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Financial Planners Said Still to Outdo Internet


NEW YORK - Online investment calculators and research on the Internet are augmenting rather than threatening the livelihood of financial advisors, according to a survey by the Forum for Investor Advice of New York.

Only 19 percent of investors currently rely on the Internet as their primary source of investment advice and education, whereas 57 percent of investors rely on financial advisors as their primary source of such information, according to the survey. The survey was released at a conference sponsored by the forum here May 4.

Neuwirth Associates of New York conducted the survey between Feb. 16 and March 5 among 400 investors who have retained a financial investor and who use the Internet at least once a month. The survey asked this group about its usage of and preference for the Internet versus a financial planner for investment information and financial transactions.

Only 15 percent used the Internet to purchase mutual funds, stocks or bonds in the previous 12 months, the survey found.

However, the survey also found that investors expect to increase their reliance on the Internet over the next three years and decrease their dependence on financial advisors.

Although 19 percent of those surveyed said they use the Internet as their primary source of investment advice and education, 29 percent said they expect to rely on the Internet for such information by 2003. The 57 percent of investors who prefer to use a financial advisor as their primary source of investment information now, will decrease to 51 percent by 2003, the survey found.

An overwhelming majority of those surveyed said they were either very satisfied (68 percent) or somewhat satisfied (29 percent) with their financial advisor.

When given a variety of reasons they might be happy with their financial advisors, 29 percent answered they trusted their financial advisors, 24 percent said they like to validate their own investment decisions by speaking to their financial advisors and 22 percent said they liked that their financial advisors came up with personalized investment plans for them. Fourteen percent said their advisors helped them sort through the copious financial information available, especially on the Internet, and nine percent said they simply did not have the time to create a financial plan on their own.

Speakers at the conference emphasized the value of the personalized attention financial advisors can provide and some speakers said that while the Internet is going to become ever more powerful, it will never replace the one-on-one attention of financial advisors.

In fact, the Internet is making investors all the more educated and raising the level of investors' expectations of their financial advisors, the speakers said.

Even Charles Schwab of San Francisco recently purchased US Trust to compete with traditional investment management companies and their legions of financial planners, said Jim Neuwirth, president of Neuwirth Research. Internet newcomers and discount brokerages realize that investors want and will continue to want advice, he said.

However, do-it-yourself investors are a growing breed, and as a result, no fund complex or investment management company today can exist without including the Internet and the direct sales channel as part of its business model, said Allen Jones, senior vice president of Merrill Lynch Asset Management of New York.

And, some speakers said that even now, the Internet can rival the personal attention individual advisors now provide.

Internet-based investment tools can already produce personalized investment plans, said Brian Hollander, president and chief executive officer of DirectAdvice.com, a web-based interactive investment management service based on artificial intelligence.

"Our models are totally personalized and totally unique to each person's circumstances," Hollander said. "They can present results and recommendations for investors as if they were face to face with an investment advisor."