` Page 1 of 4Chapter 20

As of: 12/4/18 PHK BUSINESS (11e) VIDEO SERIES FINAL (10/11/10)

EDITOR: A. Grazioso
SEGMENT: Chap 20: E*trade
(Investments/Securities)
VERSION:Final (10/11/10)

“CRYING” TV SPOT (TV:30)

Wow guys what’s wrong.The big expensive broker sent us pictures of his new yacht. It’s not cool he’s killing us. You should switch to Etrade and take charge of your finances. Oh he’s eating lobster too. Get more value at Etrade.

Christopher Larkin

SVP, retail brokerage services - U.S.

Etrade Financial is an online brokerage firm that empowers individual investors, whether they are active traders or long term investors, to take control of their particular money. We do that through products, services, tools, and most importantly, uh, in this day in age, through education.

Paul Halpern

SVP, marketing

We’ve been around now for, believe it or not, uh, twenty-seven years and inside of that we have 32 hundred employees worldwide and 28 branches.

And we went public in 1996.

We’re an online company, so we have a storefront right in front of the customer every time they come to the door. Within that, we’re able to expose them to all the different types of solutions that we’ve got. So, it’s not only about: come to E*Trade, I make a trade. It’s come to E*Trade and figure out how to make sure that my portfolio is fully aligned. Learn about different things. Education has become a really major component for us and for our customers in these crazy times.

“HIGH TECH INVESTING” TV SPOT (TV:30)

For years I trusted an old traditional brokerage with my money. They charged me a small fortune. But I never really knew what they were doing. So I switched to Etrade it’s high tech, easy to use, low cost. I can screen investments, analyze them, diversify properly, track everything. Even on my smart phone. And help is available. Anytime. It’s transformed my investing. Experience high tech investing at Etrade.

At E*Trade, because we offer so many products, tools, and services, we wanted to build an area where we can have a centralized portal for customers to come that are looking to meet their particular financial needs.

We just recently released what’s called an Investor Resource Center, and that’s a center on our website for customers to go to, and get specific information, whether it’s about trading, or long-term investment, or retirement, or getting it started.

Which helps people in a particular life stage of, “what should I be thinking about before I start executing against my financial plan?” As I think about Financial Services, you really separate it into two areas: there’s long-term planning, and then there’s sort of single stock trading. You need to decide first which avenue that you want to actually go down.

The active traders have a completely different need than long-term investors. They’re much more heavily reliant upon tools. So as they come into this particular Investor Resource Center, this gives the ability for customers instead of looking all around the site to find one spot to find all this information.

In doing that, we’ve put together quite a bit of video series, we have webinars, we have seminars, and we have lots of different ways for customers to understand more and be able to take control.

They can search for different articles.

They can sit back and watch a three-minute video on how to get started with options, or whether it’s charting, or whatever it may be… we make it very easy for customers to look at those videos, get a three minute education on it, and if they like that and see that’s something they want to do, then we can dive into a seminar that’s maybe thirty minutes, or an hour long, really depends on what the customer’s choice may be. We put the Online Service Center out for our customers a number of years ago, and it really helps our customers self-service their account. They want to invest online, they want to view their account online, they want to get research online. Well, if something’s going on in their account and they have a question or an inquiry, it’s pretty obvious they prefer to interact with us online, and not pick up the phone, get on hold, speak to someone. So what we do is: we’ve really evolved the E*Trade Service Center on our website to handle almost any inquiry that the customer may have. Whether they’re looking to understand why they… why a particular security is on margin, or why they were… why there’s a particular fee that may have been charged, or just a general question about a dividend in their account.

There are thousands of mutual funds, more stocks that are available out there, fixed-income security with lots of different maturity dates, and ratings, and things like that. So, we need to provide the tools for those customers to help whittle down those types of securities, and make it a much easier decision-making process for the customers. A good example would be: The Mutual Fund All Star List that we offer, where we go out and do some pre-screening for the customers as they look at all the different types. A good example would be: you need some type of large cap exposure, well there’s hundreds of thousands of funds that have large cap exposure. But, from our experience that we have out there, we want to look at the cost, so we want to find a low-cost fund, one that’s had a steady performance, and also looking at the manager’s tenure over the period of time to see some type of consistency of that particular fund that fits that comfort level for the particular customer.

“LOTTERY” TV SPOT (TV:30)

So this is my friend Frank and his (cough) retirement plan. One golden crown. Come on Frank how long have we’ve known each other? Go to Etrade they have killer tools man. They’ll help you nail a retirement plan that’s fierce. Two golden crowns. You realize the odds of wining are like being mulled by a polar bear and a regular bear on the same day. Frank! Oh wow you didn’t win. I want to show you something. It’s my shocked face. (Whooooaaa). Get a retirement plan that works at Etrade.

So, if customers are here to change retirement, we just passed retirement season, customers are trying to understand, “what are the types of accounts that we can open here at E*Trade? What are my goals right now?” So, as we try to help them indicate, “what are their particular goals, and what type of lifestyle do I want to have when I go into retirement?” Once we answer some of these questions in that particular area, we can then give them a better idea of how to actually meet those particular goals.

Another good example would be the retirement planning calculators that we have out there.

The first thing is to understand their risk tolerance. So they’ll go through what we call our Online Advisor and ask a series of about seven to ten questions to get a general idea of what their risk tolerance is. If you ask a particular customer what their risk tolerance is, just in a casual conversation, it’s much different when you start asking some specific questions when it comes down to their particular finances. This really helps them get a gauge of, what types of risks are they willing to take? Once you establish the type of risk that they have, then we can start developing a type of plan that’s really comfortable for their risk level. So, whether you are just getting married, are you having your first child and you’re thinking about planning for their education for the future? Are you about to enter retirement, and are you thinking about that. Either a customer has a list of companies that they’re interested in investing in, and they just want more research on that particular company. So we deliver fundamental research charts, news, real time stock quotes, those types of tools that help customers make a better decision.

“RETIREMENT” TV SPOT (TV:30)

Watching the bull and bear markets battle it out is not a retirement plan. So I switched to Etrade and jumped on their retirement quick plan. It showed me the gloomy truth and let me run senarios. Until I figured out how to eliminate my shortfall. Then I used their screeners to choose the right investments. And build a diversified plan to keep me on track. Hey my retirement plan needed work and Etrade helped me get it done. Get a retirement plan that works at Etrade.

As you think about customers that just want to invest in the market, but they don’t have a particular idea of what they want to invest in…

So whether that be fundamental research, the technical research, stock screeners, that helps them take the wide range of the products that are out there, and helps them narrow down the universe of the types of companies that they might want to invest in.

The complete other end of the spectrum is, if a customer just… an example would be someone that traditionally has twenty or thirty thousand dollars to invest in a self-directed account all of a sudden comes into money, maybe it’s through an inheritance, or they came into money some other way. They may not know how to manage those types of moneys… let’s say a half a million dollar account. What we have is… E*Trade recently put out what’s called the Manage Investment Portfolio. That’s something where the customer will go into one of our Relationship Managers, or give them a call on the phone, and we’ll walk them through step by step based on their time horizon analysis or risk tolerance, the type of portfolio that they should be invested in. Again that could also be in an ETF Manage Portfolio, or a Mutual Fund Manage Portfolio, and that will every day look at the portfolio and look at the mix of where you need to be.

One of the businesses that we also have inside of E*Trade is our Corporate Services business. Our Corporate Services business is really one of the more B to B, whereas most of our business is traditional B to C, this starts out as a B to B in terms of being able to give stock plan administration solutions to all sorts of companies that are out there. Those companies range from Fortune 500, where we have over a third of the Fortune 500 companies that we manage, all the way down to start-up companies that eventually would like to be Fortune 500 companies. What we’re able to do is we’re able to manage their stock plan, whether it’s restricted stock, or options, which for the stock plan administrators becomes really important because it makes it easier, it puts the right types of reporting and record keeping, and we have a huge education component which allows… them to meet with their peers and understand what’s going on within the industry. We have the largest individual conference for stock plan administrators which is our Directions Conference which we hold every year. People get a lot out of that, both in terms of understanding what we have to offer, but also being able to meet with their peers and understanding what’s going on inside of the marketplace.

Beyond that we also work very closely with their participants, the folks who get the stock options, and get the restricted stock, being able to give them the right level of education as to what does that mean, how does it work? Help them accept their grants, and figure out how to exercise their grants.

E*Trade is a public company… a publicly traded company on the Nasdaq. Symbol is ETFC. We treat… the information that we provide to our shareholders out there really sort of goes back on our philosophy with our individual investors. We’re all about transparency in the company. So, when you look out there at the types of releases that we give out for the company, we do things beyond the norm of what a standard public company will disclose on a regular basis. Most companies disclose all their financial information on a quarterly basis, E*Trade does that as well. We provide a full accounting of what we have here that’s going on for the health of the company.

But we also provide monthly, metric updates. So where most companies wait on a quarterly basis, we’re just giving the health of the company on a monthly basis. It’s a limited amount of information, but it gives you a general idea of the trends of what’s happening. When you think about education here, it’s not just the “just starting out” for investing. That might be our most popular type of a subject is people that are new to investing, but we’ve got education that goes all the way across the spectrum to really advanced types of strategies as well. So, if you’re an advanced investor, there’s still a big demand for education to make them better investors. What’s changed over time is really our ability to partner with our individual investors, so it’s in our best interest to make sure our customers are as educated as they can be, so that we want them to actually be successful when they’re investing with E*Trade.

Submitted for review by NKP Media Inc.