Internet Planning Service<@SM> Eyeing Bank Advisers

A pioneer in a new style of interactive Web financial advice says his product could help banks rethink the way they use the Internet, and attract customers whom banks would otherwise have lost.

Financeware.com of Richmond, Va., provides automated interactive advice for clients of financial advisers. It was launched in May 1999 by David Loeper, who had earlier been the managing director of retail brokerage at First Union Corp.’s Wheat First Union brokerage division.

The site queries advisers’ clients about their desired standard of living and their risk tolerance; then it puts together an investment plan back-tested with historical economic data.

That plan can be fine-tuned over time as market conditions or the clients’ ambitions change. Since the advisory relationship takes place on the Web, it is relatively easy for advisers to get investor approval for plan changes, Mr. Loeper said.

Only clients of advisers signed up with the service can use the planning tool. Others can use its site only to find such an adviser.

Mr. Loeper says many banks need such a service because they are consistently off-track when it comes to using the Internet as a means of bringing together advisers and investors.

They generally still see the Internet as a tool exclusively for “do-it-yourself” investors — such as online traders — and ignore the fact that customers who seek professional advice are more likely to be loyal, long-term customers, he said.

“The core customers banks want are people who don’t want to do things on their own — the exact opposite of online brokerage customers,” Mr. Loeper said.

The key to setting up a meaningful plan is to speak in terms clients understand personally, rather than using industry jargon, Mr. Loeper said.

For example, most advisers, when asking clients about risk tolerance, will use language such as “identify the level of risk you’re willing to take on.” Those terms generally confuse investors, so the Web site tries to explain such concepts in language an average investor can understand, Mr. Loeper said.

Some 58,100 financial advisers, about 10% to 20% of whom are bank-affiliated, are fee-paying users of the site, Mr. Loeper said. Those advisers, all told, manage about $10 billion in assets, he said.

All advisers who use this service are put into a database that potential investors can search for free, Mr. Loeper said. People who have used this service have averaged $1.2 million in investable assets, he said.

Independent advisers and those connected with banks or brokerages pay access costs that vary by the adviser’s assets under management. Fees can run as little as $1.95 per month per client for individual advisers, or upward of $30,000 per year for large financial companies, Mr. Loeper said.

He said the company is close to a deal that would give advisers affiliated with a large bank — which he refused to publicly identify — free access to Financeware.com’s tools. The bank hopes the deal will help it recruit additional advisers, he said.

Financeware.com is also seeking other potential bank partners for its services, he said.

It has already co-branded its Web site with firms such as New York-based brokerage TD Waterhouse; the Mclean, Va.-based adviser Lockwood Financial; and the Red Bank, N.J., brokerage First Montauk Securities Corp, Mr. Loeper said. It has also served as a consultant to Glen Allen, Va.-based Wheat First Union, he said.

Customers of these companies can access Financeware.com’s advice through their Web sites.

Apart from its advice service, Financeware.com is selling one of TD Waterhouse’s annuities and a wrap fee program developed by New York-based EnvestNet. It has also reached an agreement to co-brand a Web site with a FolioFN in the first quarter, Mr. Loeper said.