Most Americans don't know what to do with their money. Sure, the so- called "financial hobbyists" track the market, keep tabs on interest rates and invest for asset growth as well as their retirement. But these people are definitely not representative of middle-class America.

But with the advent of 401(k) retirement programs, the attrition of social security and low-interest rates, middle-class consumers have collectively poured billions of dollars into mutual funds saving for their retirement. In doing so, they have come to understand the power of their investment dollar. Even so, most Americans don't know where to invest their money; individually, they have neither the money to attract a financial advisor, nor the desire to fork over full-service investment fees. And many people don't have the time or inclination to research, track and project instrument performance through discount brokerage houses like Charles Schwab & Co., which have volumes of information for the consumer to absorb when making selections.

The bottom line: The mass market needs straightforward financial advice. Consumers are going to give their business to institutions that can give them this guidance in a convenient, low-cost, high-performance package.

Until now, that "package" has been the product and information services offered by more progressive discount brokerage houses. But the package is evolving into electronically generated and delivered advisory services, the logical next step in electronic banking and brokerage. With this, financial institutions-particularly banks-can distinguish themselves, winning customer trust by recommending an investment strategy and guiding consumers toward specific transactions. "The provision of advisory and consultative services over the Internet by individual banks, as opposed to through third parties, represents an opportunity for banks to reestablish customer loyalty and brand loyalty," says Chuck Williams, CEO of Novato, CA-based Brightware, Inc.

The company has developed an automated interactive sales representative that diagnoses customer needs and then guides customers to suitable products and services per captured customer information and the financial services providers' product selection. Williams estimates that his product will lower bank development costs of an interactive advisory solution from approximately $600,000 to under $300,000.

The program is called "BrightAdvisor." Not yet released, the Internet software uses artificial intelligence to generate advice based on a financial institution's investment models and customer specifications. It uses a natural language engine to communicate with customers, answering questions and making suggestions. Further, FutureBanking has learned that Schwab is looking at this solution, but has no plans to introduce it to its Internet service, according to a company source.

Schwab and others may be keeping their distance from electronic advisory services at this point because it presents new liability hurdles. Still, the potential returns, sources contend, far outweigh the risks.


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