Straight to Video: Your Financial Adviser - Smart Money

To see his financial adviser, Matthew Golden used to make an annual pilgrimage from his home in West Pittston, Penn., to Philadelphia, two hours away. But now they see each other every few months -- not in person, but via online video chat. "This is easy," says Golden. "I'm on my computer all day anyway."

Video dating, video doctors' appointments, video Spanish lessons -- now a growing number of brokerages and financial planning firms are offering financial advice via online video chat. In February, Bank of America introduced video conferencing at some of its branches. TD Ameritrade says some of the advisers it works with are video chatting with clients, as are an untold number of independent advisers. Meanwhile, two new online-only financial advisery firms are using video chat as the primary way to connect advisers with customers.

Companies say this is a better, more personal way for clients and advisers to stay in touch. But for the firms, there's also a strong economic incentive to push video chatting. Building and maintaining branches and office space is expensive -- one reason call centers have become so popular in recent years. And video can offer more of a personal touch than a phone call, without much extra overhead, says Diane Clarkson, an analyst who covers online customer service at market research firm Forrester Research. "We're trying to bring our customers closer to our advisers," says Cary Grace, a sales executive for Bank of America's Consumer & Small Business division.

For investors and clients, the type of service they can get from these new video features varies widely. One of the new startups, Personal Capital, based in California's Silicon Valley and founded by former Intuit CEO Bill Harris, offers advice from a dedicated financial adviser, including video consultations, to users with at least $100,000 in investments managed by the company. The firm charges an average of 0.8% of assets per year for investment management (so someone with $250,000 invested would pay around $2,000 per year), and as part of the fee, a financial adviser gives consultations via video as often as an investor wants.

Veritat Advisers, based in Philadelphia, offers a pay-as-you-go advice model aimed at people who may have less money to invest. Investors can get advice from -- and unlimited video chatting with -- a financial planner for a one-time fee of $250, plus up to $40 each month. The company is trying to keep its fees low in order to work with middle-income investors, says Trent Porter, director of business development for Veritat Advisers.

Big brokerage firms are getting in on the act, too, in different ways. Bank of America has introduced video conferencing at a small number of branches on the West Coast and in Washington, D.C. The bank says it's testing to see if a large number of its customers like it before deciding on whether to expand this service. It's an effort to bring expertise to branches when the staff there is busy helping other clients, says a Bank of America spokesman. If a customer comes in with a question about his investments and an adviser in the branch isn't available to help, he can talk to an adviser who's located elsewhere via a computer video conference at the branch. On some levels, says Harris, this defeats the purpose of video chatting, which shouldn't require clients to visit a branch at all. The bank says clients can contact advisers on the phone who are available all day long.

But as popular as video chatting may seem, it still hasn't been widely adopted. Only one in four internet users have used video to chat online or via cell phone, according to a 2010 report from the Pew Center for Internet and American Life.

In order for financial advice via video chat to take off, investors will have to be convinced that it's better than their current options -- a phone call, or a trip to their adviser's office. As of now, it's not a replacement for either, but rather a way to get "additional access," says Clarkson. In some cases, investors aren't video conferencing with the same adviser each time but rather with whoever is available at the moment.

The technology also has a ways to go. Investors typically have to make an appointment (they can set it up online or by calling the company) and then wait for a few minutes, and in a volatile market, patience can be in short supply. The companies say their clients don't typically call to ask for investment changes because of daily market movements since most of them are investing for the long haul. Separately, the internet isn't always dependable so clients might not be able to reach advisers even when they are available.