E*Trade in the US will team up with accounting and consulting giant, Ernst & Young to provide online financial planning, according to reports in the New York Times.
Both parties will contribute US$25 million to create a new venture which should be ready to deliver electronic financial advice by the end of this year. It is hoped the new venture will boost trading volumes for E*Trade and increase customer account sizes by tieing them into advisory relationships.
E*Trade in the US will team up with accounting and consulting giant, Ernst & Young to provide online financial planning, according to reports in the New York Times.
Both parties will contribute US$25 million to create a new venture which should be ready to deliver electronic financial advice by the end of this year. It is hoped the new venture will boost trading volumes for E*Trade and increase customer account sizes by tieing them into advisory relationships.
The deal should assist E*Trade compete with conventional brokerage firms’ online offerings, as well as with Charles Schwab, the largest discount and online brokerage group in the US. E*Trade in the US will team up with accounting and consulting gi-ant, Ernst & Young to provide online financial planning, according to reports in the New York Times.
Both parties will contribute US$25 million to create a new venture which should be ready to deliver electronic financial advice by the end of this year. It is hoped the new venture will boost trading volumes for E*Trade and increase customer account sizes by tieing them into advisory relationships.
The deal should assist E*Trade compete with conventional brokerage firms’ online offerings, as well as with Charles Schwab, the largest discount and online brokerage group in the US.
At the end of March, Schwab was directing customers to around 5,800 affiliated fi-nancial planners with the average account at nearly US$113,000. The average E*Trade account size is about $25,400 or about 25 per cent of the average customer’s investment portfolio.
Schwab also has US$213 billion out of US $725 billion in funds under advice at the end of last year. It made adviser referrals to 16,700 customers with more than US$100,000 in their accounts. E*Trade has yet to outline details of its own plan but will require no minimum account balance.
The company will fix higher prices for more complicated or personalised service, in-cluding direct access to Ernst & Young’s staff and should make the entire network of about 1,000 advisers available.
Ernst &Young vice chair for strategy and corporate development Beth Brooke says the accounting firm would hold onto its high-end brand status by continuing to charge additional fees to E*Trade clients who sought more personal advice. However all E*Trade clients will likely be offered the basic service.
Both companies say Ernst & Young will offer advice that provides an array of sug-gestions and avoids simply directing clients to make more E*Trade transactions, and the advice must be given under the standards required of registered investment advis-ers.
Standard & Poor has placed Mercantile Mutual’s Australian operations on a credit watch following the news that Merc’s parent company ING is interested in buying US financial services giant Aetna. The news that ING is in talks with Aetna comes just a month after ING proposed the acquisition of US life insurance group ReliaStar. Stan-dard & Poor says the combination of the two acquisitions “represents a significant strain on both the financial and the management resources of ING”. S&P says it has known for a long time the Dutch group’s intention to make major purchases in the US. Aetna has US$77 billion under management.
Investors have yet to take to online financial advice with the same alacrity that they have taken to online share trading, according to a survey commissioned by US based Putnam Investments. The survey, conducted by Neuwirth Research, found that only 2 per cent of those surveyed went to a Web site for investment advice. This compared with 47 per cent of those surveyed who sought out a broker or financial planner when looking for advice, Neuwirth found. The survey found brokers and advisers were by far the most popular choice as providers of investment advice. Just under half of those surveyed identified brokers and planners as the sources from which they sought finan-cial advice. Nine per cent of those surveyed sought advice from certified public ac-countants and another five per cent sought financial advice from lawyers.
NM Rothschild & Sons will not sell any of its minority stake in the banking group’s Swiss parent company to an international securities house, despite reports to the con-trary printed in the UK’s Sunday Business newspaper. The newspaper report stated the company is considering a restructuring that would lead to Royal & Sun Alliance Group selling its 22 per cent holding in NM Rothschild & Sons’ Swiss parent, Roth-schild Continuation, for up to 1 billion pounds (US$1.5 billion).
Charles Schwab, the US discount and internet broker has formed an alliance with ValuBond to expand its fixed-income products and services for Scwab’s Internet-based customers. The aim of the alliance is to make on-line investing in treasury, cor-porate and municipal bonds as easy for individual investors as stock trading has be-come in recent years. ValuBond specialises in providing on-line fixed income trading and information services, and is scheduled to begin operations in the in a couple of months. Schwab will be the first member of an on line brokerage consortium which will distribute fixed income products to investors. Schwab has also unveiled details of a partnership with Ericsson, the Swedish wireless equipment manufacturer, to allow the broker to provide its services over mobile phones with Internet access using WAP technology.
At the end of March, Schwab was directing customers to around 5,800 affiliated fi-nancial planners with the average account at nearly US$113,000. The average E*Trade account size is about $25,400 or about 25 per cent of the average customer’s investment portfolio.
Schwab also has US$213 billion out of US $725 billion in funds under advice at the end of last year. It made adviser referrals to 16,700 customers with more than US$100,000 in their accounts. E*Trade has yet to outline details of its own plan but will require no minimum account balance.
The company will fix higher prices for more complicated or personalised service, in-cluding direct access to Ernst & Young’s staff and should make the entire network of about 1,000 advisers available.
Ernst &Young vice chair for strategy and corporate development Beth Brooke says the accounting firm would hold onto its high-end brand status by continuing to charge additional fees to E*Trade clients who sought more personal advice. However all E*Trade clients will likely be offered the basic service.
Both companies say Ernst & Young will offer advice that provides an array of sug-gestions and avoids simply directing clients to make more E*Trade transactions, and the advice must be given under the standards required of registered investment advis-ers.
