Banks, brokerages and other financial services companies are fast becoming one-stop solution providers for online investors. And Bruce Levine is the kind of customer that investment firms covet: He’s rich, educated and willing to pay for a high level of service. He is also a self-taught investor who relied for years on books and reports to guide his decision-making. "I read a lot of books and newsletters, and I subscribed to The Wall Street Journal, Barron’s and the Hulbert Financial Digest," says Levine from his home in Boca Raton, Fla. "It took a great deal of academic effort on my part. But on the Internet, anyone can get the information they need almost instantly."

Financial services companies are only beginning to carve out their strategies for the Web, and they are trying to gauge exactly how much and which kinds of content the next generation of investors are looking for. Companies from E*TRADE to Citigroup have already started to pack their sites with everything from stock quotes and performance charts to retirement calculators and investment tutorials–and plan to take their customers even further. While many of these financial services companies are partnering with content providers to increase traffic and take them to that next level of service, Forrester Research analyst Ron Shevlin is warning these firms that they risk diluting their brand identities through their partnerships with multiple content providers.

But do investment firms really fear being overshadowed by their content providers? "Absolutely not," insists Stephen Scullen, executive vice president of Retail eBusiness Development at Fidelity. "Web surfers are very savvy, and they’re accustomed to reading content from a variety of sources. Our job is to find the best content we can and present it our customers." Scullen adds that it would be "naive" to think that one firm can corner the market on financial information. "Partnering with the Net’s best content providers will only serve to strengthen our brand integrity."

Other financial firms plan to carry their brick-and-mortar success into cyberspace by balancing state-of-the-art interactive tools with their own educational content. While the Vanguard Group produces its own investment advice and retirement calculators, it also counts on SmartMoney to deliver stock quotes and charts to its brokerage clients. And the firm has a deal with Intuit to provide registered Vanguard customers with free access to Quicken TurboTax for the Web.

Tim Buckley, Web services group principal at Vanguard, says his company’s blend of internally produced content and innovative tools serves customers best. "We are building on our track record of trusted material for self-directed investors by adding all of the new tools that will help them manage their portfolios. That’s the promise of the Web, after all. You can learn as much as you want to about investing, and you can do it on your own time."

Consumers seem to be responding favorably to content-rich investment sites. One site already popular with consumers is Schwab.com, where Levine keeps his holdings. He can look at stock quotes from Quote.com, indices from Media General Financial Services, earnings estimates from Zacks Investment Research and fundamentals from Hoovers Online. (Schwab’s partners receive credit in small type at the bottom of its quote and analysis Web pages.) Levine says that the diversity of data at Schwab.com helps him to make better choices. "I can look at my options from as many angles as I want to," he says.

While Levine welcomes Schwab’s comprehensive effort to enlighten investors, he doubts the accuracy and value of many tools, such as retirement planning calculators and portfolio trackers (the latter, he notes, often fail to factor in stock splits and dividend reinvestments). "They’re like slot machines," Levine says. "They’re there to entertain you while the house profits."

But independent experts truly believe that online investors stand to benefit from–and actually enjoy–financial tools and online advice. "It depends on what investors make of them," says John Bajkowski, editor of computerized investing at the American Association of Individual Investors. "These tools won’t turn users into financial analysts, but they will help them find investment opportunities, assess their risk tolerances and set time horizons for their investments."

Giving up the hard sell

Financial services companies may be learning to use original content and dynamic tools to bolster their brands and cement customer relationships, but they are still using their Web sites as heavy marketing tools, according to Forrester’s Shevlin–perhaps to their disadvantage. "Paying customers don’t want to be hit relentlessly with promotions and special offers." Nevertheless, Internet-only firms with short histories find it hard to resist making a play for new customers on their sites.

Until recently, two-year-old CompuBank offered visitors to its home page a $20 cash incentive to sign up online. And it continues to promote its Circle of Friends plan, which awards current customers $40 for each new person that they lure to the bank. But CompuBank’s spokesman, Jonathan Lack, says his company does not push any promotions on its customers while they are logged on to the site. "We see our site as a transactional tool, not as a marketing tool," he insists. "We’re not bombarding them with ads while they’re paying their bills or checking their account balances." This is a good move, as evidenced by recent research studies that prove many users regard online ads as intrusive (Jupiter Communications) and untrustworthy (Forrester Research). As an alternative to online ads, many analysts suggest companies cull more data from their interactions with customers and create a cross-selling strategy.

The interactive way is the only way

Forrester’s Shevlin also finds fault with financial Web sites that fail to gear their "content and services to individuals based on knowledge about their preferences and behavior," a practice Forrester calls "smart personalization." To Fidelity’s Scullen that means responding to customer questions with data that is "meaningful at that exact point in time." Fidelity’s Web site prompts current and prospective customers with questions about their investment goals or needs. "Then, based on these user-defined parameters, we are able to produce dynamically generated content pretty much on the fly," Scullen says.

Scullen and others refuse to discuss the details of their site development processes, but the Fidelity vice president concedes that such high levels of customer interaction require deep pockets and dedicated site developers. "This isn’t brochure-ware we’re making here," he says pointedly. "Our greatest challenge right now is developing ways to anticipate what our customers and prospects–after we answer their initial questions–are going to ask next. That’s where it gets tricky."

To meet its rigorous performance requirements, Fidelity.com relies equally on its own developers and third-party software companies and consultants. "I don’t care if we buy it or build it," Scullen says, "as long as it’s exactly what we need. If the right tool doesn’t exist, then we’ll build it ourselves in a proprietary fashion."

Vanguard’s Buckley, meanwhile, leans even more heavily toward in-house Web site development. Vanguard has a long history (its S&P 500 Index Fund dates back to 1976) and many of its financial records reside on legacy computer systems. "Doing things in-house is almost a part of our culture," Buckley says. "Of course, we may outsource for design expertise or some other targeted consulting. But when you are dealing with as many legacy systems as we are, in-house is still the best way to go."

Buckley sees another benefit to in-house Web site development: It allows Vanguard to bring its talented and highly valued investment associates into the planning process. "We call it a merger of clicks and crew, to describe the way we are bringing the skills of our associates together with the very best technology we can produce." The result, according to Buckley, is an exceptionally user-friendly site that allows consumers to perform multiple tasks and transactions.

And Buckley says that Vanguard’s associates should not worry about programming themselves out of a job. (At Vanguard, phone associates remain an institution–even CEO John Brennan works the phones at tax time.) "We learned after surveying our clients that, no matter what you do, people still love talking to a live associate," he says.

Mark Baard is a freelance journalist based in Boston. He contributes to publications including Computerworld and PC World.