E*TRADE recently sent us a text-based email that had the following message:

Dear (NAME REDACTED), Account Number Ending In: REDACTED

Identity theft is a serious issue, no matter how it originates. The vast majority of online fraud is a result of a compromised personal computer - when a consumer knowingly or unknowingly discloses identifying information like their user name and password.

By exercising caution and following some basic guidelines, you can reduce your chances of falling victim to online identity theft.

1. Be suspicious of ANY email that asks for sensitive personal information, even if the sender seems to be familiar.

2. Never open attachments or click links in spam or unsolicited emails.

3. Avoid filling out forms contained in an email message or pop- ups, even if they appear to be from a legitimate company with whom you do business.

4. Run the latest version of a proven anti-virus software program on your computer.

5. If you have logged on to a Web site, log off when you are finished and close your browser completely.

At E*TRADE FINANCIAL we protect every asset and transaction you make with our Complete Protection Guarantee, providing complete fraud coverage, payment and privacy protection. In addition, we’ve introduced the Digital Security ID(1) to help our customers protect their identities by making unauthorized account log on virtually impossible.

Rest assured, E*TRADE deploys advanced protection solutions to ensure our systems are secure. Our strict physical, electronic and procedural safeguards are designed to exceed industry standards and safeguard customers’ non-public information.

We encourage you to take an active role in protecting your identity. Visit "www.etrade.com/onlinesecurity" for more details on these services as well as additional security tips. http://email.etradefinancial.com/r/c/r?2.1.3K1.2Y0.13CFs4.By1zSK..T.Clyw.1Hzu.DeRIEcR0 If you suspect that you have received a fraudulent email from E*TRADE, please contact Customer Support at 1-800-838-0908. Sincerely,

It is a reality of this day and age that firms need to be more proactive in informing their customers about online fraud. Of course, doing so via email is tricky because that’s the very medium that is subject to abuse. E*TRADE’s email above does a good job in dealing with this because it lists out five simple steps users can take and provides a link to the site for more information. There is also a subtle feature that makes this a good email – it is in plain text (as opposed to HTML). This is beneficial because you cannot hide nefarious links in seemingly innocuous URLs (e.g., having http://www.etrade.com really lead to http://123.45.678 or something like that), which is how phishing scams work. What is surprising, however, (and E*TRADE is not alone in this) is that we’ve never seen firms mention this simple fact. If anyone is suspicious of a link in an HTML based email, they can simply hover over it (in Outlook at least) to see the real URL to which you will be sent.

Regardless, this is something that firms must continue to be more proactive about. It is not enough to post a page on the website (that’s passive and people may not go to it) or to put something together to go into your privacy statement (just more legalese). You need to hit customers from multi-ple angles repeatedly to drive the point home.

We are in the process of wrapping up our latest Brokerage Website Audit in which we analyze and rank the top brokerage firms from a client perspective looking on website capabilities and overall usability. Part of the research consists of a survey of 1000 individual investors to find out what is most important to them when it comes to online brokerage. The most important attribute this year - not surprisingly - is security of personal information.

What is surprising, then, is the lack of multi-factor authentication being used by the retail brokerage websites. While this security feature is nearly universal among the bank websites that we track, only two firms in our study offer similar measures - E*TRADE and Vanguard. Most firms remain wedded to a single ID and password protection scheme. This will likely change over the next several months as customer anxiety over identity theft grows and consumers become accustomed to the multi-factor process through their bank and credit card sites. Now, however, is an opportune time for brokerages to join the party.

We recently completed a review of the call centers at leading brokerage firms for our Broker Monitor report and, overall, things have improved in the past three years since the last time we looked at this issue.

The firms Broker Monitor tracks are a mix of full-service and discount brokerages and each model has its inherent strengths and weaknesses. While they are different beasts, support people must deal with many of the same types of requests and questions.  We set out to find if the level of service differs between the two groups. Are full service firms that typically rely on advisors able to translate that feel and quality to standard, phone-based customer service? Do the web-centric discount brokerages rely too heavily on their websites to handle customer queries?

We called each firm three times at various points throughout the day. After navigating through the automated call menu, we explained to the rep we reached that we wanted to have information about opening a brokerage account (including an application) mailed to us. Our request was intentionally open-ended – instead of offering a lot of information up-front, we wanted to see how deeply reps probed in terms of qualifying us as potential customers. In keeping our request rather vague, we wanted to see if the full-service firms took the chance to connect with us on a deeper level, qualifying us for accounts and services.

All calls were made to the customer service number we were able to locate on each firm’s website and tracked the following:

• Call start time
• Number of prompts (steps) through the automated system to reach a rep
• Time on hold
• Total time of call (including time on hold)
• Questions asked/information provided by rep
• Customer service hours of operation

Among the findings, which are discussed in our July Broker Monitor report, average time spent on hold went down at 75% of the firms we reviewed. The greatest improvement was seen at Schwab, which reduced its time by over two minutes to 10 seconds.

Well, we finally did it and started a blog. So many of our Monitor services spend a lot of time reviewing website changes in such granular detail, we often lose the forest for the trees. We thought that a blog might help us bring our clients our view of the financial forest, as it were.

We hope you enjoy this and get some value out of it. Feel free to comment and please email us directly if you would like to see specific topics covered.

Here we go!