The consulting industry is exploring how to use the Internet to communicate and keep clients better informed.
As pension fund executives begin to embrace the web, consultants are looking at creating portals, money manager databases and customized client reports. They're also making market research available online to meet plan sponsors' and participants' expectations.
But most still have far to go before they figure out the best way to accomplish many of these goals.
"The Internet is forcing us to innovate here," said Gregory Allen, executive vice president and director of operations at Callan Associates Inc., San Francisco. Some consulting firms are looking to create a portal site, rather than just enhancing their general website. The idea behind a portal is to create "one-stop shopping." Such a site offers more than one type of service or type of information that may also be geared to more than one type of client.
At Callan and New York-based William M. Mercer Investment Consulting Inc., officials inspired by the results of the internal use of web technology are looking to use the same technology to provide data to clients online.
Callan is using its experience with an internal e-mail service -- which spreads the word on changes at money management firms -- as a blueprint for a free e-mailed money manager news service for clients.
As it constructs its portal, the firm is considering making its money manager database, which includes information on 1,600 to 1,700 managers, available online as well, Mr. Allen said.
"That's our big focus, to distribute information on the web," he said.
Steven Freed, principal at Mercer, said the portal his firm is constructing likely will have news feeds, commentary from the consulting group and Mercer's research.
The firm doesn't have a specific target date for launching its portal, which would include links to other websites containing government statistics, general news, actuarial data and index returns.
Mercer's portal might include a client feedback section, but such a move would involve assigning specific personnel to answer questions.
The firm also is considering including a forum that would allow clients to survey each other, possibly with investment questions such as "What is your allocation to emerging markets?"
Started portal
Tacoma, Wash.-based consulting firm Frank Russell Co.'s new web portal, www.russell.com, initially is catering to investment management clients. But investment consulting clients ultimately will have access to the site's personalization component, which allows users to pick and choose which sections of the site they see.
"The consulting firm with the most hits is Frank Russell and that's because of their index data," said Steve Nesbitt, senior vice president and principal at Wilshire Associates Inc., Santa Monica, Calif.
Wilshire, too, has opened its internal information, including proprietary index data, to the outside world through a website, www.wilshire.com.
As Frank Russell's portal develops, the firm's consulting, investment management, brokerage and analytics customers will be able --at one URL, with one password -- to access customized data for any relationship they have with the firm, said Kelly Haughton, director of client services. Investment management clients will have access June 5; others will be brought on after that.
For consulting clients, the site will have links to portfolio information on their custodians' websites. Russell's site mainly will provide consulting clients with research and commentary that now is available only in hard copy, Mr. Haughton said.
"We have been `webifying' ourselves internally and the web portal is a way to open ourselves to the outside world," he said.
Posting client reports
Other consulting firms are focusing on posting client reports on secured areas of their websites.
At Mercer, Mr. Freed has been in charge of a group that is considering whether to offer client portfolio access, which would require data feeds from both custodians and money managers to provide real-time data and portfolio analysis to plan sponsors. The technology exists, he said, but that option will not be made available to clients this year.
"My personal opinion is perhaps the custodians are better equipped to do that than we are. . . . We haven't seen any real large demand for it," Mr. Freed said.
Although the consulting firm has not surveyed its clients extensively, he said, it would enlist some of them to help test a prototype of the website, which would be available from the corporate site, www.mercer.com.
Wilshire also has polled clients on their website wishes. The firm's site provides basic company and product information, index data and market commentary to the world, Mr. Nesbitt said, but the firm is ready to respond to its clients, whose two key requests were for an online resource library and portfolio performance numbers, which they now receive quarterly or monthly in printed form.
"I think their feeling is that it would be pretty neat," Mr. Nesbitt said. He did not give a timetable for potential additions to the site.
Evaluation Associates Inc., Jeffrey Slocum & Associates Inc. and Arnerich & Massena & Associates Inc., meanwhile, also are working on client reporting initiatives.
"It's essentially in its infancy," said Phil Maisano, Evaluation Associates' chairman and chief executive officer.
The firm is working on the technology to provide client-specific reports and on ways to allow clients to run "what-if" scenarios using those reports as a starting point. He said the firm is about 12 to 18 months from having those capabilities on its main website, www.eval-assoc.com.
In terms of making portfolio updates available to clients online, EAI plans to start with quarterly updates, but likely will move to monthly updates even though Mr. Maisano doesn't believe such frequent reports are necessary.
"You don't want to develop a day-trading attitude with these types of funds," he said.
The chance of more-frequent reports changing a client's attitude toward investing is not a fear at Jeffrey Slocum, www.jsa1.com.
The firm provides clients with performance reports through a secured website. It also offers weekly commentary.
Database information
Consultants also anticipate that clients increasingly will request money manager database information online.
Callan already provides its manager database online to smaller consulting firms, which often lack the resources to maintain such databases. About 38 regional consulting firms use the service.
This year, Mercer rolled out a web-based global investment manager database for investment consultants in all Mercer offices. Through it, managers can update their basic information at least once a year and update their investment product information quarterly.
Callan, whose website is www.callan.com, has been considering for three years providing money manager information to clients, but it took the creation of portals such as eFrontiers.com and InvestorForce.com to make the firm consider providing an online money manager database to clients, Mr. Allen said.
Because all manager information provided by such portals is free to plan sponsors, Callan executives at this point can't envision making their information available online to clients and non-clients for a fee. "We are hoping in the long run the people that give it away for free will die, hopefully leaving us with their ideas," Mr. Allen added.
Those ideas include online searches.
While Mr. Allen believes Callan is capable of allowing plan sponsor clients to search for money managers online, he doesn't believe it's a strategy that will make Callan wealthy. He also believes a workable revenue model has yet to be discovered by any firm, especially since it's costly to gather and maintain a comprehensive database.
More sophisticated
Arnerich & Massena is focused on improving participant education on the web and on delivering quarterly reports to clients online.
In the next 18 months, the Portland, Ore.-based firm expects to make the move from a basic "brochureware site" to an interactive one, said Sheri Fitts, Arnerich's director of education and communication.
Arnerich's efforts through www.am-a.com are being driven by participants' insistence on online education and their employers' searches for education tools, Ms. Fitts said.
The firm is already delivering through the web a newsletter, retirement workbook, specialized content for clients' intranet sites and customized work for clients' websites.
Revamping sites
So far Arnerich has worked with a few clients in revamping their sites. For example, Ms. Fitts said, the firm completed an online investment guide for the State of California's defined contribution plan participants.
In the future, "participants may drive the tone and content of these websites more than the institutions themselves," said K.C. Connors, vice president of Minneapolis-based Jeffrey Slocum.
Online market research also is a consideration for specialized consultant websites.
Clients of Norwalk, Conn.-based Evaluation Associates can download research such as papers discussing general asset allocations and market information and offering performance and market commentary.
"I think that what we will be able to do is to dramatically improve the communication process," EAI's Mr. Maisano said.
