It's been two years since regulators gave their blessing to broker-client e-mail. Most reps can finally communicate electronically with clients and send attachments. Some can even do limited prospecting.
But e-mail is a technology that elicits mixed responses. Reps taking advantage of the open-access environment find e-mail is a tool that enhances client dialogue and speeds up decision-making.
At the same time, some brokers are starting to see a downside to e-mail, questioning whether it's the right way to maintain supposed personal relationships with clients.
Here are messages from reps on both sides.
Enamored With E-Mail Tricia Bothmer, a Merrill Lynch rep in Indian Wells, Calif., uses e-mail to make recommendations and confirm orders. "I might tell clients to take a look at two mutual funds and pull up the research on Merrill Lynch Online," she says. "Then, I have them e-mail me what they think."
Bothmer often gets client e-mail that was written early in the morning or in the evenings. "They seem to be more relaxed then and can reflect on their investments," she says.
What are they writing about? "A client typically might have three or four questions on how their account is doing, want to go over my recommendations or talk about making changes," Bothmer says. "A client may also just e-mail to say thank you for placing them in a certain stock."
E-mail has become a central research tool for a First Union Securities broker in the Midwest whose business is focused on stocks. "I'll have a client search the Internet, e-mail articles he finds on a stock and then we'll talk about the stories," he says. The broker can also access a stock-charting service online and e-mail a chart to a client. Then, he calls the client and the two can discuss the stock with the chart in front of them.
Vince Romano of First Union Securities in Chicago has found the firm's e-mail system a good prospecting tool. He holds seminars targeted to teachers. The system allows him to automatically batch e-mails to send to school principals at their school Web site and attach his seminar flyer.
Pat O'Neill, a PaineWebber rep in Southfield, Mich., also e-mails seminar invitations to prospects, but can only send to those who previously gave him their e-mail addresses. "We're doing more mailings to clients because of e-mail," O'Neill says. "We can set up baskets of clients to target with research I download from the firm."
Another PaineWebber broker in the West who's just started using e-mail discovered it helps clients have peace of mind about their investments when they're traveling overseas. "I had a client in Czechoslovakia for two months," he says. "I wanted to reassure him we were taking care of some IRA business for him, so we e-mailed back and forth each step of the way. It would have been impossible to try to do it by phone."
E-mail is helping a Merrill Lynch broker in the West build CPA relationships. Previously, his staff called clients' CPAs early in tax season asking them to fax any questions about cost basis or the portfolios. "It took a lot of time playing phone tag," the broker says. "Now we have e-mail addresses and very quickly can get questions asked and answered."
Setting client appointments also is less of a headache, the broker says. "That's where e-mail's best value is for me. I can copy a husband and wife at different locations and they can check their calendars at once and simultaneously set up an appointment."
Reps' E-Mail Fears E-mail isn't all it's cracked up to be, some brokers say. Even though Marc Jaffe estimates his client communication via e-mail is up 500 percent from 1999, he won't embrace e-mail.
"I'm afraid people are using e-mail to be more hermitized," says Jaffe, a Merrill Lynch broker in Indianapolis. "We still need to hear what the client wants to do. It concerns me that you could lose that edge in a personal relationship and just become a name on a computer."
The Merrill Lynch broker in the West finds e-mail intrusive. Clients use it as "Post-It notes," he says, which interrupts his focus. "I'll also get a five-paragraph e-mail from a client who asks seven or eight complex questions and expects a quick response," he says. He'll only answer the questions by phone or in person.
A Morgan Stanley Dean Witter producer in the South is horrified at the idea of using e-mail. "With 2,300 clients, the last thing I'd ever want is people e-mailing me and having to respond," he says. "If even one-tenth of the 6,000 people we speak to at seminars each year e-mailed me, I'd be in real trouble."
E-mail adds an urgency that concerns some. Spencer McGowan, a Dain Rauscher rep in Dallas who uses e-mail extensively, knows the negative side of e-mail well. "I've had clients send e-mails at 2 a.m. just to gripe," he says. "I'll open them at 6:30 a.m. and respond. They'll complain that I didn't answer it earlier."
Deborah Lewis, Prudential Securities, Atlanta.
Deborah Lewis starts her day checking client e-mails at 6 a.m. from home. She says her senior citizen clientele has embraced e-mail technology. With a laptop and Palm Pilot, Lewis spends most days on the road meeting clients and prospects. E-mail is her lifeline.
Each day, Lewis e-mails her sales assistant a list of assignments. Her assistant forwards to Lewis' laptop e-mail any client questions that come in by phone during the day. "I find there's less chance of errors working this way than talking back and forth over the phone," she says.
Lewis also uses e-mail to improve her working relationship with clients. She e-mails portfolio data to clients before scheduled reviews. "When we meet, clients now are more prepared. We have much more productive meetings."
Spencer McGowan, Dain Rauscher, Dallas.
Spencer McGowan has segmented clients into four groups according to investment interest. He e-mails targeted recommendations and news. Those interested in bonds receive a weekly interest rate update. Those interested in mutual funds receive updates on news affecting their funds.
"I give them URLs inside my e-mails so they can simultaneously get our mutual fund recommendation, the prospectus and whatever else they want directly from the fund's Web site," McGowan says. "For my stock clients, I'll e-mail 12 great companies they should look at. It would take an hour phone call to tell clients each story. In my e-mail, I give links to each company's Web site so they can get the story. They want to feel part of the research process."
Even though broker access to clients and prospects has improved, regulatory uncertainties continue to slow the development of e-mail capabilities.
The NASD and NYSE haven't officially clarified their requirement that a firm exercise "reasonable supervision" over broker e-mail. Firms don't have to screen 100 percent of broker e-mail, regulators say. They can check random samples. Yet firms say they're unsure how to determine an adequate sample.
Prudential Securities, for example, still requires branch managers to review every outgoing broker e-mail before it's sent, says Steve Silver, director of Internet strategy for PrudentialSecurities.com. The resulting slowdown in reaching clients is the only e-mail-oriented issue brokers complain about, he says.
A.G. Edwards' rollout of an external e-mail system hasn't yet moved beyond a pilot program because the firm is still debating the review process, says Steve Garrett, A.G. Edwards manager of financial planning and chair of the workstation committee. "We're now reviewing what e-mails we can and can't release. Outgoing e-mails that get flagged will be quarantined, but the issue is how do we notify the rep of the quarantine?"
Adequate review of e-mail attachments is also an issue. One wirehouse broker says approval is so slow, some brokers at his firm use America Online at home to call up their firm's Web site, copy research to the desktop and paste it into client e-mails to bypass the review process.
A First Union broker in the Midwest says he has a tough time using e-mail alert services for news on stocks. A message he's meant to receive within minutes sometimes languishes in compliance until the next day.
Then there's the concern that brokers might overuse e-mail or that e-mail could be too distracting. "E-mail is a modern version of getting an overnight package," Garrett says. "There's an implied urgency and people may react negatively to that."
A.G. Edwards will have some tips for its reps when it debuts its system. "There's a real learning curve to using e-mail effectively," Garrett says. "We want brokers to organize their time so e-mail doesn't intrude." The firm suggests brokers forward e-mails to their assistants, so they don't have to read them unless the assistant feels it's needed.
* A.G. Edwards Access--Broker-client e-mail available only through firm's Web page. Client e-mail goes to home office and is forwarded to broker. External e-mail system with open access in pilot program.
Review--Process undecided for new system, but firm will likely flag for key words and quarantine. No orders.
Attachments--Will be available in new system.
Prospecting--Guidelines undecided for new system, but prospecting likely allowed if prospect gives consent via any other form of communication.
Marketing--Undecided
Broker home pages--Will be available in new system.
* Edward Jones Access--Client can link to broker home page through firm's Web site and e-mail broker. Broker must respond by phone.
Review--No reviews. Firm is considering surveillance software. No time frame yet on when review and broker e-mail response will be available.
Attachments--No
Prospecting--No
Marketing--No
Broker home pages--Access only to clients.
* First Union Securities Access--Open through Internet, but reviewed first each way.
Review--Firm screens for key words. No orders.
Attachments--Some research, plus other documents.
Prospecting--No
Marketing--Automated targeting available.
Broker home pages--No
* Merrill Lynch Access--Open through Internet.
Review--No pre-review of outgoing messages. Branch managers spot-check incoming and outgoing e-mails.
Attachments--Research only.
Prospecting--No unsolicited e-mail. Can respond to prospects' inquiries from broker home pages.
Marketing--Automated targeting available.
Broker home pages--Introduced in May. Brokers can post biographical information and description of practice, and include firm links or a market update. Access is available to the public.
* Morgan Stanley Dean Witter Access--Open through Internet.
Review--Branch managers do a post-review of incoming and outgoing e-mail. Messages sent to 10 or more recipients require pre-review.
Attachments--Yes
Prospecting--Cannot initiate contact. Can respond to prospects who express interest in MSDW through the Web.
Marketing--No
Broker home pages--Under development.
* PaineWebber Access--Open through Internet.
Review--Branch manager reviews all incoming and outgoing e-mails. Broker must copy all e-mail. No orders.
Attachments--Research only.
Prospecting--Rep can e-mail if prospect has given e-mail address to broker, including prospecting campaigns.
Marketing--Automated targeting available.
Broker home pages--A pilot program is ongoing in a handful of branches.
* Prudential Securities Access--Open through Internet. The ability to e-mail to a fax machine for clients without e-mail addresses is in development.
Review--All incoming e-mail reviewed after broker receives it. All outgoing e-mail pre-reviewed by branch manager. No orders.
Attachments--Research, marketing brochures and Power Point presentations.
Prospecting--No first contact via e-mail. Can e-mail if prospect gives consent via any other form of communication.
Marketing--Automated targeting available.
Broker home pages--Financial Advisor Homepage Program in place in all branches as of March 30. Access only to clients.
* Salomon Smith Barney
Access--Open through Internet.
Review--Firm looks for key words and phrases to trigger review. No orders.
Attachments--Research and any Word or Excel attachments that have prior approval. Broker newsletters available by summer.
Prospecting--No first contact via e-mail. Can respond to prospect's e-mail if asking a general question.
Marketing--Automated targeting in development.
Broker home pages--"FC Profiles" will debut by summer. Access only to clients subscribing to Smith Barney Access online service.