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Fund Websites Adding Advisor Services

As financial advisors increasingly use the Internet, mutual fund companies are developing tools and services for them, according to a recent survey conducted by kasina, an electronic-commerce consulting firm in New York that specializes in mutual funds.

The leading firms are providing advisors with the ability to open client accounts and make trades online and receive customized e-mail alerts while offering access to proprietary investment commentary via webcasts, according to kasina's Top 10 Mutual Fund Websites for Financial Professionals.

In alphabetical order the sites are: AIM Management Group of Houston, American Funds Group of Los Angeles, Fidelity Investments of Boston, Franklin Templeton Investments of San Mateo, Calif., INVESCO Funds Group of Denver, Colo., John Hancock Funds of Boston, MFS

Investment Management of Boston, OppenheimerFunds of New York and Putnam Investments of Boston.

Steven Miyao, senior vice president of kasina, said none of the sites in the top 10 were a surprise. "All the big names are there. All the sites did pretty well. Oppenheimer made the list this year and has been putting forth tremendous effort. AIM has also refocused and is doing a good job and Franklin expanded its resource center. These companies are making an effort and coming on strong."

Originally fund companies hoped the Internet would allow them cost savings and were not concerned with having information for the financial professionals on their sites. "However, today's best web initiatives are more about delivering value than savings," the report noted.

Fund companies are succeeding in adding value and may even save themselves a buck or two eventually, Miyao said. "This is really more about offering investors or intermediaries another way to access their companies' information. The cost savings are not very high. Look at compliance material: You will save on printing and mailing costs if you send the information electronically, but a company has to sign up at least 45 percent of its base. When that happens, they will see savings."

It shouldn't be long before companies do see the savings. According to kasina, financial advisors report that 60 percent of their clients have access to the Internet. With more than half of all clients able to view fund statements immediately, advisors cannot afford to wait for information to arrive by traditional mail.

A little less than 50 percent of financial advisors report lack of time and information flow as their main problems, according to kasina. Along those lines, 67 percent of advisors prefer to receive fund information electronically to keep up with clients.

"It is much faster to e-mail. In the past, advisors' information would go from the home office to the clients and then the advisors' personal office. By the time advisors got the statements, clients had had them for a week. They would call the advisor, who wouldn't know what to say. Now they can immediately respond and service accounts," Miyao said. Although only 50 percent of fund companies offer advisors the ability to view clients' accounts online, that number will grow a lot in the next year and has been steadily increasing, he added.

Fund companies seem to be catching on to advisors' need for immediacy and easy-to-use tools. This year, 88 percent of mutual fund companies are using webcasts to update advisors on market trends and portfolio management. "Webcasts are not expensive and with a webcast an advisor can sit back and listen rather than read. People like that process better," Miyao said.

The number of fund companies allowing advisors to customize a website on the firm's URL is disappointingly low to Miyao. Only 18 percent allow advisors to customize the website. "That is a pretty small number. We thought companies would implement customization faster but they still are in the process," said Miyao.

Additionally, the report said, most firms are committed to launching a separate site for advisors, not simply an amended version of the public mutual fund site. "It's a good idea to segment the market. The Internet has brought transparency. People are able to better evaluate different funds because fund companies are disclosing more information, but it is harder for investors to go through all of the information and they need an advisor," Miyao said.

In the future Miyao expects personalization will continue to be important because there is so much information and advisors really want to focus on what is relevant to them. "We will also see more fund companies looking over all processes to find out where advisors are getting their information and then trying to make their sites part of the overall process. So advisors will automatically log on to their website in the morning. That includes fund companies trying to help advisors build their overall business, not just sell funds," he said.