CASE OVERVIEW

Primary Business Segments Investor Services Advisor Services Corporate & Retirement Services Multi Channel Presence Pioneered the concept of Discount Brokerage firm Well constituted IT Department No Outsourcing 1300 Full time Employees 70% of its IT Staff were babyboomers (unusual!) Regular Investment in Technology and IT Infrastructure

Known for Product and Service Innovations OneSource No Transaction Fee Mutual Fund Supermarket Equalizer DOS based Electronic Brokerage Channel TeleBroker Automated Brokerage Phone Service StreetSmart (Windows Based)

Decision: Whether to launch an integrated brokerage solution or not? Pricing- $39.95 or $29.95? Cannibalization cost: $125mn To stop heavy traders from migrating to deep discount online brokers

As David Pottruck, would you cut prices on January 15, 1998? What alternatives did he have?
Yes, we would recommend providing an Internet based integrated solution and lowering the prices to $29.95 because
Online Brokerage Accounts are projected to grow to 14.4mn (480%) by 2002 Rise in number of online brokerage players (1560 in 1996) Heavy increase in Price sensitive customer segment These customers wanted to take the trading decisions by themselves They appreciate more value-added products and services at a decent premium To prevent cannibalization of business from 20% traders who accounted for 80% of revenues Can use existing branch network to build credibility

What is your opinion on Merrill Lynch being a late entrant in the online trading services market? Did they do the right thing? No, they lost substantial business opportunity because of entering late
Schwabs online accounts as a % of total accounts soared from 8.8% (1995) to 25% (1997) Schwabs assets in online accounts increased from 12.82% (1995) to 22.84% (1997) DLJdirect had made a significant presence in Online Brokerage space by foraying into it at the right time The market was becoming more price sensitive and with increasing Internet penetration, the number of customers has been increasing Down the line it is set to become a business of volumes

Thank You