No bull here: Well-designed site puts #1 brokerage in great position

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For a time, it looked like the E*Trades of the world might put Merrill Lynch & Co. out of commission. But the bull woke up last year with an aggressive restaging that put Merrill squarely on the Web while building on the power of its branch offices, brokers and research base.

NET PLAYS EXPLOIT ASSETS

The latest move came in December, when Merrill became one of the last major brokerages to offer online trades to the public with Merrill Lynch Direct, which charges $29.95 per trade.

Merrill's site is well-designed, easy to navigate and has a wealth of information for individuals and small businesses that puts it ahead of the offerings from other online brokers, says David Wanetick, senior analyst at Xceed Intelligence, a New York Web market researcher.

"It was a big risk. It was a scary thing and they were late to the game -- but they developed a good Web site," he says.

The Dec. 1 launch of Merrill Lynch Direct gave investors a site (www.mldirect.ml.com) offering stock and bond trading, mutual funds, bill payment and a so-called "sweep" money market account that pays interest on uninvested cash. The brokerage at the same time also launched Merrill Lynch eShopping (www.shopmerrill.com), an e-commerce portal with vendors including Barnes & Noble and Toys "R" Us.

Merrill, the No. 1 stock brokerage, made other moves last year involving the Web. The company's consumer brokerage unit, U.S. Private Client Group, introduced Choice Platform, a program offering consumers a selection of products and the option of online and offline trading and advice. Merrill credits that platform with speeding up its asset growth -- a record $36 billion in net new client assets in the fourth quarter alone.

In a speech in late January, Merrill Chairman-CEO David Komasky boasted the new strategy lets the company exploit its edge in financial research, thanks to its 800 analysts.

In another move, Merrill last May launched Unlimited Advantage, which offers services of a broker and unlimited trades -- over the phone, the Internet or in person -- for a single fee based on the size the account.

MULTICHANNEL POSITIONING

Merrill is in the same situation Barnes & Noble was when Amazon.com began selling books on the Internet, says Robert Duboff, director of national marketing for the North American operations of Ernst & Young. It has a strong, established business offline, but has to expand online without turning off traditional customers, he says.

John L. Steffens, Merrill's vice chairman and the executive leading the growth in online channels, initially was skeptical about the Internet, says Mr. Wanetick.

But customers want to be served through various channels, says Mr. Wanetick. Some require hand-holding by a broker some of the time, but they also may want to cheaply execute a trade online, he says.

Merrill reinforced its multichannel positioning with print ads and TV spots from J. Walter Thompson USA, New York. In the TV commercials, clients nervously quiz a broker about the online services. The non-plussed adviser smilingly explained everything -- the office, the coffee, even the company's bull logo -- would not go away. Its latest flight of spots includes both a high-tech "Digital Bull" branding spot and a series of warm and fuzzy customer testimonials.

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