A financial adviser's most frightening competitor these days is not the bank across the street or the credit union downtown. It is the Internet, which has spawned E-Trade, Ameritrade, and Charles Schwab's Mutual Fund OneSource. Bank brokerages need to scramble to get on track.

With Forrester Research predicting that 21 million households will be using on-line financial services by 2003-600% more than in 1998-it is clear that bank brokerages must merge their proven guidance and expertise with technical innovations. Yet questions persist as to how such systems should be put in place.

From a banking perspective, spending hundreds of millions of dollars to upgrade financial systems is not a happy thought.

Besides the cost, banks continue to grapple with the fact that they don't want to open their networks to anything but transactions. Security is always a concern, but it takes on new levels of importance and maintenance requirements once a system connects to the Internet.

These obstacles should not stop banks from investing in technology- especially as consumers become more and more technology-savvy when it comes to their financial planning. They are demanding on-line access to accounts. The combination of inexpensive consumer financial software and the Internet is helping a growing number of people to make investment decisions on their own.

Have the big guys found the answer with proprietary systems? Large companies like Fidelity Investments and Merrill Lynch have proprietary software, but it primarily gives advisers access only to their own company's products.

Consumers balk when offered only the house brand instead of the best product available for their unique situation-especially when they have a resource like the Internet that can give them a much broader selection of investment products.

As consumers increase their use of the Internet, they are demanding the ability to track their investment progress, evaluate investment options, and select investment vehicles on-line. Yet they still want the advice, oversight, and relationship provided by investment professionals.

In the on-line world, advice givers will evolve, but they will not disappear. Teachers, machinists, and advertising executives do not have the time to surf the Web daily to determine the best course of action. They need a trained expert who can build a relationship and financial plan with them that will reflect not only their life goals (college, vacation, new home, retirement) but also allow for variables such as inflation, maintaining a predetermined quality of life, or extreme market fluctuations.

Perhaps what banks need is a technology platform that allows consumers to access all their banking and investment needs on-line while allowing advisers to provide oversight and the ability to make recommendations for any investment product or service.

This is neither full-service nor self-service, but a combination of the two, where the customer determines the level of the adviser's involvement.

Retail banks have a reputation for inspiring confidence and must continue to look for ways to instill loyalty in their customers. If banks don't build on this by combining technology, products, and a human touch, someone else will muscle them aside.

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