Merrill Lynch & Co. is not alone in straddling the worlds of full- service brokerage and on-line trading.

Many traditional financial advisers say the marketing position is not an awkward one, describing on-line trading as an evolutionary step, not revolutionary step. On-line-only brokerage service does not present a long- term competitive threat, they say, because technology improves customer service.

In that vein, when Merrill Lynch announced this month that it would offer on-line trading, the New York company emphasized that it would also expand its force of financial consultants, who now number 14,000.

David H. Komansky, the chairman of Merrill, said the strategy was "the most important decision since we decided on the Cash Management Account in the 1970s."

But he and other executives were careful not to downplay the role of financial advice. John L. Steffens, Merrill's vice chairman, said it is through "human wisdom" that people achieve long-term financial goals.

"It's not about the substitution of technology for labor," Marten S. Hoekstra, executive vice president and director of marketing for PaineWebber Inc.'s private client group, said at a recent press briefing. "The clerical function is not what the affluent value."

PaineWebber plans to launch on-line trading in the third quarter. Merrill plans to offer its broad-based on-line program in December, matching Charles Schwab & Co. in price at $29.95 per trade.

"On-line trading is table stakes. It's like, 'Do you have a fax machine?'" added Mark B. Sutton, the president of PaineWebber's private client group.

The rush by traditionalists to throw their hats into the on-line ring was somewhat overdue, said Charles B. Wendel, the president of Financial Institutions Consulting in New York. "A lot of them were in denial that this was serious or even appropriate."

But now full-service brokers are compelled to get into the on-line market to prevent a "bleeding" of clients to discount shops like E-Trade Group and Charles Schwab & Co., he said. A strong economy can only mask loss in market share for so long, he added.

People who trade on-line are among the best clients at traditional brokerages, he added. "It's not just day traders. It's sophisticated investors," he said.

Current clients are less of a concern than future prospects, said Jeffrey S. Maurer, president of U.S. Trust Corp. in New York.

"You stand to lose the next generation of client if you don't have this capability," he said.

According to a recent survey conducted for U.S. Trust, wealthy investors tend to track finances and conduct research on-line, but are less likely to make trades.

Sixty-eight percent of the 126 respondents who use computers, do not make investments on-line.

However, many of the total 150 respondents-all of whom had either net worths above $3 million or annual incomes of at least $225,000-said they expected to trade more on-line over the next five years. A quarter of the respondents said they would make investments on-line a "little more often" and 17% said "much more often."

U.S. Trust offers on-line banking and investment account reviews. Systems for investment transactions are being developed, Mr. Maurer said.

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