Defined benefit plan money managers for the first time will begin reporting performance data and research directly to pension fund clients and consultants via customized password-protected Web sites.
Some of the largest firms working to gain secured Web access for outside parties include: State Street Global Advisors, Boston; Fidelity Management Trust Co., Boston; and Northern Trust Global Advisors Inc., Chicago.
But money managers are playing a game of catch-up with their defined contribution counterparts.
"What I think was fairly interesting, to use as a lesson, is how online services in the DC industry went from a novelty to a requirement in an eight-month period of time," said Peter Bennett, an SSgA principal.
Mr. Bennett has spearheaded the defined benefit side of the company's Internet strategy, using some tricks involving secured client access from the firm's up-and-running defined contribution Web site.
New projects under way
Defined benefit Web-related projects are now under way, including the creation of a new public Web site and two secured sites dealing with clients and consultants separately.
SSgA expects to launch a new public Web site by this month that will provide basic information on the company, investment products and research.
The other two sites should be ready by the end of the year, with enhancements to follow throughout next year on a quarterly basis, Mr. Bennett said.
The password-protected site would be for large clients that eventually might show interest in multi-investment strategies with SSgA because of information provided there, Mr. Bennett said. The new Web strategy -- because of links to defined contribution sites -- might be of use to clients that have both defined contribution and defined benefit assets with the company, officials expect.
Web access is a good way on the client servicing side to "leverage the human touch," according to Mr. Bennett. The site also will include more of State Street's research on indexing, quantitative investments and fundamental analysis of markets.
At SSgA, which has $560 billion in assets under management, executives ultimately envision transactions taking place on the client site. They also hope to offer their services helping clients transfer assets from one manager or group of managers to another through the site and to allow direct e-mail access to client service representatives.
On the consultant site, executives at SSgA see the Internet as a key to taking part in the RFP process by answering consultant-specific questions and offering one-on-one marketing, in which a site recognizes a user's identification and offers information customized to that user's preferences.
Fidelity also has focused on consultants in creation of its defined benefit Web site, and gained good response.
"Fidelity is way ahead of the curve," said Eric Colsen, head of global manager research at Callan Associates, San Francisco.
He is one of a few consultants testing Fidelity's Web strategy, which is focused on the defined benefit consultant community. Wilshire Associates Inc., Santa Monica, Calif., is another firm giving feedback on the site.
Stages two and three for Fidelity's site include giving clients access to online reporting and password-protected dissemination of information on products. This stage of "the digital revolution" should be complete by the end of next year, said Michael Forrester, senior vice president of marketing and product management for Fidelity Management, which has $63 billion in assets under management.
Alan Kirby, director of marketing and communications at the firm, said he thinks of the Internet as a software tool that allows consultants and clients to choose how, when and in what form they want to download their specific portfolio and research information.
While State Street and Fidelity are working on their Web site capabilities in-house, other firms have decided to hire outside consultants.
Expecting more business
One such consultant, Business Logic Corp. in Chicago, is expecting to do more work with defined benefit managers after helping clients such as Key Asset Management revamp Web communications to defined contribution participants.
The firm is working with Northern Trust Co. to develop an analysis tool to help Northern's defined benefit clients decide whether to take part in a cash balance plan approach, said Dirk Quayle, senior vice president of Business Logic.
But Northern also is focusing on providing Web access for performance information to clients and consultants sometime next year, said Steve Potter, managing director of the institutional group at Northern Trust Global Advisors, which has $262 billion in assets under management.
While Mr. Potter envisions his company's Web strategy as a strong tool allowing clients to better monitor their portfolios, he sees the move to Web-based performance reporting as a necessity.
"It's inevitable that you can do a better job communicating with clients without sending out reams of paper," he added.
Plan sponsors agree, according to an Eager Manager Advisory Services survey.
The Louisville, Ky.-based money manager consultant concluded that while 37% of defined benefit and defined contribution plan sponsors receive performance information and attribution data via the Web, 72% of those surveyed said they would like to receive that information on the Internet.