Morningstar starts over to court advisers online

Eight months after taking the wraps off a much-ballyhooed website for financial advisers, Morningstar Inc. is going back to the drawing board.

In June, the Chicago company intends to launch another – supposedly more practical – version of its site, MorningstarAdvisor.com.

“We are moving away from becoming an electronic magazine that writes about trends affecting the financial advisory business,” says Chris Boruff, president of Morningstar’s adviser business unit. “That is just not something that advisers are looking to Morningstar to provide.”

Morningstar plans to eventually charge advisers an annual fee to use the site, ranging from $395 to $2,000 a year, depending on services provided.

Currently, about 49,000 advisers have registered to use the site for free. “Our focus is not so much on growing that number, but getting the advisers who have already registered to be more active on the site.”

The thrust of the modifications is to cut back editorial content and beef up such data-oriented services as portfolio construction, the ability to plot charts and to sort through thousands of mutual funds or individual stocks.

Tight-lipped

Morningstar is not engineering a minor nip and tuck to its adviser website. While the company is being tight-lipped about how much it is spending to court advisers over the web, it will be far less than the $20 million it originally planned to shell out, according to Mr. Boruff.

“Originally, we were heading down a path where we were working with a lot of outside consultants,” he says. “We’ve realized that we are most successful with stuff that we have developed ourselves.”

What about the stock market’s ongoing flirtation with bear territory? “That is obviously a big part of it,” Mr. Boruff concedes.

In July, the company severed ties with Sapient Corp., the Internet consulting firm in Cambridge, Mass., that was hired to develop the adviser site.

The changes are all part of a larger shake-up going on at Morningstar. The privately held firm spent more than $35 million on advertising, new business ventures and hiring consultants last year and did not turn a profit on $71 million in revenue. For its part, Morningstar says it never expected to show a profit in 2000.

Shake-up

In October, Morningstar founder Joe Mansueto stepped back into day-to-day management after a hiatus of more than two years, taking over the chief executive post from Don Phillips. Mr. Phillips moved into one of three managing director slots.

The changes by Morningstar coincide with other changes in online information services.

Alyssa Sibley, a senior analyst at Lincoln, Mass., research firm Gomez Advisors, says the overall demand for financial news on the web appears to be waning. TheStreet.com, a financial news website based in New York, two weeks ago announced it was laying off 20% of its staff, or 40 people.

Bob Veres, editor of the Morningstar site, went from being a full-time employee to a part-time “consultant” April 2. In December, editorial director Robert Clark left the company altogether.

Traditional media companies also have cut workers at their online news divisions as the slowing U.S. economy translates into lower advertising sales.

Meanwhile, Morningstar aims to enhance its online presence and provide new services to advisers. The new site will be closely linked to Principia Pro, the company’s popular software package that allows advisers to perform detailed analyses of mutual funds. While advisers research a fund with Principia, they can use a link to Morningstar’s website to obtain more information about the fund. That is, of course, assuming that the company running the fund is willing to pay Morningstar the approximately $10,000 it charges to include on the site additional information about the fund.

The company hopes the adviser site will eventually replace the need for Principia Pro to be distributed via CD-Rom.