(January 8) – “More than half the employees of Morgan OnLine — J.P. Morgan’s ambitious private-banking site on the Web — are losing their jobs as the company grapples with a merger and the difficulties of using the Internet to gain new customers,” writes Mike Anderson in today’s Wall Street Journal.

“About 150 employees in sales, marketing and other ‘client acquisition’ roles at Morgan OnLine (morganonline.com) are being laid off, said Glenn Smith, chief executive officer of the Web venture launched in March 2000. But about 100 people working on the technology behind Morgan OnLine will keep their jobs and continue to develop the product, he said.”

” ‘What’s changed is the merger with Chase,’ said Mr. Smith, referring to the megamerger finalized Dec. 31 that created J.P. Morgan Chase & Co. ‘Client acquisition is no longer the primary goal — client retention is,’ he said.”

“The private-banking operations of the old Chase Manhattan and J.P. Morgan will be consolidated under the leadership of Jes E. Staley, who had headed J.P. Morgan’s private-banking group, and Maria Elena Lagomasino, who was Chase Manhattan’s chief of private banking.”

“Mr. Smith said his mandate is now to use Morgan OnLine to serve about 65,000 private-banking clients of the combined company.”

“But while the merger was an unforeseen wrinkle for Morgan OnLine, the bigger unexpected challenge may be the Web itself. After watching Charles Schwab Corp. and aggressive start-ups such as Ameritrade Holding Corp. and E*Trade Group Inc. achieve explosive growth by offering online stock trading, J.P. Morgan mounted an aggressive catch-up effort. Although Merrill Lynch & Co. launched its online-trading business in 1999, J.P. Morgan said the March 2000 launch of Morgan OnLine represented ‘the first time a blue-chip Wall Street firm has delivered comprehensive, integrated wealth-management services to the affluent via the Internet.’ “

“Charging $2,500 a year for clients with an initial investment of $10,000, Morgan OnLine tried to stand out by offering not just stock trades but professional advice and wealth-management services. Tailored for millionaires, services include tax and estate-planning and account-aggregation features, which allow customers to consolidate all of their personal-finance data in one place.”

“The company spent hundreds of millions of dollars to develop Morgan OnLine and hired hundreds of employees for what it considered a major initiative. But while officials said Sunday that Morgan Online serves thousands of customers and remains on target, they wouldn’t say how many new customers were drawn by the online features.”