The quick evolution of the web from the toy of the few to the technology of the many has left money managers pondering how to best use it to communicate, gain business and market themselves.
The main initiatives for managers this year include:
* increasing content on their Internet and intranet sites;
* enabling clients to access account information;
* giving consultants specialized sites through which to access client portfolio information; and
* gaining and maintaining presences on the web search engine of choice.
"We are starting to see it in RFPs. They are asking, `What's your web strategy?' " said Theresa Snyder, director of global marketing at SSBCiti Asset Management Group, New York.
Ms. Snyder has led the firm in better answering that question. One of the first realizations was that the firm is competing for hits and clicks with firms like Amazon.com Inc. and eBay Inc.
"It's about the consumer service experience," she said.
SSBCiti, like many others, has instituted a concentrated web strategy focusing on content and clients' online experience.
The firm is offering institutional portfolio performance on the public part of its website, at www.ssbciti.com, as well as news feeds from organizations such as CNBC and from market research papers. In the future, the site will offer portfolio analytics to clients.
The SSBCiti site also allows clients to take part in surveys on such issues as investing and doing business online and see the results updated instantly. Plan sponsors also can find out where SSBCiti's closest offices are and automatically see the local time and weather report.
"It's not important but makes the user experience more exciting. . . . It is also what makes it a fun place people want to come to," Ms. Snyder said.
SSBCiti soon will add a tool allowing clients to look up a specific type of product SSBCiti manages by benchmark, asset class, or the country in which the portfolio is invested.
A separate site available to those with passwords will give clients up-to-date reports on their portfolios, access to Salomon Smith Barney and SSBCiti research, and news feeds from industry publications.
The online reporting area also will be customized so that a plan sponsor can choose only the reports and product tracking information of interest. Users also can create links to their favorite websites in the password-protected area.
To find out what clients wanted from them online, SSBCiti used a third-party organization, aabalone[red], to conduct market research, Ms. Snyder said.
Other money managers also have conducted research to see what their clients expect for online services.
GLOBALT Inc.'s clients were surveyed earlier in the year on their cyberspace needs and wishes. The results led the firm to overhaul its site, www.globalt.com, and offer a secure area where clients can access portfolio performance and see performance attribution and information on investment strategy, said Bill Roach, president of the Atlanta-based firm.
"We believe the Internet will revolutionize how business is done. It's a necessity for us going forward," he said.
Increased globalization is also part of the push for money management firms moving forward.
"Companies are focusing on centralization of the management process and are looking for a provider to deliver a single snapshot wherever they are in the world," said Kathy Taylor, managing director and head of global markets for Barclays Global Investors, San Francisco.
Globalization is such a major factor in the firm's business that it has included a currency converter on its client-only extranet.
Clients also may monitor the performance of sample strategies as well as gain access to their specific account information in real time, including portfolio holdings information and analysis.
As do others in the industry, BGI is starting specialized webcasts. The first video streaming was done in January, and the firm hopes to offer different webcasts separated by strategy to clients sometime in the future.
In the fall, BGI will allow clients to conduct portfolio transactions online. Typically, the firm has required plan sponsors to call and then follow up with a letter.
The firm is building a password-protected order entry portal so that clients may indicate which funds they want to trade. This also would help clients see the trading process from beginning to end and allow them to see how many trades are done on the open market vs. cross-trading between BGI clients.
BGI's e-commerce strategy has been incubated in a group called iCore, which is an internal organization charged with developing a consistent online standard for the firm.
iCore was a way "to figure out how to fast-track new and creative initiatives on the web," Ms. Taylor said.
Officials work in the "e-garage" to quickly flesh out ideas to establish templates and guidelines for development.
BGI is now looking to update the look and feel of its website, www.barclaysglobal.com.
In checking out the competition, Ms. Taylor is looking for ways BGI can take its own approach to concepts similar to those used by competitors' sites. For example, many sites have stock tickers, so Ms. Taylor is looking to create index tickers that allow users to drill down to the stock listing in the index and to the performance of the individual stock.
BGI's Global Chief Executive, Patricia Dunn, "has made 2000 the year we become a web entity," Ms. Taylor said.
In terms of the Internet, Fidelity subscribes to a business ideal called "kaizen." the Japanese word for continuous improvement, said Mike Forrester, senior vice president at Fidelity Management Trust Co., Boston.
The company's main website, www.fidelity.com, is a mixture of retail and institutional information, but in the future, Fidelity is looking to become a benefits outsourcing portal catering to both participants and plan sponsors.
While executives hope to have full client reporting capabilities in the defined benefit area by the fall and already offer defined contribution access to clients, Fidelity is looking to offer a whole "e-suite of benefit services outsourcing," said Bob Reynolds, president of Fidelity Investments Institutional Retirement Services, Boston.
The new "e-suite" includes health and welfare benefits and other human resource functions online.
Mr. Reynolds said that the firm's more than 8,000 corporate 401(k) are asking for more in terms of benefits automation. The cost savings clients realize by getting all their benefits administration in one place are obvious, he added.
On the retirement side, 401(k) participants have access to Fidelity Portfolio Planner, the firm's investment advice tool, while on the defined benefit side the firm is looking to allow employees to conduct "what if" scenarios to have an idea of their future benefits.
"We have spent millions of dollars on the total package," Mr. Reynolds said.
The barrier to entry for other money management firms may simply be capital, he added.
But for the money management industry, this may be an investment with a quick payoff.
The number of U.S. corporate financial officers that reported using the web for business purposes more than five times per week last year totaled 62%, a significant increase from the 40% that reported that much use in 1998, according to a survey of corporate banking by Greenwich Associates, Greenwich, Conn.
In aabalone[red]'s research for SSBCiti, about three-fourths of the
clients and consultants interviewed said they use the Internet daily, although mostly for e-mail purposes.
Some firms also are looking to save money by using the post office less and web-based delivery more for both clients and their investment consultants.
Uniform and low-cost
At BlackRock Inc., Managing Director Bennett Golub is looking to the web "to have a uniform, standard, low-cost way of dispensing information to geographically diverse entities."
The New York-based firm has taken what was traditionally on the desktops of portfolio managers and put the technology in the hands of plan sponsors, Mr. Golub said.
BlackRock has more than 150 password-protected, client-specific websites allow clients access to their portfolio information, account reports, and a risk management analytical tool.
"There is something very wonderful knowing it (the information) is always at the same click and is current," Mr. Golub said.
Between the client sites and the firm's intranet site, BlackRock has saved hundreds of thousands of dollars in copying costs alone, Mr. Golub estimated.
The additional benefits of information being delivered faster and more exact helped the firm develop a closer relationship with clients, he said.
"This is a source of return, rather than a source of cost," he said.
All managers interviewed for this story declined to put price tags on their web initiatives, although the sums of money being flung into cyberspace can be a competitive issue for some.
Eric Disend, managing director at New York Life Asset Management LLC, Parsippany, N.J., would not reveal how much his company was spending on its website, www.newyorklife.com, because of the competition.
"It is a considerable competitive force," he said.
Some firms will say they are spending millions to seem ahead of the competition, Mr. Disend said, while others are more conservative in their figures.
GLOBALT's Mr. Roach said he estimates firms can spend anywhere from $25,000 to $500,000 on building a website, depending on how much information is provided and how often the sites are updated.
Most firms agreed that the money for their web initiatives is coming from their marketing and information technology budgets.
At Boston-based United Asset Management Corp., Laura Dailey said the firm views the web as an investment in the future. Ms. Dailey, as vice president in charge of information technology, leads an in-house web team.
UAM is developing a common website that will include product information for each of its 45 affiliates and help them launch websites of their own. A new website, www.uam.com, will feature portfolio manager webcasts, online transactions, account access and a promotion area for UAM affiliates.
UAM, like many other investment firms, has spent money on its intranet as well as its Internet.
The firm, which is known for its decentralized structure, has a discussion area where employees of the firm and its affiliates can post questions and answers.
"It's a great technology for a company set up the way UAM is," Ms. Dailey said.
Part of the firm's web strategy is to make sure the site comes up in various online search engines.
Handling search engines has become a key issue for many firms and a job they often outsource.
SSBCiti's Ms. Snyder hired Darien, Conn.-based aabalone[red] to manage the firm's search engine prominence.
The firm targeted to the top 40 search engines, including Yahoo!, AltaVista, and Ask Jeeves. The main lesson was that if a home page takes more than 15 seconds to load, many search engines reject the firm's bid to register, Ms. Snyder said.
Chris Bittman, principal at Jurika & Voyles LP, Oakland, Calif., registered www.jurika.com on the major search engines, such as AltaVista and Excite!, about 31/2 years ago.
"All those places will pull us in quite quickly," Mr. Bittman said. Overall, company officials believe the site has been a hit with their clients, mostly due to the longevity of the site.
"We were reasonably early with the site; people felt it was their own."