Pershing Taps DirectAdvice
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Thursday, July 27, 2000

Pershing Taps DirectAdvice

Investors will be able to access DirectAdvice's Web-based asset allocation advice through there broker-dealer using DLJ's Pershing NetExchange Client Internet platform by the end of the year. The alliance will make a private-label version of the advice product available to a network of 650 independent broker-dealers who are Pershing clients.

A spokesperson for Donaldson, Lufkin & Jenrette Securities Corporation's Pershing Division said that the firm hopes to roll out the product by the end of the year. At least one broker-dealer has already signed up for the service and expects to go live in the fourth quarter.

DirectAdvice's strategy is to partner with financial institutions and provide a private label version of their service. Under the alliance, Pershing will shoulder the task of marketing the service to the broker-dealer firms.

The Hartford, Connecticut-based firm is one of a number of startups targeting the online asset allocation advice model. Its competitors include, Financial Engines, mPower, Morningstar, Standard & Poor's and Intuit/TeamVest.

"The whole idea is that financial institutions are looking at ways to add value to retain and attract customer assets, explained Neil Benedict, senior vice president of sales and marketing at DirectAdvice. "One way institutions see to do that is to add asset allocation advice. To provide advice just for the 401(k) plan is not enough. You really need to address all of an individual's financial goals," he elaborated.

DirectAdvice will changing the look and feel of its product to fit the broker-dealers' needs, he added. When this is done the advice product will have the look and feel of financial institution -- not DirectAdvice. Benedict added that the customization will extend to the questionnaire investors complete and the communications to the customer.

"We will customize the communication to the tone of voice of the institution," he said, adding that this will allow communications to high-net-worth individuals differ in tone from those with moderate incomes, for example.

Rather than being a threat to financial advisors, the service could become a tool in their arsenal. DirectAdvice says that it will make its online assistance capability available to broker-dealers that wish to refer clients who want to move beyond the Web product to financial planners.

DirectAdvice's retail service costs $75 for an annual subscription and provides asset allocation advice for all of an individual's investment goals. Under the arrangement with Pershing broker-dealers will pay a licensing fee based the firm's volume. It will be up to the broker-dealer to set the pricing for its clients if it wishes to charge for the service at all.

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