Moving beyond discounted share trades

TD Waterhouse yesterday announced the launch of its Analysts' Choice Funds service which combines fund research from Morningstar and consolidated fund performance reporting from Investment Link. Just last week Etrade (US) signaled its intention to add a physical force of financial advisors to its list of services to make house calls anywhere in the United States. Both of these initiatives indicate emerging trends in the distribution of financial products both online and off.

TD Waterhouse is currently one of eight online brokers that offer access to managed funds. Although still considered the domain of financial advisors, figures reported in the Australian Financial Review (24/5/2000) indicate that 60% of TD Asset Management's Canadian retail funds distribution comes from the bank's discount broking arm. The ‘Do – It – Yourself' investor who understands their risk profile, has access to analytical tools and independent fund reports may be less inclined to enter into managed funds via financial planners, especially when they can do so over the internet and often at a discount.

Etrade in the US also currently offers access to mutual funds, analytical search tools, fund profiles and discounts upon entry. They begun moving to a physical presence by buying a network of ATM's and now creating a network of financial advisors and looking to open storefronts in major metropolitan areas.

Similar to the way in which discount brokers have segmented the share trading market into those who require advice and those who don't, they now have managed funds and financial planners in their sites. Etrade US's strategy shows,however, there will always be a place for old economy face to face advice and distribution.