On the heels of my colleague John Cantwell’s recent blog post about banks and Youtube, I sat down for an interview with Kelsey Hubbard at MarketWatch to talk about how the financial services industry is using this site to engage their customers.

It’s no coincidence that three of our last five blog posts have addressed the role of social media in the financial services industry. The topic continues to gain momentum in the industry and while it’s far too early to know just how great the impact will be on companies’ bottom lines, it’s clear that firms are actively looking for ways to harness this new form of marketing.

After my article on social media appeared in the most recent edition of our Consulting Newsletter, a number of clients expressed interest in learning more about the current state of social media and the financial services industry. As a result, we are preparing to publish a report on the topic this September. If you are interested in learning more about this report, feel free to send me an email at amaginn(@)corporateinsight.com.

In a move symbolic of AG Edwards’ end, Benjamin “Tad” Edwards IV is stepping away from Wachovia Securities to start his own new brokerage firm, as we read in a recent InvestmentNews article. Edwards, who is the son of former CEO Benjamin Edwards III, plans to launch Benjamin F. Edwards & Co.

According to the article, Edwards’ resignation took many brokers by surprise. We, however, didn’t think this is too shocking. The merger of AG Edwards and Wachovia certainly hasn’t been the smoothest. We have read about AG Edwards advisors leaving for other firms, numerous job cuts, and the recent ouster of Wachovia CEO Ken Thompson - although not directly related to the merger - did not help. There was clearly tension in the air, and bigshots were bound to find that the corporate cultures clash.

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I was reviewing the recently released ICI 2008 Fact Book and came across a chart that should strike fear into the hearts of 401(k) providers while at the same time make retail financial services providers salivate:

What this says is that given the choice, 57% of plan participants will opt to take their 401(k) assets in one lump sum. The report goes on to say that of those, only 14% spent all the proceeds while the rest rolled over into an IRA or some other investment account. Given the pending wave of retirement from our Boomer friends, the challenges to financial services firms in responding to this statistic are many:

How can firms that provide the 401(k) participant platform utilize it to encourage participants to roll money to retail accounts provided by the same firm? (e.g. a Fidelity 401(k) to a Fidelity IRA)

• How can firms utilize their call centers at the time of rollover to capture these same assets?
• How do firms that don’t manage 401(k) assets take advantage of the opportunity to capture the shifting assets?

In some of our consulting work, we’ve seen that 401(k) providers are starting to tackle the first issue using their participant websites to get the word out about rollover IRAs. During actual rollovers, we’ve also witnessed how some call center reps talk up their firms’ non-401(k) accounts. In fact, later this year we plan to increase our research into the 401(k) space and look forward watching how the industry tackles these issues.

There is tremendous opportunity here for those firms that do a few things right. They need to make it easy to do an in-coming rollover via multiple channels – Web, phone and branch. They need to offer support during the on-boarding process, to ensure the TOA happens; a hands-off approach leads to accounts that are opened and never funded. Finally, firms that offer products like target date mutual funds and in-retirement income funds will also have an edge as they can serve Boomers throughout all stages of pre- and in-retirement life.

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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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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Several weeks ago, while covering sites for our Annuity Monitor Update service, we came across a survey on the Vanguard.com public website. Going through the survey (and providing complimentary expert advice), we at first didn’t come across anything particularly notable. A pleasant, colorful interface walked us through twelve questions covering a variety of standard topics – past, current and future desired usage of the Vanguard website, inquiries about personal financial standing. However, upon completing the survey, we were unexpectedly offered a reward for our time and given the option of receiving a $10 check or Amazon.com gift certificate.

Vanguard Online Services Survey

No indication had been given until that point that respondents would be compensated for their time. This is probably a good thing though as the answers are likely to be more honest than if people were taking the survey just for the cash prize at the end.

Six weeks after completing the survey, we received an interesting mailing from the FRC Research Corporation. A standard thank you letter was enclosed thanking us for our participation in the Vanguard survey, with our payment in cash – a crisp 10 dollar bill paper-clipped to the top right hand corner:

Vanguard Survey Letter

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!