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The Online Finance 40: Money Managers

Profiling: Steven Elterich of Fidelity Investments, Paul Heller of Vanguard Group and Jeff Maggioncalda of Financial Engines

Steven Elterich

Chief Information Officer,

Fidelity Investments

Last year’s rank: 5

You might think Steven Elterich would have trouble getting excited about new technologies after 19 years at Fidelity Investments, but when discussing the topic, the 57-year-old CIO sounds more like a bright-eyed kid: “This is the most exciting time yet for online technology,” he exclaims. Elterich is referring to the emergence of Web 2.0 technologies, the user-friendly add-ons that are making a huge difference in the way people interact with the Internet. Such technology enables the Boston-based mutual fund giant’s online customers to view instructional videos without leaving the main Web page. The company has invested millions in developing Web content for all ages, especially for older people managing their retirement accounts. It has its own lab, the Fidelity Center for Applied Technology, which conducts in-depth studies on how people interact with the Web and uses one-way mirrors and retinal trackers to determine where to place different elements on Fidelity’s site. The firm even employs doctors of behavioral economics to ensure that the phrasing of information is easily understood. The efforts appear to be paying off: fields 2 million visits a day, up from 1.3 million last year, and 95 percent of customer trades are executed via its Web site.

Paul Heller


Vanguard Group

Not ranked last year

“This whole Web 2.0 thing is an enormous wind in Vanguard’s sails, and I am totally psyched about it,” says Paul Heller, 45, who took over the top tech spot at the Valley Forge, Pennsylvania–based mutual fund firm one year ago from Mortimer (Tim) Buckley, who is now head of the retail investor group. Indeed, for a company that relies solely on toll-free telephone numbers and a Web site (they have no storefronts), any advancement in Web technology is a huge plus. As of the end of June, Vanguard was getting about 600,000 Web log-ins a day, up from 550,000 one year earlier, and 60 percent of new accounts were coming through the Internet. Heller has been working to make the site more personalized. “If you are participating in a 401(k), we know a lot about you," he explains. “We know your age, how much you make, and we know your allocation preferences.” When clients log on to the site, they are presented with information tailored to those preferences, including electronic statements that feature financial modeling and investment projections, “so they can make good investment decisions and retire early,” Heller says.

Jeff Maggioncalda

President and CEO,

Financial Engines

Last year’s rank: 14

Last year Financial Engines got an unexpected boost from two retirement-related pieces of legislation: The Pension Protection Act of 2006 and a new Department of Labor regulation governing qualified default investment alternatives. Both updated 1974’s landmark ERISA and strongly encouraged employers to offer investment advice to their employees (among other initiatives). “It is fair to say that the fundamental assumption of the 401(k) plan was wrong — people don’t want to do it themselves,” says Jeff Maggioncalda, 38, president and CEO of the Palo Alto, California–based advisory firm founded by Nobel Prize–winning economist William Sharpe. “This is the largest change to our retirement system since the advent of the 401(k) system 30 years ago.” Financial Engines, whose sophisticated technology and high-tech analytics allow companies to provide personalized management of employee 401(k) plans, saw its number of participating sponsors jump to 200 last year, up from 86 the year before, and its assets under management surge to $8 billion, up from $3.7 billion

Come back tomorrow to view profiles of the Exchanges in the Online Finance 40 as well as the full ranking.

Banking profiles were released on Monday, click here if you missed it.

Dealmaker profiles were released Tuesday, click here if you missed it.

Online Brokerages profiles were released yesterday, click here if you missed it.