While mutual fund companies are trying to accumulate more assets overseas by opening offices in Japan and Europe and developing offshore fund products, online brokerage E*Trade is going overseas too.
By using the World Wide Web, E*Trade does not have to set up physical brokerages in each country on which it sets its sights.
Mutual fund companies like Fidelity have already developed websites in French and German for customers who speak those languages.
Now E*Trade, of Palo Alto, Calif., has joined with a San Francisco Internet consultant to develop native-tongue websites in countries abroad where E*Trade is selling franchises or creating partnerships.
Over the next two years, Nova/Ironlight Interactive, which has developed websites for Toyota, Levi Strauss and Sony, and E*Trade will develop about 20 country-specific websites for E*Trade brokerages around the world, said Lisa Nash, vice president of customer management at E*Trade.
Each local franchise or partnership is responsible for the back-end operations and local regulations. However, E*Trade will be responsible for the E*Trade brand and the look of the site, which it intends to tailor to each country with Nova/Ironlight's help.
For instance, since investors in Canada prefer to invest in mutual funds, mutual funds are emphasized on that site, while on the E*Trade Australia site, Australian securities are given the most attention, said Nash.
The alliance should lead to international markets accounting for 30 percent of E*Trade's business within three to five years, according to Nash.
E*Trade currently has franchise, joint venture or partial equity positions with companies in 32 countries. With this network, E*Trade estimates it has access to 95 percent of the world's investable assets. It believes it can capture a sizable chunk of those because it expects the rest of the world to embrace online trading.
According to Euro-Marketing Associates (EMA), a global marketing consultant in San Francisco, there are 75 million people who use the Internet in languages other than English, and non-English speakers are the fastest growing segment of Internet users as a whole.
"They're ready for the next step and online investing," said Nash of E*Trade.
The most common language in the world is Chinese, with 885 million speakers worldwide, according to the Summer Institute of Linguistics, located in Dallas. The second most common language is English, with 322 million speakers. Of that, 210 million are located in the U.S. There are 266 million Spanish speakers, the third most common language in the world. Bangali, Hindi, Portuguese and Russian are the next four most commonly spoken.
Already, E*Trade has set up electronic brokerages in Canada and Australia and it plans to open online brokerages in the United Kingdom, Japan and Sweden over the next six months.
Federated creates website for CPAs
At least one mutual fund company has set up a site devoted entirely to the growing certified public accountant channel. Federated Investors of Pittsburgh has created a website at cpaadviser.com that it hopes will help to establish its brand with accountants and offer CPAs a resource on mutual funds. The site became active the first week in January.
Like other fund companies, Federated is in the early stages of courting the CPA channel. Recent legislation allows, for the first time, CPAs in many states to receive commissions from sales of financial products like mutual funds. That development has spurred fund companies to pursue this channel. Federated estimates that 60,000 CPAs' will be selling financial products by the year 2004.
The Internet is one of the best ways to reach CPAs since they are not afraid of technology, says Keith A. Nixon, senior vice president and national director of Federated's institutional sales division.
The website is linked to Federated's main website (www.federated.com) and includes general information about Federated and its products. It also explains how to become a financial adviser and through which third party distributors, i.e. fund supermarkets, Federated's funds are available. Federated hopes that by providing this information, it can develop allegiance among CPAs to the Federated name. Federated is also educating its sales force about marketing its products to CPAs.
One of the most important features of the site may be a guest book through which Federated hopes to compile a database of CPAs with which it can begin building relationships.
"What I don't want to do is just go out and push product," Nixon said.
Federated is also using a print advertising campaign this year to build awareness of the site. Ads will appear in Practical Accountant, Accounting Today and Accounting Technology.