E*Trade makes push beyond e-trading
* Sales and marketing push to help with asset gathering
* Could lead to larger sales force
* Plans to roll out retooled Web sites in 2012
By John McCrank
Dec 7 (Reuters) - E*Trade Financial Corp wants to be seen as more than an e-trading firm.
The online brokerage, which uses a talking baby as its TV pitchman, is planning a marketing push to rebrand itself as a more comprehensive wealth manager and not just a place for discount stock and options trades, E*Trade chief executive Steven Freiberg said on Wednesday.
The move follows a strategic review in which E*Trade considered putting itself up for sale but decided not to, citing unfavorable economic conditions among other factors. Instead it said last month it would implement a longer-term strategy to grow as an independent company.
The presentation by Freiberg points to E*Trade's need to transform itself into a more diversified financial services firm.
"Today, our customers come to us largely so that they can trade, but we want them to come not only to trade, but to think about the more serious money (they have) to invest," Freiberg said at the Goldman Sachs U.S. Financial Services Conference in New York.
E*Trade estimates its clients keep only about 10 to 12 percent of their overall financial assets with the firm, or $180 billion to $190 billion. Capturing a larger share of their customers' wealth is crucial as the company, which has lagged its peers since the 2007 mortgage crisis, tries to fend off shareholders calling for E*Trade to put itself up for sale.
Yet the firm has to overcome years of marketing itself as a place where investors big and small could quickly and cheaply direct their own investments.
Many clients, for example, are not aware they can buy and sell bonds through E*Trade. "Our customers don't know that because they have come to us to trade equities or options."
Freiberg said the firm recently tested a program in which some clients who had a strong relationship with the firm were put in touch with an E*Trade financial consultant, moving from a purely online experience to a one-on-one personal experience.
"The relationship changed," said Freiberg. "We picked up substantially more assets."
Freiberg said E*Trade is now testing to see if clients who do less business with the firm will also bring more assets to E*Trade if they are get access to a consultant.
"If that were to work out, then I could tell you that we could add another X-hundred of financial consultants," he said.
E*Trade lags its rivals in terms of attracting new assets. The firm this year has added net new assets at a rate of about 7.3 percent of total assets, 4 percentage points lower than rival online brokerage TD Ameritrade .
E*Trade also will introduce a new Web site for prospective customers in the first quarter of 2012, followed by a retooled client website that will emphasize the broader array of services at E*Trade.
Last month E*Trade completed a strategic review under pressure from Citadel Investments, its largest shareholder with a 9.9 percent stake. For the second time in the past year, the company's board concluded E*Trade could generate higher returns for shareholders by staying independent than by selling.
Citadel and other investors have pushed the online brokerage to seek a buyer, having lost patience with the firm after years of poor performance. E*Trade continues to chip away at an out-sized portfolio of soured mortgage loans, which pummeled its balance sheet and profits when the housing market collapsed in 2007. Its results have also been more vulnerable to declines in net interest margin because its relatively high level commission-based trading.
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