E*Trade’s Intelligent Investment Analyzer

Etrade_intelligent_investorToday E*Trade added yet another new feature to its website, the Intelligent Investment Analyzer. It sounds a lot sexier than it is, an eight-question asset-allocation worksheet. But that’s the point. E*Trade is using classic marketing techniques to identify customer needs and concerns and design the solutions to address them.

The company’s core messages touch on security, maximizing investment returns, minimizing loan rates, and so on. And the messages are delivered with an understated flair. For example, look at the homepage graphic above. It delivers the message in a number of ways including good color, an effective image of an open laptop displaying a colorful pie chart, and copy that emphasizes key benefits:

  • Fast: "recommendations in minutes" and "one-click investing"
  • Smart: "diversified," "optimizer," and "intelligent"
  • Personalized: "custom recommendations"

Etrade_intelligent_investor_questionaireWho wouldn’t be tempted to click through to see what’s behind the optimizer? Unfortunately, the questionnaire, powered by Thomson Financial, isn’t particularly appealing (click on inset left for a closer view). And once completed, users are required to log in to their E*Trade account to view the "All Star" mutual fund recommendation designed to fit your self-described investment needs. But all in all, it’s an excellent lead into the company’s mutual fund area.

For more on E*Trade’s string of innovations, select "E*Trade" in the topics reachable via the top navigation bar, or click here.


E*Trade Bags Millions in Free Publicity

Etrade_protectionguaranteeWow. It’s not often a press release rates an article in BOTH The Wall Street Journal and The New York Times. But that’s exactly what happened today when E*Trade made the relatively innocuous announcement that it wouldn’t hold its brokerage customers responsible when their accounts were defrauded.

Etrade_securityarea_1Consistent with previous innovations, the online brokerage and banking powerhouse wrapped its new message with impressive graphics and copy (see inset above-left for graphic displayed on its homepage today). Clicking on Learn More leads to an impressive security area where E*Trade touts four main protective measures (click on inset above-right for a closeup)*:

  1. Security tokens
  2. Electronic statements with paper turnoff
  3. Email alerts
  4. Antiviral and firewall software, which can be purchased through a link to Norton (60-day free trial offer); users can also run a real-time scan to check for vulnerabilities

It just goes to show you how skittish the public has become about online security. I’d wager that most brokerage customers are sophisticated enough to realize they will eventually get their money back if it’s stolen from their account. So this is a non-event from a financial standpoint. E*Trade even admits that online fraud cost it only $2 million last year, less than the cost of one of their famous Super Bowl ads. The brokerage also said there were "fewer than 50 incidents," implying a fraud loss of approximately $40,000 per incident.

Evidently E*Trade’s marketing department prevailed over its legal counsel and actually put the company’s fraud-protection policies in writing. It’s amazing that makes headlines in 2006 and may say more about the growing need to cover your behind to fend off the class-action bar even if it means scaring off customers.

We hope this prompts other financial institutions to take similar action. One of the main functions of financial institutions is safeguarding assets. Customers, online or otherwise, shouldn’t have to guess whether certain types of fraud are covered. As any good lawyer would say, "Put it in writing."


*The screenshot displayed here is only the top portion of the security area, to download a screenshot of the entire page, click here.

Holiday Stock Picking Contest

Umb_stockpicking_sweepsUMB Bank <umb.com> ran an eye-catching sweepstakes in mid-December (click on inset for closeup). Users were invited to register online to participate in a week-long stock-picking contest. The contest had its own URL <stockingstuffer.umb.com>.

The contest ran from Dec. 12 to Dec. 15. Top prize was a $1000 Target gift card with second receiving $750 and $500 going to the third-place finisher. Users were required to choose winning stocks from a list provided by the bank. Users could log in anytime during the week to see where they stood. The contest was open only to residents of Missouri, Kansas, Colorado, Oklahoma, Illinois, Nebraska or Arizona. An identical second contest ran simultaneously that was open only to UMB employees.

Stock-picking contests are a tried-and-true way to gain Web traffic, email addresses, and add excitement to your website, and in UMB’s case to reward employees in a separate sweeps. The bank ponied up for a decent prize pool of $2250 for customers and another $2250 for employees; the graphics were superb; the "stocking stuffer" theme played well around the holidays; and the contest was interactive with the ability to log in and check standing in near-real time.

However, the one-week duration caused a substantial decrease in its overall marketing value. Usually these stock-picking contests run for several months, with leaders posted at various intervals. The holiday theme used by UMB created a natural year-end deadline, so it should have started in early- to mid-November for maximum impact.


Marketing Database –

If you’d like to learn more about the latest financial interactive marketing campaigns, check out the Interactive Financial Marketing Database from our sister publication, the Online Banking Report.

Charles Schwab’s Rich New Customer Offer

Schwab_offer_homepage_10_27_05_1Yesterday, I noted that TD Waterhouse was giving away iPod nano’s for new accounts. Well, it turns out that is nothing in the high-stakes game of bagging higher-balanced brokerage accounts.

In the middle of its homepage, Charles Schwab <schwab.com> is offering a night on the town in NYC, including 2 or 4 Broadway show tickets, dinner, and even a night in a luxury hotel. What’s theSchwab_offer_details_1  catch you ask?

Just $100k, $250k, or $750k in new money depending on just what level of "free" you’d like (click on inset for details). The deposit does NOT have to made to a new account, but like TD, all retirement and institutional account are excluded. (Click to view the homepage screenshot, links do not work)

Start saving your pennies, you’ve got until March 15, 2006 to qualify. 


Everbank’s MarketSafe CD

Everbank_marketcd_2 When I was a deposit product manager in the late 1980s, I worked on a project to bring out an equity indexed certificate of deposit. That project died, one more merger casualty, but I've always been intrigued by the product.

Over the years, a number of banks have offered market-indexed CDs, but they've never been much more than a niche product. That's OK. More than half of Amazon's book sales are from titles not found at retail bookstores. The Internet is a great place to mine the niches. Everbank has already proved that by moving nearly $1 billion worth of foreign currency-denominated deposits.

The problem with equity indexed CDs is that they are crummy investments. By the time you pay for the hedging, marketing, and bank overhead, there's not much left over to pay the investor.

Let's look at Everbank's latest incarnation. The MarketSafe CD provides a total return based on a relatively complicated formula that averages S&P 500 prices at six-month intervals during the five-year term. In an up market, the CDs typically return 40% to 60% of the S%P gain (click on inset below).

The main selling point: Investors are guaranteed a minimum 5% total return over the five years (APY = 0.98%). The CDs are FDIC insured up to $100,000 with a minimum investment of $1500.

Everbank_marketcd_returnsBy Everbank's own figures (click on inset), its CD would have only beaten the S&P 500 index eight times during the previous 31 five-year periods beginning with 1970-1975. And by our estimates, the return would have beaten a normal 5-year CD more than half the time, 17 out of 31 periods. But only twice did the MarketSafe CD beat both the S&P and a regular CD.

Expected returns would be higher if the investor simply bought a mix of regular CDs and S&P indexed funds. The most conservative would be an 82% CD, 18% S&P mix that would still return all principal even if the S&P went to zero (assuming 4% CD APY). For the less conservative, a 67% CD, 33% S&P split would still return the principal even if the S&P dropped 40%. You get the idea.

But the target market for MarketSafe CDs is probably someone that never invests in equities. For that person, the MarketSafe is a reasonable way to put a little money "in the market." From Everbank's perspective, it's a nice addition to their unique deposit product line.

Addendum: View full screenshot of MarketSafe CD page




Building the Case for Increased Investment


Every year it’s a battle to win approval for your business
plans. This process, though far from perfect, is a necessary evil to ensure
that only the most promising plans are funded.

Online banking, which in the U.S. generates little direct
revenue, often requires creative spreadsheeting to show a positive
NPV. Following are some of the positives to incorporate into a winning
business case.

  •       Stay competitive: improving account retention and
    increasing sales

  •       Improve sales by differentiating your products and
    services with online functionality

  •       Increase cross sales, especially credit/loan

  •       Increase online banking and bill payment
    transaction fees

  •       Create a new stream of monthly and/or annual
    service fees with a premium service option

  •       Use marketing dollars more effectively through
    targeted online promotions

  •       Reduce costs through self-service

  •       Improve customer satisfaction, retention, and
    cross sales

Allocating scarce budget dollars

If you are looking for the biggest bang for your buck, look
to online lending and small- and micro-business initiatives. According to
Celent’s study across 1.5 million Digital Insight users (in 2001),
online lending generates four times the combined value (NPV) of banking/bill
pay. Business services were even more valuable, resulting in returns of
nearly six times that of banking/bill pay.


Everbank made a sizable investment in a new online
banking platform, a highly customized mix of Metavante and Teknowledge
software. Previously, the bank used the S1 online banking platform.

Table 1

NPV from various online banking products


$ Return (NPV)1


5-Yr Total

Per Cust2


Banking, statement info.




Bill pay








Small business












Banking and bill pay




All except small business (lending, banking, bill




Source: Celent, 10/01  For a better understanding, read
Celent’s Customer Retention and Cost Savings Drive Online Banking ROI,
Oct. 17, 2001
(1) NPV over 5 years at a 50,000-customer bank; includes direct revenues,
cost savings, and retention. (2) Per-customer figures are across all
customers, on- and off-line, consumer and small business.


Stockbroker Rankings from SmartMoney

SmartMoney just published its annual stock broker rankings (Note: currently the 2003 survey is posted, the 2004 should be there shortly).
There are now two categories of discount brokers: Premium and Basic. THere was little movement in the premium category year over year other than Vanguard droping from second to sixth and E*Trade making its inagural entry at number 2. Last year it was ninth in the basic category.
The best premium discount brokers:
1. Fidelity……….Fidelity
2. E*Trade………Vanguard
3. Schwab……….Schwab
4. USAA………….Quick & Reilly
5. T. Rowe Price..USAA
6. Vanguard…….T. Rowe Price
The basic category was more interesting with OptionsXpress coming out of nowhere to take the number one spot. SmartMoney’s comment, “nearly flawless.”
1. OptionsXpress…….TD Waterhouse
2. Muriel Siebert……..Muriel Siebert
3. TD Waterhouse……Bidwell
4. Ameritrade…………ScottTrade
5. HarrisDirect………..HarrisDirect
6. FirstTrade…………..BrownCo
7. ScottTrade………….FirstTrade
8. Wall Street Access…Ameritrade
9. BrownCo…………….E*Trade (moved to premium)
10. WallStreet*E………Wells Fargo (moved to premium)