has a fee schedule that ranges from 20 to 225 basis points, with a minimum account size of $50,000. Firm officials emphasize that their brokers, too, now have the ability to discount.
Several MSDW brokers say they haven't gotten much interest in the account from clients. However, one rep says ichoice should help attract assets from firms like Schwab.
Through its discounter, MSDW will match Schwab and Merrill Lynch Direct in offering $29.95 trades online. SSB still has no plans to offer a do-it-yourself option.
However, Citibank offers online trades for $19.95. And SSB is "in the process of working on a [Citibank] referral process," a spokesperson says. SSB brokers have already been referring their clients to the bank for mortgages and other banking services.
Meanwhile, in late September, PaineWebber rolled out its own new fee account with online trading (see "PaineWebber Reps Like InsightOne").--Rosalyn Retkwa
Discover Brokerage has more than a new name. As of late October, new customer service reps were in place in all of the firm's 450 full-service branches.
The customer service reps "will help guide [visitors] to either a financial adviser [or] help facilitate the opening of a MSDW Online account," MSDW President and COO James Higgins told reporters Oct. 20. The firm wants to "ensure that when our advertising and marketing efforts draw visitors to our branches, they get warmly met and introduced to whichever ichoice platform they choose," Higgins said.
James Punishill, online financial services analyst with Forrester Research in Cambridge, Mass., says Discover Brokerage has been hurt by MSDW's reluctance to strongly promote the franchise and thereby upset the full-service side. Now, in a full turn, MSDW is combining the two businesses for marketing purposes. Operationally, the two units will remain distinct.
MSDW is betting the revamp will invigorate the discount business by following Schwab's successful "clicks and bricks" strategy. But Punishill predicts existing online customers will defect beginning in April when MSDW Online starts charging $29.95 for trades--double Discover's current rates.--Rosalyn Retkwa