Tag Archives: etfc

E*Trade further blurs lines between full-service and DIY investing

Full(er) Service and DIY Investing: Investor Fork in the Road

There is no doubt we are witnessing a wholesale exodus of assets out of full-service brokers like Merrill Lynch and Smith Barney. These assets seem to be finding two very different types of homes:

  1. boutique investment advisory houses: Built by brokers/advisors who themselves have defected from the large wirehouses, these firms take service and advice very seriously. In some sense, they’re a further move into full-service. They are competing head-on with traditional brokerages by upping the ante on technology, service and investment advice.  Investors who feel slighted by their advisor and want the extra hand-holding find this model really attractive.  It’s interesting to note that many of these firms are being founded/built by traditional brokers evolving to this model.
  2. online brokerages: Firms like E*Trade and Ameritrade are taking the bulk of this business.  In the wake of the financial tsunami, some investors are looking to take back investment decisions and don’t want to pay someone else for underperformance.  Proof of this is in capital flowing to online brokerages.  E*Trade reported that it had net new accounts of almost 30,000 in the first quarter of 2009 with $3.5 billion in net new customer assets.

I’ve written about the emergent trend towards high end investment advisors and how traditional stock brokers are resurrecting themselves and building smaller, nimbler firms with their billion-dollar books of business.  I’ve spent less time discussing how online brokers are luring assets.

Online Advisoretrade_onlineadvisor

I had the opportunity last night to have a guided demo of a recently-launched E*Trade product, Online Advisor, with E*Trade’s Liat Rorer, VP of Investment Products.  Online Advisor, developed as part of E*Trade’s newly-minted Investor Resource Center, is a nifty little financial planner-in-a-box.

In a quick and easy 4-step process, Online Advisor: Continue reading


Schwab no longer run by Schwab: discount broker pioneer steps down

“Fire your broker!”  How many of us remember those ads of yore that implored brokerage clients to fire their wirehouse broker and move over to Schwab (SCHW)?  They are indelibly imprinted on my brain, anyway.

Charles Schwab

What’s more is that the message as definitely driven the direction of the brokerage business over the past couple decades.  Industry studies show that retail brokers are finding it harder and harder to compete against online brokers.  So, Schwab was definitely onto something when he introduced the discount, DIY (do-it-yourself) model to investing.  It was revolutionary at the time.

Interesting to see that after founding the firm in 1971 and with a couple of stabs of having outsiders at the helm, Charles Schwab seems to be moving aside and empowering a new general to take the helm of the $26B financial services firm.

What’s interesting here is that new CEO Walter Bettinger II has been instrumental in refining Schwab’s

retail branch network and service centers.  Having a leader with a focus on the retail customer is not by chance.  After Schwab and other online brokers moved into full-services by providing banking, wealth management, and mortgage products, it seems that the aftermath of the popping of the debt bubble is leading to a renewed focus on retail.

This is a good thing for Schwab, its customers, and the industry in general.