It’s no secret that E*TRADE Financial has had some serious troubles recently thanks to its sub-prime mortgage exposure. Understandably, the firm wants to do anything it can to restore confidence and retain its customers. To that end, E*TRADE is having a Customer Appreciation Day today. The firm is giving “gifts” to all of its customers throughout the day – the gift of commission-free trades, that is. We’ve seen firms offer a limited number of free trades as a promotion for opening a new account, but this is the first time we’ve seen a firm offer a day of unlimited trades to all clients just to say “we appreciate your business.”

E*TRADE also sent out an email to clients informing them of the Customer Appreciation Day and Customer Appreciation Day events at their local branch locations. Not only can clients receive commission-free trades, they can also enter for a chance to receive a video iPod Nano and other giveaways at the branches.

Here is the reminder email we received today (you can click to view the full image):

This shows the trade screen today - notice the Estimated Commission reads $0.00:

Some may see all of this as a desperate move by E*TRADE, but we think the firm is playing to its core audience – i.e., price-sensitive self-directed investors/traders. The bottom line is that all investors like free trades and E*TRADE is giving its customers a reason to stay with the firm. And as we have noted in our Broker Monitor report over the years, the Christmas Holiday card is by and large a thing of the past from brokers. This, then, is a nice gesture to clients at the end of the year.

With the environment becoming a larger concern for many consumers, Bank of America has entered the “green” card market with an eco-based card that allows users to earn points towards carbon-offsets instead of traditional rewards. The Brighter Planet Visa Credit Card is just one aspect of B of A’s increasing environmental initiatives. The firm has long promoted paperless statements as a way to save trees and is currently building an eco-friendly skyscraper in Manhattan.

In addition, since the firm doesn’t say, it’s not clear whether the card is made from new plastic, recycled plastic, or Al Gore’s tears.

There is a show in the UK called Bremner, Bird & Fortune that has a number of clips available on YouTube. It is a very funny show and they recently provide some colorful insight on the sub-prime market woes. We thought you’d enjoy it.

An article in Ignites (subscription required) recently mentioned a new study from Fidelity that was released last week discussing the low levels of college savings among parents. According to the report, although 58% of the 2,200 families surveyed have saved anything for college, only 26% of them use 529 or other education-specific savings plans.   

The end of the year is often a time for parents to reflect on their spending priorities and now would be a good time for firms to highlight their 529 plans. As we noted in one of our Mutual Fund Monitor reports from last December that looked at Online 529 Content, there are a number of best practices for doing this:

• Make content easily accessible – 529 savings accounts have become a preferred method for college savings. As such, firms should make this information easily accessible via a separate college planning tab to house educational and product related information. This is not only valuable for current clients, but is also a way to attract prospective investors.
• Promote offerings while educating investors about planning issues – While educating investors about the potential benefits of a 529 college savings plan, firms should be sure to simultaneously promote these products. Investors can learn about the importance of planning for college, as well as how a given firm’s plan can help them meet their savings goals. Space on a firm’s public homepage, especially during "back-to-school" season, is an ideal way to jumpstart parents’ thoughts toward saving for their children’s future.
• Make the content intriguing – Firms can appeal to customers by adding video presentations, colorful charts and interactive tools such as personalized calculators to make the information easier to digest and more enjoyable.
• Address grandparents, other family members and friends – Parents are not the only investors that can contribute to a college savings plan; grandparents, friends and other investors are also eligible. Unfortunately many firms ignore these key groups and limit their opportunity to pull in additional assets. Firms should promote the fact that anyone can contribute to a 529 plan and that it acts as an ideal legacy building tool, especially for grandparents.
• Highlight why a specific plan is unique – Most 529 plans have federal mandates that make them difficult to tell apart. Whenever possible, firms should highlight the unique benefits of their managed plans.

We are currently finalizing a new report focusing on Direct Savings Accounts (DSAs) – those (typically) online-only, high-yield  accounts that users link to checking accounts. For this research, we opened accounts at the following firms:

• Capital One
• Citibank
• Emigrant Direct
• E*TRADE Bank
• FNBO Direct
• GMAC Bank
• HSBC Direct
• ING Direct
• Key Direct
• M&T Bank
• Washington Mutual

The DSA market is still relatively new and continues to evolve as more firms – especially traditional “brick and mortar” banks – introduce new accounts. Here are a few basic findings from the report:

• As of this writing, the highest APY is 5.05% (FNBO Direct & E*TRADE), the lowest is 4.00% (Citibank)
• Only one firm charges a monthly fee: GMAC at $7.50 per month
• WaMu is the only firm that requires a linked checking account
• Capital One is the only firm that does not allow electronic funding
• Less than half the banks feature e-signature capabilities

Simplicity is a key theme for DSAs. In this market, customers want things to be quick and to-the-point. This is particularly evident in looking at DSA online applications. The most successful applications we reviewed were invariably the simplest – they were quick to complete, allowed customers to set up the majority of their account information (things like the online banking User ID and Password and debit card preferences) and required minimal follow-up after the application was submitted. See the ING application below for a good example:

Our DSA report will provide comprehensive analysis of DSA applications and highlight industry-wide best practices.

Innovation. It’s all around us: iPods, iPhones, SlingBoxes, Nintendo’s Wii, NetFlix. But financial services? Sure the boys on the trading desk and the whiz kids at the hedge funds can be innovative. But retail financial services? Prior to the mainstream adoption of the Internet in the mid-90’s the last innovation in retail financial services was arguably the ATM – 30 years ago. Since then, we have witnessed innovation within retail financial services as a more frequent pace and it’s about to get really interesting since it is coming from non-traditional competitors.

Web 2.0 is perhaps the biggest catalyst behind this trend, and we’re not simply referring to AJAX-enabled websites. It’s about the socialization of the Internet and it’s going to be a major disrupter to mainstream financial firms. Firms like Paypal are changing the payments industry; Mint is helping people find savings within their spending; Cake Financial is allowing people to share their trading strategies; and Sir Richard Branson is changing the lending industry with Virgin Money.

Obviously, this presents major challenges to financial marketers who are often saddled with a gaggle of lawyers controlling their messaging. It does appear that all is not lost, however. We have seen innovative maneuvers from large financial firms recently: Bank of America has added customer reviews to its site as well as a small business online community. Wells Fargo has Stagecoach Island and the bubbly fun-loving Cassie. TDAmeritrade recently added a tool from PredictWallStreet that allows users to track and share opinions about the market. It’s a good start. Now, marketers must collectively build on this momentum and take full advantage of all that Web 2.0 has to offer.