Less than 18 months after it announced the launch of Morgan Online, the investment bank J.P. Morgan is getting high marks for the site and says it is about to take Internet investment advice to new levels as it targets a select audience.
"Our goal is to define a new class of Web design for the very wealthy," said Glenn Smith, who heads Morgan Online and is a managing director of J.P. Morgan Chase & Co. The Internet, he said, "is still a very competitive medium. You always have to enhance your site."
Version 3.0 of the site does that by adding new research functions and other tools, the investment bank says.
Launched too late to be included in the 2000 roundup of investor-oriented Web sites compiled by Barron's, Morgan Online got the magazine's four-star rating in this year's survey. Also getting the top score were more-established players such as Credit Suisse First Boston's CSFBdirect (formerly DLJ Direct), Charles Schwab, and National Discount Brokers. TD Waterhouse, E-Trade, Merrill Lynch Direct, Wall Street Electronica, and Scottrade were among those with three-and-a-half-star ratings.
The review of Morgan Online included a "sneak peek" at enhanced research capabilities to be added shortly after the Barron's survey report, which was published in March.
"Morgan's Internet-based trading and advice service won't win over any Datek fans or day-trading junkies," Barron's said, "but it might soothe high-net-worth investors who want a combination of hand-holding and free rein when it comes to investment management."
The silk-stocking scions at the House of Morgan are unlikely to lose much sleep about missing out on the day-trading traffic. This is online investing for the financial elite - Morgan private banking clients with net worth of $25 million and up, a spokesman said. As such, the site's appeal is less about the automated trade execution and more about the firm's top-drawer investment guidance.
"No other system comes as close to delivering an effective automated advice system," said Jaime Punishill, a senior analyst at Forrester Research of Cambridge, Mass. Until now, Mr. Punishill said, most automated investment advisers have focused narrowly on employer-sponsored 401(k) accounts, offering stock or mutual fund recommendations for retirement based on a client's age, risk tolerance, and similar factors.
"While that's interesting, how many people want information on just one tiny part of their life?" Mr. Punishill said.
Morgan Online enables clients to put a lot more detail into a single analytical engine - information on their actively managed investment accounts as well as on trusts, corporate stock option plans, the kids' college savings programs, and the like.
"The first rule of getting organized is getting a very clear picture of what you have," Mr. Smith said. It is not uncommon for a Morgan private banking client to have 25 or 30 different relationships with the bank. Morgan Online first pulls together all that information, then lets the client bring in additional data on outside accounts.
The investment bank works with Yodlee Inc. to gather details on other online accounts and with the high-end aggregator Kinexus Corp. of New York to obtain information that cuts across currencies and asset classes. Mr. Smith said a Kinexus subsidiary, Greentrak, can provide Morgan Online with analyses of illiquid assets, such as real estate holdings, derivatives, and private equities that may be difficult to price.
Clients can enter data themselves, import files from financial management software such as Quicken or Microsoft Money, or "permission in" third parties such as accountants or family-office managers to provide the information.
"So you're looking at your total balance sheet," Mr. Smith said.
Morgan Online has not yet integrated commercial banking information from Chase Manhattan, so customers with such accounts cannot yet use the service to check bank balances or transfer funds. But Mr. Smith said programmers are working on an incremental upgrade, to Version 3.1, to address the issue: "In three weeks, it will be both sides of the house."
He said the firm will "repackage some functionality for the mass affluent," using some Morgan technology to augment features of the Chase site, for instance. And he promised another significant upgrade to Mortgage Online by yearend.
Morgan Online puts in its clients' hands basically the same analytics that are used by the bank's own "professional wealth advisers." In the old days, the firm would mail out the reports, fax them, or ship them by courier, Mr. Smith said. The Internet can "open up these tools so clients can directly see them."
Staff members did not object when Morgan put their heavy-duty number crunchers in customers' hands, Mr. Smith said.
"We have extremely good bankers," he said. "They're not afraid to show these tools to their clients. It helps them explain to the client all the work they have to do."
Morgan decided not to provide a co-browsing option, by which the banker could essentially take control of the customer's computer to control the screen display. "Our clients didn't really like the experience," Mr. Smith said. "They want a very strong line between what they run" on the computer "and what the banker runs."
If Morgan Online delivers on its vow to take online investment advice to the next level, it could deliver a blow to competing platforms. Mr. Punishill of Forrester suggested Morgan could license its technology to firms such as the mutual fund manager American Century or Prudential, the insurance giant, but Mr. Smith said Morgan has no such plans in the near term. "Our dance card is completely full."
But he would not rule out licensing the software. "We'll get as much secondary use from it as possible," he said.