As the stock market climbed higher in recent years, Capital One began to notice a trend that it found troubling within its online brokerage business.
People’s portfolios were flourishing, but some customers were shutting down their accounts and seeking advice elsewhere. At the same time, the McLean-based bank struggled to expand its separate financial advisory business, which lacked an online presence. The company came up with a solution — combine the two departments so that people could get both advice and online guidance.
“Once [online] customers’ needs would grow and their needs became more complex, they would leave us, to be quite frank, because we didn’t have advice,” said Yvette Butler, president of the new division – Capital One Investing – which is being announced Monday. “On the advice side, it was a healthy business but it couldn’t really grow to serve all Capital One customers. We’ve released those constraints by putting them together.”
The move will create an advice center in the fall that will give investors using the bank’s online trading platform, ShareBuilder, the option to chat with an adviser online, over the phone or through a video chat, regardless of how much money they have invested with the bank, Butler says. People with at least $25,000 to invest can look into being paired long-term with a financial adviser. And clients who are already working with a financial adviser through the department formerly called Capital One Financial Advisors will get tools for tracking their investments online, she says.
In addition to helping it hold on to customers, Butler says she hopes the new model will create a middle ground of services that may appeal to millennials. As young people move up in their careers, make more money and build up savings, they may start to want additional guidance with their investments, she says. “We want to try to find a way to meet them where they are,” she said
Some 57 percent of young investors say it’s important for them to have online or mobile access to their brokerage accounts, but only 27 percent of advisers said they thought clients wanted a mobile platform, according to a survey by Corporate Insight, a research firm focusing on financial institutions. Most young people also want guidance when it comes to managing their finances, to make sure they’re on the right path, the firm found.
“What they’re looking for is a more collaborative relationship where their opinion is taken into consideration, their knowledge is being taken into consideration and they’re not being talked down to,” said Silviya Simeonova, a senior analyst with Corporate Insight.
Other banks and brokerage firms are offering models that let people track their investments online and pay for as little, or as much, advice as they want. E*Trade, for instance, offers three levels of guidance for customers. One program targets people who don’t want any advice. Another online service helps people create their investment allocation based on their goals and risk tolerance, but leaves them in control of managing the money. A third program is for investors with more than $25,000 in assets who want to talk with an adviser and ultimately want the firm to manage the money for them. (E*Trade says most customers choose that middle option).