Twelve years after opening its virtual doors, DLJdirect Inc. is making some important adjustments to its strategy, cutting the ribbon at bricks-and-mortar sites, and forging ahead with efforts to develop products and seek out wealthier clients through alliances with financial partners, including banking companies.
K. Blake Darcy, the company's chief executive officer, says the changes are needed to succeed in an investing market where much of the competition already has a well developed hybrid strategy.
In a recent interview, he explained that every major financial services company has an online component so that to "define ourselves by that now would be very dangerous going forward."
Mr. Darcy also said DLJdirect, which is mostly owned by Donaldson, Lufkin & Jenrette Inc., must become a globally recognized name.
The trend DLJdirect is riding has already swept up key competitors such as Charles Schwab & Co. and TD Waterhouse Group, and it also includes the likes of American Express Co., which lately bought up a slew of automated teller machines to augment its credit card, online banking, and other financial services offerings.
In its bid to move beyond no-frills online brokerage, the Jersey City-based DLJdirect this month opened its first U.S. retail office in Delray Beach, Fla.
The company also has a branch office in Japan, a country that in recent years has been a Mecca for financial services companies from the United States.
"Our strategy is to be a global provider of financial services to high-net-worth, self-directed investors," Mr. Darcy said.
Though DLJdirect's "core strength and capability" will continue to be in brokerage and investment products, it also plans to offer online banking in some fashion.
"It's a natural extension," he said. "It's just a matter of how we want to do it."
DLJdirect is consistently ranked among the top 10 online brokers by several measures, including customer accounts, assets, and average assets per account. On March 31, it had more than 930,000 customers on its books worldwide and assets of $29.4 billion.
But DLJdirect holds far fewer online accounts worldwide than its competitors.
At the end of March, it had 389,000 active accounts worldwide, ranking seventh, according to U.S. Bancorp Piper Jaffray Inc.
It said Fidelity Investments was ranked first, with 4.2 million, and Schwab No. 2, with 3.7 million.
And with fierce competition for online accounts from companies like Fidelity, Schwab, TD Waterhouse, and E-Trade Group Inc., to name a few, it is imperative for companies to distinguish themselves, observers said
"It's hard for any of the online brokers to develop and maintain anything that's truly proprietary," said Jim Marks, director of e-commerce equity research at Credit Suisse First Boston.
DLJdirect has tried to carve a niche by targeting self-directed investors with more than $100,000 of investable assets.
And its acquisition of 12,000 brokerage accounts from Scudder Kemper Investments in December should get the company closer to that goal, said Sean Chin, an equity analyst at Merrill Lynch & Co.
The average account at Scudder had about $100,000 of assets, while DLJdirect customers averaged $61,300 in the fourth quarter and $67,600 in the first, according to Merrill Lynch research.
In March, moreover, the company announced it would supply online brokerage services to clients of the New York private banking company Bessemer Trust.
On Thursday DLJdirect cast its net even wider, striking a deal with CPAdirectory.com, an online database of more than 450,000 certified public accountants.
New members of CPAdirect who open online brokerage accounts with DLJdirect will be eligible for two commission-free trades per month, for a limited period.
"It is apparent to most companies, particularly DLJ, that one of the most efficient ways to grow is through partnerships," said Henry McVey, an analyst who covers the company for Morgan Stanley Dean Witter & Co.
Mr. Darcy said DLJdirect expects to sign a number of Scudder and Bessemer-type deals with banks, trade groups, and professional associations. He declined to give names but said banks are a "natural" because many do not offer online brokerage.
DLJdirect is also looking to market itself as a self-directed brokerage option in 401(k) plans. It has announced seven such alliances, including one with Nationwide Financial on Thursday.
The company also has deals with Sungard Data Systems Inc. and the 401(k) Company of Austin, Tex.
But in moving toward a hybrid strategy, DLJdirect faces tough competition.
Schwab and TD Waterhouse are steadily opening branches, bolstered in both cases by decent menus of online services.
Even E-Trade, which has resisted establishing a broad brick-and-mortar network, has said it will open a branch in New York next quarter and just last week announced plans to open a unit in a Target store in Roswell, Ga.
However, the Menlo Park, Calif., broker plans primarily to use kiosks attached to a network of ATMs to reach customers.
For DLJdirect's part, it will probably not stop with the Delray Beach retail office, said Mr. Darcy.
If the Florida experiment succeeds, the company may open branches in other major cities and regions where wealth is concentrated, he said.
Though brokers in the Delray office accept trades, their primary function is to help investors open accounts, get answers to questions, and enjoy the comfort of face-to-face contact.
It is a "marketing necessity," Mr. Darcy said.
"We think the game is going to be all about delivering the widest range of financial service across the widest number of different channels," said Mr. Marks of Credit Suisse.
Firms that are not online need to be, and those that are should explore at least the possibility of retail branches, he said, or they "are going to be at a competitive disadvantage."
Meanwhile, DLJdirect is looking to go global. In five years investors should be able to click on DLJdirect's Web site from anywhere in the world, gaining access to all markets, Mr. Darcy said.
The company already has online brokerage operations in Japan, the United Kingdom, and 14 countries in the Middle East.
It has announced plans to offer online brokerage in Hong Kong and Germany this year.
Next year it hopes to offer such services in France, Taiwan, Singapore, South Korea, and India. Canada is another target, but Mr. Darcy said the dominance of Green Line Investor Services Inc., a unit of Toronto-Dominion Bank, is a difficult barrier to crack.
"At this point we don't see the entry point that makes sense," he said, "but we continue to look." 
