Mutual fund observers at last week's industry convention shot down the conventional wisdom that the Internet is a major cost-saver.
"It's a net expense right now, because we're all spending to build the infrastructure," Edward C. Bernard, managing director of T. Rowe Price Associates Inc. of Baltimore, said Friday at the Investment Company Institute's annual conference.
Calls that used to go to the firm's automated voice response unit have shifted to the Internet, but live representatives still get roughly the same number of calls, Mr. Bernard said.
Capital Research and Management Co., the adviser to the American Funds, has found that calls per account to live representatives have dropped, but with no significant cost savings, said executive vice president Paul G. Haaga Jr.
If anything, it has led to added work for the company, he said. The ease of sending an e-mail, compared with writing a letter, has led to a much higher volume of mail while raising expectations, Mr. Haaga said.
"It's clear that shareholders will expect much more immediate communication," he said.
But the panelists agreed that the Internet has become indispensable as a communications tool.
Mr. Haaga said saving money was low on the list of priorities when Capital Research added Internet access. Providing better service and keeping up with competitors who already offered Web access were higher on the list, he said. Mr. Haaga said fund shareholders use the Internet - rather than phoning representatives - to check the value of their holdings.
The Web also enables companies to enter markets where they have no significant presence, said Terry K. Glenn, executive vice president and chief operating officer of Merrill Lynch Asset Management of New York.
For instance, Merrill recently signed a deal with HSBC Holdings Inc. to provide online banking and brokerage services to non-U.S. customers.
Meanwhile, costs continue to be a challenge for mutual funds and will become even more so in the future, Mr. Porter said.