Defensive or Offensive Strategic Implications
Merrill Lynch’s online offering appears to be generating more defensive strategic implications. They also faced hurdles that were largely indigenous to traditional full-service brokerages, including a longstanding internal culture associated with their financial consultants and an educated and affluent customer base that requires a higher level of service. Since the management of these relationships proved to be an integral part of their success, one could readily appreciate how Merrill Lynch might be reluctant to pursue any modicum of change around this formula. Indeed, The Industry Standard (12/1998), quotes Merrill Lynch’s spokeswoman Bobbie Collins as saying “online trading has never been a priority for Merrill Lynch or its clients.”
When they decided to commit to online trading in 1998, via Asset Power and Financial Advantage Service, it was delayed three times until its eventual introduction a year later in 1999. It would appear as though Merrill was concerned about introducing a reliable product that was more in keeping with their full-service heritage and devoid of the myriad glitches and shut downs that characterized other discount providers.
Aside from significantly lower pricing points, there is little to distinguish Merrill’s online service from that of Morgan Stanley Dean Witter in terms of timeline and in dimensions of service. The implications of Merrill Lynch’s behavior seem more in line with a strategy of preservation rather than innovation. The implications would thus be more defensive in nature as they attempt to augment the growing needs of their traditional customer niche.