December 11, 2000

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PNC Uses The Internet To Help The Nouveau Riche

By Christopher T. Heun

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uch has been made of dot-com millionaires and the importance of stock-option compensation. But there's less talk about how little this young and prosperous crowd knows about managing its wealth. In that sense, these people are no different than all the other private investors out there, chasing cheap online trades and scouring the Internet for financial advice.

Toward the end of last summer, while talking within the company about ways to tap this emerging young, affluent, and technology-minded segment of society, Timothy Shack, CIO of the Pittsburgh banking and mutual fund company PNC Financial Services Group Inc., came across an Oppenheimer survey that found that 39% of the 19 million U.S. workers with stock options knew nothing about them. Three-quarters of the group knew little about alternative tax strategies. But half of the group did know that options played an important role in their financial future.

Sensing an opportunity, PNC teamed with IBM to develop an Internet-based financial advice center for the New Economy crowd, and by early October, a program catering to this clientele called Unlocking Paper Wealth was formed. The timing was right on the money.

"Because of the stock market volatility, it's a great time to talk about this subject. Our pipeline has tripled since August," says Gail Graham, executive VP and managing executive of PNC Advisors, which helped create the service with the company's capital markets division. "The folks in Silicon Valley have learned that what goes up does come down. That's one challenge of youth--to give them a little sobriety. There's still taxes to pay and planning to do."

The Internet delivery channel is critical to the Unlocking Paper Wealth service, which PNC expects will bring in more than $400 million in new assets this year. First, PNC research found that people in this target market want to do their financial research online. Second, Graham believes that because it's distributed online, the new advisory service is more democratic than previous industry efforts. Until now, the only high-net-worth individuals who qualified for this type of consultation were "people who lived in New York or Los Angeles and had $5 million or more in a single stock, who had access to very sophisticated bond traders or advice from Goldman Sachs," she says. In one egalitarian online initiative, PNC will post on its site (www.pncadvisors.com/unlocking_wealth) periodic Webcasts, the first of which is a primer on stock options.

PNC isn't reserving technology for the new upper crust. It's paying more attention to which service channel customers prefer and is developing offerings customized for those who prefer banking by telephone. On the retail side of the bank, PNC expects to improve customer service by adding Internet capabilities to its call center, which also responds to all E-mail the bank receives. Five employees do nothing but answer those electronic messages. But that flood of messages is expected to climb early next year when PNC expands its Web site, so the company's adding an automated E-mail capability that, rather than respond itself, will make it easier for a person to do so.

PNC also plans to unveil online chat sessions that let phone associates and customers communicate via instant messaging, with collaborative Web browsing available by the end of next year.

Photo by Jim Judkis

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