May 08, 2008

We've Only Just Begun (the Internet Revolution)

There was an important article in today's Ignites (subscription required) that really speaks the importance of monitoring your competitors' Internet efforts. Speaking to the Investment Company Institute yesterday, Google's chief Internet evangelist said that the Internet revolution has only just begun and "although this revolution may not be televised, it will be broadcast to the hips, pocketbooks and laptops of an increasingly mobile and connected community."

Further:

As the Internet continues to reshape customer expectations and how companies manage their own operations, fund companies face the prospect of either learning to adapt or being eliminated by the competition, Cerf said.

"Darwin was right," he said, noting that only the technologically fittest firms will grab market share from those with weaker operations. "Companies will need to adapt to the new economy."

For one thing, as use of the Internet continues to evolve, so too will customers' expectations of how they communicate with mutual fund providers and advisors.

We've longed believed that financial services firms must adapt to the Internet or lose competitive ground. How do they figure out how to do that? The first step is to keep sharp tabs on what your competitors are doing online. Next, they need to identify best practices both within, and outside of, the industry. Without tooting our horn too loudly, we believe that Corporate Insight has the best process in place for helping firms accomplish these goals.

Let's assume for a moment that you don't already use us (gasp!), you should still have some internal system for looking at the competition. When doing so, it is important to remember that a "once-in-a-while" approach won't do it. Things move too fast in this space to take a haphazard approach to monitoring your rivals. The landscape tomorrow could be vastly different from what you see today. You need to have a sustained, ongoing approach to competitive intelligence if you want to preserve - or, better yet, improve - your position in the marketplace.

It's one thing to stay on top of your obvious competitors, but it's also important to keep your eyes on the white space. By that I mean it's not enough to look exclusively at your direct competitors. Doing so ignores threats from upstarts (see Mint, et. al.) Moreover, best practices from an online standpoint are often developed outside of financial services - look no further than retail leader Amazon.com.

For the past 10 years, we've watched the Internet reshape the financial services landscape. There is no reason to think that the changes over the next 10 years would be any less significant.

May 07, 2008

Members Know: Web 2.0

As we mentioned in this week's Credit Card Monitor Update (CCM subscription required), American Express launched a new online community called Members Know: Travel. The new feature serves as a travel discussion board for card members who wish to comment or read about places to visit, dine and stay. Card members also have access to recommendations from writers at Travel + Leisure.

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May 02, 2008

Personal Ads

With more people accessing the Internet via hand-held devices, website developers are being challenged to create online environments that are compatible with a wide range of hardware, from cell phones to widescreen monitors. A recent Business Week technology article highlights the problems this may cause for companies like Google. The search engine giant and other firms that generate revenue from ads must address the fact that there is less ad inventory available on the small screens of hand-held devices.

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April 30, 2008

Are Password Resets as Secure as You Think?

Security From time to time, we update our passwords to ensure we have the best security possible. While technological advances in website security have made it safer to manage your finances online, users are still wise to keep their login passwords fresh. Fortunately for us, firms have made this a fairly streamlined process, with the Change Password function usually in a quick and easy location. While we are all in favor of a streamlined process (consider changing around 60 of them at once, like we do), this chore should not be too simple; for safety precautions, we understand the need for ID verification questions.

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April 29, 2008

Investor Profiles: A Personal Touch for Annuity Prospects

Descriptions of what makes an appropriate investor for a given product are a useful, but underutilized complement to product details. Especially with products as complex and controversial as variable annuities, prospective clients could use extra indication if it could be right for them. However, only six of the Annuity Monitor websites have consistently included such details with product information. One of the best examples comes from Vanguard, which provides specific “Who Should Invest” pages for products such as the Vanguard Variable Annuity. A concise list suggests the goals, minimum investment amounts and other tax and savings characteristics that the product fits. Fidelity, ING, John Hancock, Lincoln and Mass Mutual as well all specifically address such criteria within product information.

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April 25, 2008

Weekend Reading

A roundup of notable articles this week (seems the business press is focused on Citigroup):

  • Where Pandit is Taking Citi (BusinessWeek) - A look at Citi's CEO strategy and why he still believes in the one-stop-shop model for financial services.
  • Will Clients & Brokers Bolt (BusinessWeek) - Given the troubles with some of Citi's hedge funds, BW questions whether top brokers and clients will bolt for the competition.
  • Edwards Investment Gurus Taking Over at Wachovia (InvestmentNews) - Discusses how Wachovia's Masters program (the firm's separately managed account) is being run by Edwards vet Michael Havey.
  • The Taming of Merrill Lynch (Portfolio) - More of a (longish) profile on John Thain, but provides some insights into Merrill's current challenges and how Thain aims to tackle them.
  • Can Anyone Run Citigroup? (Fortune) - From the Fortune 500 issue, this is Fortune's synopsis on the 8th-ranked firm.
  • Wealth Mismanagement (Economist) - A recount of what went wrong at UBS with regard to the mortgage-backed asset mess.

Dateline NBC Catches Some Financial Advisor Predators

Dateline NBC correspondent Chris Hansen, of To Catch A Predator fame, has turned his attention from online sexual deviants to a different kind of predator that preys primarily on the elderly. Reports of unscrupulous investment professionals pushing annuities on unsuited investors are nothing new in the financial service world. The annuity industry has fought a long battle to change the public’s poor image of their product in an effort to regain investor confidence. While we are convinced this is a case of a few bad apples, a black cloud continues to hang over these retirement products as allegations of unethical sales behavior continue to surface. 

Much of the stigma surrounding annuities can be attributed to the negative publicity fixed annuities, specifically the Indexed variety, have received over the past few years. The biggest culprit in the inappropriate sale of fixed annuities is Allianz Life, the nation’s leading seller of indexed annuities. The firm has been involved in numerous lawsuits since 2004 with the most recent being a 10.05 million dollar settlement in California on charges that their advisors replaced 126 fixed annuities for unsuited elderly customers ages 84 or 85.

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April 18, 2008

Charles Schwab Reaching Out to Gen-X

Ttchuck_2 While so much attention across the financial services industry these days is focused on baby boomers, we discovered one site gearing up to cater to the “next generation” – Gen X. With its new Schwab Money and More site, Charles Schwab is expanding its efforts to market to a younger audience.  The new site is certainly visually appealing, with plenty of large, easy-to-read text, images and Flash-based content. Videos of Schwab client interviews are even embedded within the site. Users will find a variety of tools and planning calculators. From the moment we visited the homepage, it was clear who the target audience is. The homepage highlights issues that many investors in their 20s and 30s, in particular, face – such as how to get out of debt, how marriage will affect money and how to start investing without a lot of money.

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April 15, 2008

Corporate Insight's Take on Website Usability

Have you ever wondered if there’s an ideal location for a search tool on your website? Or if there’s a “best practice” for account comparison tools? Or if the names of your main menu tabs are conventional and, if not, whether this hurts the usability of your site? These are the kinds of questions we help our clients answer on a daily basis, drawing on our deep knowledge of retail financial services websites and our understanding of Web usability principles circa 2008. These are also the kinds of questions that serve as the focal point for a new research project we’re on the verge of completing – the Corporate Insight Website Usability Guide.

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April 11, 2008

Vanguard Jumps Into the Managed Payout Fund Business

With the introduction of The Valley Forge Funds, Vanguard will break into the (as of now) niche managed payout fund business. As reported in a recent Ignites article that Vanguard plans roll out the three funds – Vanguard Managed Payout Growth Focus fund, Vanguard Managed Payout Growth and Distribution Fund, and Vanguard Managed Payout Distribution Focus fund – on April 21, 2008. We have been waiting some time for this announcement. In a report we published a few months back on Retirement Income Planning, we reported that the firm’s payout funds were still pending SEC approval.

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  • The Corporate Insight blog is written by analysts at Corporate Insight and is based on the latest research efforts of our firm. To learn more about our research offerings, please visit http://www.corporateinsight.com.