Morgan OnLine was supposed to introduce J.P. Morgan & Co. to a new breed of wealthy, though not ultrarich, clients those with assets of $1 million to $5 million.
But less than two weeks after Morgan and Chase Manhattan Corp. became J.P. Morgan Chase & Co., the combined organization has fired three-fifths of Morgan OnLines employees and is repositioning the site. Instead of being a driver of new business, it will concentrate on retaining the combined companies roughly 65,000 private banking clients, about 13,000 of them mostly people with assets of at least $25 million from Morgan.
The approximately 150 terminated employees were in sales, marketing, and other client-acquisition roles, and the 100 who remain will develop technology for the site, which is to merge with the former Chase Manhattans private banking site by early summer.
Morgans technology staff is working on version 3.0 of the site, which is to get enhancements such as account aggregation and an easier-to-use interface, said Glenn Smith, Morgan OnLines chief executive officer since its inception last March.
Morgan OnLine is still up and running and will keep that name for the time being, J.P. Morgan Chase said. It is too soon to say whether the site will be renamed, the company said.
Mr. Smith said the change in plans has nothing to do with market volatility or any perception that the well of emerging affluent investors is drying up. But Morgans move comes at a time when some of the largest Internet brokers are feeling the pinch of slower-than-expected growth in online trades.
Ameritrade Holding Corp. said Monday that it plans to cut 230 full-time and 120 part-time positions, mostly from call centers in Omaha and Fort Worth. Charles Schwab & Co. instituted a hiring freeze last month and said it would cut the salaries of 750 top executives.
Mr. Smith said Morgan OnLine was never meant to stand alone, but rather to complement Morgans private client services. When the service was unveiled, however, Morgan chairman and chief executive Douglas A. Warner 3d said it would extend Morgans reach to a much broader group of affluent individuals.
J.P Morgan Chase would not say how many new clients Morgan OnLine has attracted, though it claims to serve thousands of customers.
Kurt Reisenberg, a managing director of VIP Forum, a Washington firm that advises private banks, said focusing on customer retention is smart for this type of Internet business.
Youre not going to bring in clients through the Web youre going to bring them in through traditional channels, Mr. Reisenberg said, noting that even Charles Schwab & Co. opens most of its new accounts through branches.
People are most out of their comfort zone when originating an account, Mr. Reisenberg said. But a lot of people are comfortable maintaining a relationship through a convenient medium such as the Internet.
