Online brokers are in the news again. But this time it isn't about do-it-yourself trading or why your broker is an idiot -- it's about providing a multichannel advisory strategy to solve investors' financial challenges.

The major challenge with traditional online brokerages is that clients just are not trading. While the Internet boom spawned cadres of day traders, now the day-trading community has split into the sophisticated, who leverage less-expensive channels, and the dead, who don't trade. This leaves the pure online folks in a branding quandary: how to move upstream and provide advice while having built a brand predicated on trashing the adviser.

Initially, many online firms simply consolidated. Accounts that had sold for hundreds of dollars were years later being given away, and the number of online brokers, once in the hundreds, now can be counted on one hand.

While consolidation reduces costs and competition, more needed to be done. Online firms needed a way to reintermediate the adviser, extend the brand and increase the level of service from "Do it yourself" to "Maybe we can help." Fidelity, Schwab and TD Waterhouse made the transition through their extensive branch networks, fund management complexes and/or traditional banking relationships. They also developed extensive Registered Investment Adviser (RIA) networks to enable the brokers to provide arms-length advice through the networks while retaining asset custody of a commission stream.

Ameritrade and E*Trade, however, until recently were left out of this market. E*Trade had, of course, gone the online banking route, and Ameritrade remained true to its heritage by going the consolidation route and acquiring JB Oxford, BrokerageAmerica, MyDiscountBroker.com and Datek. But neither developed the extensive branch networks or money management facilities to give them the asset management synergies of Fidelity or the physical presence of Fidelity, Schwab or TD Waterhouse.

Now things have changed. A few months ago, Ameritrade acquired TD Waterhouse. While the branding puts TD in the lead, this was a brilliant strategy by Ameritrade to extend its brand into the higher-touch service sector by acquiring both the TD Waterhouse branch network and its extensive RIA servicing business, which gives Ameritrade a platform to get into the high-touch advice business.

Not to be outdone, E*Trade just announced it has acquired Retirement Advisors of America. While this transaction does not provide E*Trade with either the distribution or the RIA business of TD Ameritrade, it provides E*Trade with entry into the retirement/advice business, which will boom over the next dozen years. And though Retirement Advisors of America focuses exclusively on the retired airline pilots and crew members community, I don't believe that E*Trade acquired the property just to serve its current limited set of constituents. With the baby boomers' retirement a few years out, this must be read as a play to provide advice and support to E*Trade's banking and brokerage community.

While the idea of having a low-touch trading channel for the financially independent is wonderful, we must remember that it is difficult to develop a business around a single product or value proposition. Providing a channel for $10 trades may be easy, but not everyone has the same needs or requires the same service.

In a time of difficult markets, investors, who are more inclined to watch than to participate, need help. You need to work with your clients and provide a properly balanced set of services. That way, you may be moving upstream, but you're not swimming against the current. <<<

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