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Executive Outlines Fund Industry's Online Efforts


Kim King is managing director, global investor services, for NewRiver, which provides e-fulfillment services for the financial industry. NewRiver's clients include INVESCO, Merrill Lynch, Nvest, UBS PaineWebber, SalomonSmithBarney and T. Rowe Price.

Before joining NewRiver, King was president of The King Company, a financial services consulting firm. Prior to establishing the firm, she was divisional VP of Prudential Investments, where she was involved in building all facets of the company's third-party investment business.

Mutual Fund Market News caught up with King to discuss online initiatives in the industry. An edited version of her conversation with Jerry Minkoff follows.

MFMN: How far have mutual fund companies come in adopting Internet capabilities? Where do they fall short?

King: As a general rule, I think you're going to find that mutual fund complexes, as a whole, large or small, got involved in using the Internet very early compared to other financial institutions. One interesting point is that most of them focused, and still do, on the marketing aspect. Most fund complexes, both large and small, have Web sites where prospects can learn about the company, look at products, obtain general information. But, at least from our experience, only about 10% to 12% have the functionality to allow consumers to open an account online.

Another point is that many companies distribute their products through intermediaries. Some of them have been extremely reluctant to put accounts online, because they perceive this as a direct conflict with having intermediaries sell in person.

Large companies are very easily able to aggregate accounts--your mortgage, your bank account, your brokerage account, your funds--so you virtually have one financial services account. The smaller ones do not have that ability.

Large companies also take a very proactive approach to personalized marketing. They're able to do outbound e-mail campaigns, very targeted e-mail campaigns. Smaller companies tend to have their Web site for reactive purposes, if a customer wants to pursue looking at them, see what they have to offer for funds, and so forth. Very little proactive marketing, if any, is currently done by the smaller companies.

Large companies allow the consumer to personalize the site. If you're a customer, you can customize the home page so you can circumvent all the navigation and get to your personal interests and your personal information. The smaller ones don't seem to be that advanced or technologically sophisticated.

The biggest difference I've found, however, and this is not based on size, is the company's perception of the need for e-sales and e-servicing.

You'll see companies that view the Web and e-communication as a necessary evil: "I've got to have a Web site to stay competitive," or "I've got to find a way to attract the small percentage of customers who use the Web." You'll see other companies, though, that see e-commerce as an absolutely vital method of sales and servicing, and an absolutely critical method of attracting sales and customers. They really get it; they get the point that it's important, it's necessary.

It's not only important. You must enter the customer's space. You have to do business by the customer's preferred method. They get it. Unfortunately, some of the smaller companies don't have the internal resources to get there quickly.

MFMN: What are the typical steps a fund company follows in setting up a Web site?

King: Typically the first thing they do after general marketing is to move forms online. The next step is to give the customer account access.

Normally, they then start looking at service at the other end, the e-delivery of documents. They say, "Wouldn't it be nice if we offered all of their compliance documents, annual reports, semi-annuals, online?" And that's the evolution that they go through.

Once they get through all that, they say, "Wouldn't it be nice if we could be the one place that a customer stopped if they have a question on any financial product that they own? They may be a Fidelity customer and have a Fleet mortgage and a Schwab brokerage account but could they get information or do transactions on all those accounts in one place? And then, if we understand all that about the customer, wouldn't it be nice if we could market to that person?"

If I know the size of your mortgage, and I know basically what's in your brokerage account, I've got a pretty good idea how to market to you because I know a lot about you. You don't have to send out, "Take a look at our equity-income [fund]." You can focus on interests, lifestyle, age, all those sorts of things.