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The Basics of Visuals

Financial advisors should show-and-tell, not just tell.

In the post-bubble economy, the majority of investors are asking for financial advice. "About 52 percent of the market says, 'I want to take responsibility, but I don't want to go it alone,'" noted David S. Pottruck, president and CEO, The Charles Schwab Corp. (San Francisco), at last month's Financial Forum 2004 conference in New York.

Known as "validators," this growing segment of the investing public includes many former self-directed investors, who now constitute 18 percent of the investing public. "Delegators" - those who prefer not to handle their own investing - comprise the remaining 30 percent.

Compared to delegators and the self-directed, validators pose a particular challenge, in that they require substantive interaction. Schwab's response: a solution allowing a customer and an adviser to work together via any channel, even when they're apart. "We're going to need our client to be able to look at their portfolio while the adviser is either on the phone or coming through the Web simultaneously," said Pottruck.

In such a scenario, the visuals are key, according to Jaime Punishill, principal analyst, Forrester Research (Cambridge, Mass.). Financial services firms all too often attempt to sell complex financial products, such as mortgages or living trusts, over the telephone, without the aid of graphs and charts. That's a mistake, Punishill suggested. "We're visual beings - 80 percent of our brains are wired to handle visuals," he said. "You've got to add visuals to the remote selling experience."

That's becoming easier to do, at least online. Punishill advises that firms move toward collaborative online selling in a staged fashion: First, gain the ability to share "static" documents with customers. Then, add online "chat," but only in conjunction with a visual collaboration environment. Finally, develop capabilities around dynamic application sharing, such as those used by MorganOnline, the private banking portal from JPMorgan. Through MorganOnline, the characteristics of highly complex financial instruments can be described and discussed with graphic aids. "Structured derivatives don't translate very well to a phone conversation," Punishill noted.

But adviser-assisted online capabilities aren't everything. Validators "want it all," asserted Mitchell H. Caplan, CEO of E*TRADE Financial (New York, $26 billion in assets). "They want the price, they want the service, they want the convenience and - from their perspective - control."

E*TRADE's approach to providing all of those things has been to unify its own lines of business, including mortgage, loans, banking and investing. "We took what was very much a series of disparate monoline businesses and put them on one technology platform," Caplan said.

By doing so, customers receive personal service in line with their contribution to profitability across the entire firm, he noted.

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