Trust Companies Start Providing Account Access By Internet Connection

Money managers for high-net-worth and institutional clients are gradually putting their trust in the Internet.

Several trust companies large and small are letting customers tap into account information over the Internet. Though customers cannot yet conduct transactions that way, they can see their holdings, account histories, and investment details.

"There is a new generation of private clients," said Michael Baresich, private client services group managing director at Bankers Trust Corp., which has allowed wealthy customers to view accounts on the Internet since 1996. "They are more involved in their money. They have a desire to play an active role and monitor what's going on."

The development is a logical step for people accustomed to using the Internet to research investments and financial news, said Robert Rowan, director of the Institute for Private Investors in New York. "That is a good indication that there is some interest out there," he said.

About 30 trust companies have signed up for M&I Data Services' TrustWeb, launched in January 1997. The Milwaukee-based computer service company has added three customers a month for the service, among the first to afford such access.

Some 35 small trust companies have signed up for Sungard Trust Systems Inc.'s Portfolio Account Link, enabling access to accounts via the Internet. Six new firms are signing up each month. The service costs institutions $2,500 to set up and $150 a month.

"The little guys now have the tools to leapfrog some of the big banks," said Stephen Borst, Sungard's senior vice president of sales and marketing.

Copper Mountain Trust and Advisor Services, a 1,000-client independent trust company in Portland, Ore., is heavily marketing its system, provided by Sungard, that links retirement plan managers and high-net-worth customers. The firm has signed up 200 retirement plan and individual clients since January, said Rick Meigs, chief operating officer.

The firm decided to provide Internet access after realizing a significant proportion of its clientele goes on-line, he continued. A quarter of its customers had viewed Copper Mountain's informational Web site and several had asked for further enhancements.

Most users have not expressed concern about security, Mr. Meigs said. In addition to getting a log-on name and password, clients have the option to encrypt the transmissions. Most do not, however, because encryption slows downloads and they prefer speed.

Security is one reason that Fiduciary Trust International is sticking with its private network access for now, a spokeswoman said.

Two other banking companies with trust services-New York-based U.S. Trust Corp. and Chicago-based Northern Trust Corp.-plan to start offering Internet access early next year.

Bankers Trust Corp. issues to its high-net-worth customers security tokens that randomly generate ever-changing identification numbers. Customers use the number and a static password-known as two-factor security-to protect their on-line account sessions.

The bank now plans to migrate its institutional clients from private network access to the Internet, which can offer them a wider array of research, said Timothy Boomer, managing director for product management in global asset management services.

Some analysts and software vendors question whether trust companies should turn to the Internet at all.

"Trust is a high-touch business and rides a lot on personal interaction," said Octavio Marenzi, research director at Meridien Research Inc., Needham, Mass. "The Internet perhaps is not the best medium for that kind of service."

"The Internet is a volume game," he said, "and trust is not-it's exactly the opposite."

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