The online brokerage is considering buying or building its own network of financial advisers, company representatives said. E*Trade is just beginning to explore its options for developing an adviser network, but it expects to have something in place by the end of next year.
"We clearly understand that a financial-adviser option is something that is very, very important to our customers," said company spokeswoman Connie Dotson. "It's on a short list of priorities that we're looking at."
The move would mark a significant change for E*Trade. During the stock market boom, the company eagerly courted active investors, urging them to dump their brokers and take charge of their own finances.
But the move reflects the depressing realities of the stock market downturn: Many day traders have decided to call it quits, and many investors who have been burned by the market are looking for help with their investments. At E*Trade, stock trades are down significantly, as are the company's revenues from these trades. Meanwhile, the average value of an E*Trade account has shrunk from about $18,530 at the end of 1999 to just over $13,000 earlier this year.
"Times have definitely changed," Dotson said.
E*Trade has attempted to counter its falling brokerage fortunes by expanding into other financial services. The company now offers bank accounts, mortgages and insurance through its site.
The company has also moved offline, opening up financial trading centers in New York and four other cities, and financial "zones" inside more than 30 Target stores. But some analysts havethe company's offline strategy, since the centers and zones offer little more than basic services, such as computer terminals where customers can check their accounts.
E*Trade representatives have said that they were exploring the possibility of offering financial advice in their centers and zones.
Earlier this year, E*Trade took one of its first steps toward offering financial advice when ita new advice site, offering electronic planning tools and personal financial advice from Ernst & Young financial planners. Initially only available to customers with at least $100,000 in assets invested with E*Trade, the service is now available to all of the company's customers, Dotson said.
The adviser network that E*Trade is considering would go beyond the services offered by Ernst & Young, Dotson said. She declined to give many details, but said that one possible service the network could offer is to allow customers to schedule meetings with financial planners at their own homes.
Although E*Trade might have some financial advisers working at its physical locations, the company is not planning on creating a branch network, Dotson said. Unlike a Charles Schwab or a Merrill Lynch, which has hundreds or thousands of branch locations, E*Trade plans to focus on a more cost-efficient strategy. It costs the company far less to establish one of its zones or to set up an ATM than to open a full branch, Dotson noted.
Additionally, E*Trade's move to offer financial advice is separate from its offline strategy, she said. E*Trade's advisers might telecommute, she suggested.
"With financial advisers, it's the expertise you build upon," Dotson said. "It's the expertise that provides value to customers; it's not that you put them in buildings somewhere."