Ironically, the move comes at a time when big offline brokerages such as Merrill Lynch and PaineWebber have scrambled onto the Internet, following in the footsteps of early moves by Charles Schwab and Fidelity Investments.
With today's announcement, WebStreet.com becomes the first online broker to move the other way.
Through opening land-based offices, the company is targeting the huge market of investors who have traditionally used brokers and aren't ready for the Web, according to WebStreet.com spokeswoman Melissa Wharton.
Within the next three months, the company plans to open offices in New York and Chicago. And within two years, it plans to be in every major financial market in the United States, she said.
WebStreet.com's Beverly Hills center, which opened last week, will have 10 licensed brokers on staff and 14 to 20 high-end computers. The staff will offer free advice to customers and help to introduce them to online trading, Wharton said.
Jupiter Communications analyst Robert Sterling said WebStreet.com's move is an attempt to gain more customers and gather its assets. Compared with offline giants such as Merrill Lynch, which manage more than $1 trillion in assets, even online leaders such as E*Trade, which has some $30 billion in assets, look puny.
"Assets are kryptonite to the online brokers, because they just don't have them compared to the traditional brokers," Sterling said. Assets enable brokerages to offer more services and give them a chance to increase their revenues by facilitating trades or investing the cash.
Gomez Advisors ranks WebStreet.com 26 out of 53 online brokerages. Dan Burke, a senior brokerage analyst at Gomez, said the company has a strong base in active traders but doesn't seem to offer a lot of services for its users.
Burke said it is unclear how WebStreet.com's offices will mesh with its online customer base.
"The confusing part about this is what does a branch office do for them, unless they are going to change their business model and go after more mainstream investors," Burke said.
But Forrester Research analyst Brook Newcomb said other online brokerages are likely to follow in WebStreet.com's footsteps. The number of investors who will want to trade online is a limited market, Newcomb said; the mainstream investor is going to want to be able to ask questions and get advice from live brokers.
"A lot of firms we believe should be experimenting with this," Newcomb said.