Technology roundtable transcript

The following is an edited transcript of the round-table discussion.

InvestmentNews: What do you see as the greatest technology challenge facing advisers?

Mr. Scott: It’s information overload, and finding ways of filtering and keeping unwanted information out. You have to really be disciplined in this environment, because you’ll get a lot of stuff thrown at you that you want to learn about, but you just don’t have the time.

Ms. Chesney: I don’t think you can survive in the next 20 years if you don’t have a very strong technology platform. I think you will be out of business.

Mr. Daniher: We tried to set ours up thinking five years down the road for growth, because if we did it based on where we were today, we’re going to be obsolete. We’re going to be done.

Mr. Siskin: Is anyone going toward paperless?

Ms. Chesney: We went paperless in 2000, maybe 2001. The money that you spend is scary, but it has served us really well. We set up a document share through the Internet, where we load our documents that everyone can look at. It was maybe a year before we really grew past that technology. Then we moved to Worldox [from World Software Corp. of Ridgewood, N.J.]. We spent that next year scanning all of our documents into Worldox. That is not a trivial exercise, but it paid us back 10 times over.

Mr. Daniher: The fear and uncertainty and doubt that people have about how hard it’s going to be prohibits them from taking the first step. They think they have to do it perfectly. It’s a significant improvement just to get started.

Mr. Scott: I bought a very high-end scanner. That’s really key. We tell our clients: “Bring in your trust [instrument]. Bring in your tax return. Bring in your legal documents,” whatever. We can upload it fast and put it in their file. If we had a cheap, little $300 scanner, it would never work.

Ms. Moulton: We see the technology challenges largely in integration, where the adviser is struggling with [customer relationship management], document management, portfolio management, financial planning tools, account aggregation tools, and trying to figure out how they glue this all together.

We are cobbling it together and trying to pick best of breed and integrating them. If you look at all the vendors in those spaces and all the paths that they want to integrate, there are thousands of permutations. If you map it out, there will be several closed loops in those paths. So they don’t know where to start. They don’t know where the master data should be, and where it should feed to. Integration and the overall technology vision is something that we see as a pain point.

Another thing that we particularly harp on is the awareness and commitment to people in the pro-cess component of information management. Some of the tools are very specific. When you talk about your CRM system or document management system, every business in the world has one, even if it’s nothing more than this folder and a Rolodex. You can’t install software and make those go away. You have to integrate your firm, integrate your people, integrate your processing. So an education and awareness of bringing that together is something that a lot of people aren’t aware of.

The whole migration of technology from the systems that we know to the cloud-computing web-based environments, in 10 years we’ll all be there, not remembering the pain that we had with [Microsoft] Office [from Microsoft Corp. of Redmond, Wash.] upgrades, and operating systems, and patches, and releases, and backups and disaster recovery.

Lastly, to start in this business, there aren’t a lot of barriers to entry. You need a client and you need a laptop, but to grow the business, the barriers to growth are pretty ginormous. It’s how you leverage your human capital, because the talent pool is small and the demand is insatiable. To leverage and create that high-quality experience through systems would be the difference between firms that can grow and firms that stay where they are.

Mr. Siskin: Or get gobbled up. If they are not on the forefront of the technology that you are talking about, they’re just going to get gobbled up because they don’t have the resources to compete.

InvestmentNews: How much should an adviser invest in technology?

Ms. Moulton: This is business 101. The firm will grow because they have successful rainmakers and they’ll do a great job. Then they’ll reach a point where they cannot sustain what they’ve created because they’ve created clients with exceptions. They’ve had lax acquisition standards. They don’t have a core any more, so it becomes unprofitable. They need to retrench, spend money, build the systems so that they can hit a higher plateau. As a percent, when you’re at the top of the peak, you’re probably [spending] 5%, 10% [of gross revenue]. When you’re down at the inception point, when you need to re-gut everything, it can easily be 10% to 15%.

Mr. Scott: I’m purely a junkie. I see something that I like, I think, “Wow, that’s cool,” and I’ll spend several thousand dollars on it. A couple months later I’ll see something that I think is even cooler. I just love it.

SECURING SYSTEMS AND DATA

Mr. Daniher: There’s the cool factor and there’s the “what works” factor. We’ve learned this through the school of hard knocks. You can push the bleeding edge and you’re spending more time trying to get a system to work than it’s worth. As much as I love cool, I just got an iPod [from Apple Inc. in Cupertino, Calif.] a year ago. I didn’t see a use for it until podcasting. I found it can be a curse to be too enamored with technology.

What keeps me up at night is security. How do you protect this information? We’re managing people’s money. Other than sex, this is their most intimate area. You betray that trust, there’s the doubt. How do you back it up? How do you limit access? How do you make sure that no one else really can get into it?

Mr. Siskin: Obviously the people that you are hiring and the personnel you bring into your office are the first line of defense. We register everyone, [take] fingerprints, the whole nine yards.

Mr. Daniher: Your disgruntled employee is your biggest weakness. Our network is constantly penetrated or tested by outside people. If you’re trying to do this by yourself as an independent, you’re playing with fire.

InvestmentNews: Do most people have a dedicated firewall?

Ms. Moulton: Most do. There’s awareness out there. There’s so much low-lying fruit. Ninety percent of the offices that we see have very low-lying fruit in the security backup or disaster recovery area. Schwab [Institutional of San Francisco] is now finally coming out with their second-factor dedicated tokens. Hopefully the other custodians will follow suit. It’s a pain for us, but it’s well worth our while.

Mr. Daniher: We have six people now. I wrote an Internet policy. I cannot enforce it, but for people who log into my computer or my network from their home, how am I going to lock down their home computer? How am I going to know where they browse? You trust your employees, but I also had to have them sign in writing that they understand that they’re putting the company at risk if they engage in these behaviors. Remote access is a privilege. It’s for your benefit. We’re not requiring you to do this. So if you’re not willing to have a firewall and up-to-date encryption, forget about it. I’m really intrigued with the whole concept of client aggregation. But if you have to have separate tokens for each site to be able to [screen] scrape the data [import client data in its native format without necessarily having third-party reconciliation and validation of that data], I just see barriers.

Ms. Moulton: Enter [single sign-on]. Through web services, the sophisticated providers for [SSO] will allow you to pass on your authentication to the integrated services. These guys, and the custodians, Fidelity [Investments of Boston], Pershing [LLC of Jersery City, N.J.], Schwab, they are really using technology as a way to attract advisers.

Mr. Daniher: To some extent, we’re competing with an LPL [Financial of Boston], because LPL is able to roll it out for all of their thousands of reps. As an independent, I’m doing it all myself. What I’m finding is with our software, we’re scalable. From the six people I have, I can run to 30 people with the system I have right now, so long as you’ve got the integration and then the training. This is just a tool. If you don’t teach people how to use it, it won’t work. We use a CRM called Junxure [from CRM Software Inc. in Palm Beach Gardens, Fla.] Our rule in our office is, if the meeting notes aren’t put in Junxure, the meeting didn’t happen. It has to be that way.

Ms. Moulton: It’s one-third people, one-third process and one-third technology. I say to firms when we start out, if you’re just going to go out and buy some cool new tool and not focus on these other parts, don’t waste your money and don’t waste my time.

Ms. Chesney: We installed Worldox in 2002 or 2003. This year we are re-looking at our cabinet and folder structure. Now we have more people who are actually accessing it. Everyone’s mind works differently. We’ve now have taken some of the subjectivity out of it and we’re using the document codes within Worldox to reflect back to a document. Things change. You have to keep on reworking.

Ms. Moulton: That’s a good point. Someone said, “When is my CRM and when is my document management system done?” You never want to hear this from a consultant, but the answer is never. You don’t need me to do it, but your business grows. It will always change and evolve. It’s never done.

Mr. Daniher: That’s the hard reality of technology. It changes so rapidly. We recently just switched from Office ’03 to ’07. I got gripes. “I can’t find this,” and “I can’t find that,” but I kept pushing through because I had seen that once you unlearn and relearn, it is more intuitive and makes more sense.

Ms. Chesney: We went to Office 2007 a while ago. A lot of people don’t use it. So you’ll send an Excel spreadsheet to somebody and they respond, “We can’t open this.”

Mr. Scott: To keep our clients up to speed, I’ve got somebody to make outbound calls to clients. “Are you accessing the web? Are you accessing your accounts? Are you able to read the files?”

Mr. Daniher: Do you buy computers with your clients? Because we go that far.

Mr. Siskin: I’ve done that for a sizable client. He was still on dial-up. Literally, I sent a tech guy up there.

Mr. Daniher: That’s not really technology, but that loyalty of helping your clients, they love it. We’ve gone so far as to offer our clients a repository for their old machines, because we found a non-profit that will either recycle them or shred them.

InvestmentNews: Give a snapshot of what each of you is using as your core technology.

Mr. Scott: We currently have Junxure 7. Besides Office and [Microsoft Windows] XP, we are running full-blown Small Business Server [from Microsoft Corp]. We’re in the middle of switching to Money Tree [Software Ltd. in Corvallis, Ore.] for our financial planning software. We use a lot of what [TD] Ameritrade [Holding Corp. in Omaha, Neb.] offers for trading and, through TD Ameritrade, Advent’s Back Office [Service from Advent Software Inc. in San Francisco]. It’s where Advent does the hosting and scrubbing of our performance portfolio. I found that not having standard machines across the entire company was ridiculous. So we have a policy that every three years there’s a complete replacement of at least the desktops. That’s probably a little earlier than need be.

Mr. Daniher: I would love to get rid of my server. We have overkill. I recognize that, but we tried to envision down the road. We found that to try to skimp and buy the bottom of the line [of Dell computers from Dell Inc. in Round Rock, Texas] or the closeout machines just didn’t make sense. The No. 1 complaint among my teammates is when their computer does something weird, just like computers do, we see a lot more weirdness with a machine that’s two or three years old, because the operating system has had so many files installed and uninstalled, and the registry is bogged down, and it’s slower. We’re also wired. We went back from wireless to wired because of the security cost. We were having our machines just randomly drop the connection to the network because of the level of encryption and tokens. It was a pain.

InvestmentNews: Do you use any third-party performance reporting or rebalancing software?

Mr. Daniher: No rebalancing right now. Excel spreadsheets with some customization. We’re looking at a couple of different applications for that.

Ms. Moulton: Account aggregation?

Mr. Daniher: Not yet. That’s primarily because of who we work with. With most of our clients, we have most of their assets. It’s in one place. So we’re not overly worried. If it worked well and easily, I would be glad to have that.

Ms. Moulton: What about web portals and all the things that you can have on the web?

Mr. Daniher: We use Advisor-Square [from LiveOffice LLC in Torrance, Calif.]. It helped that we went up to their middle level, where there’s Flash [Player from Adobe Systems Inc. of San Jose, Calif.], but we don’t yet have a secure portal. That’s where people can upload and download. We have all of our clients’ documents scanned and paperless. If they need their tax return, we’ve got it. Their will, their trust, it’s all in our system. We offer our clients, “If you need a copy, let us know.” Probably we’ll find it faster than they will.

InvestmentNews: So your clients aren’t clamoring to get on a web portal to be able to look at their stuff.

Mr. Daniher: No. They really haven’t expressed that interest at this point. I know a lot of advisers who do a lot of two-way communication, where people will upload things and use it, but we’re not.

Ms. Chesney: We have a similar structure, with Microsoft Small Business Server. We’re a virtual company. I wanted to have the business be able to source the best employee wherever they were located. We have a dedicated T-3 line that is our feed, which perhaps is a little overly expensive at this point, but we got it because we’re in the Southeast. We have a lot of electrical storms. It’s a monitored line. It’s probably 10 times the price of [a digital subscriber line], but the downtime is a pittance.

Ms. Moulton: Is it all right to ask you how much you paid for the T-3?

Ms. Chesney: We pay $1,000 a month. We are probably the only company in South Carolina that has a T-3 line. T-3 is twice a T-1.

From a software point of view, we use all the Microsoft products. We also were a Junxure client for CRM. Then we use Worldox for our document management system. We use Schwab Portfolio Center [from Schwab Performance Technologies in Raleigh, N.C.], for our portfolio management software. We have a firm which does all the download, reconciliation and preparation of our quarterly reports. Then we use Tamarac [Advisor from Tamarac in Seattle] for rebalancing software. We’ve worked with Tamarac for almost two years now and I like them a lot. We don’t really use it for the purpose solely of rebalancing. We use it as a compliance tool to take the subjectivity out of the trade.

Mr. Daniher: What do you use for backups?

Ms. Chesney: We use a three-tape system, the little cartridges. They’re alternated every day. A process is set up where certain parts of the system are backed up nightly, weekly, quarterly, annually. It is greatly simplified from what we had before.

We have a web portal on our website. We give the clients the ability to put their documents up there. We’ve done it for about a year now. The clients are just getting used to noticing it. We just got them to where they actually pay attention to the e-mail and go up and look at it. They will regularly come back and say, “I forgot what my password is. Can you reset it?” There are some things that we need to make better.

Then we use a product from Trumpet [Inc. in Phoenix] called Assemblage, which makes our quarterly reporting process really easy. We create the cover letter, the portfolio reports and the invoice, the newsletter and anything else that needs to be added into the package. Then Assemblage pulls all those things together into a zip file, and it’s uploaded to the website. It’s neat because it populates the client’s accounts.

InvestmentNews: Account aggregation?

Ms. Chesney: We don’t do account aggregation. Our premise, when we take on a client, is that we manage all of your assets. We’re also shareholders at a trust company. So if it so happens that there were irrevocable trusts, we could do it that way. We don’t really have a need for account aggregation.

FINANCIAL PLANNING SYSTEMS

InvestmentNews: What do you use in terms of financial planning software?

Ms. Chesney: We’ve done our own. If it’s been built, we’ve tried it. Our clients are high-net-worth, high-income clients. Everything is very customized. We find that over time we do just fine with our homegrown [software]. We built a balance sheet that we work on. We have an income summary statement that we work on and we do a lot of tax work. Then, from there, we build our own stuff.

Ms. Moulton: What about internal accounting, QuickBooks [from Intuit Inc. in Mountain View, Calif.]?

Ms. Chesney: We outsource that. We have a firm out of Akron, Ohio, and we can link into QuickBooks from there.

Mr. Daniher: We use QuickBooks. We tried Microsoft Small Business Accounting. It just wasn’t as easy as QuickBooks, so we went back. We didn’t switch out. We ran parallel for a while. For our backup, we have really [changed our] approach. I used to do the tapes until I found one time, when I tested it, some video games on the tape. It was a new tape and we didn’t have video games. The unit wasn’t recording. It was doing its thing and wasn’t validating it. The tape had somebody else’s stuff on it. That made me apprehensive about using tapes.

InvestmentNews: Did someone come in from the outside?

Mr. Daniher: No. It was a tape that somebody had bought, and returned, and it never got overwritten. Our data wasn’t on the tape. It appeared to be working. So we use now an Internet backup, like from EVault [Inc. in Emeryville, Calif.]. We use [Backup] Boomerang [from Forward Design in Rochester, Minn.]. We have a portable hard drive that I switch out every week to a safety deposit box. So if, for some reason, the web goes down, where I can’t get my stuff off the Internet backup, I can at least get it from the safety deposit box.

Mr. Scott: Being with LPL, my core technology is BranchNet. We have not only the accounts that are held at LPL, but we also have all accounts that are directly held with sponsors. We have a link so that we can see all the positions of wherever the funds happen to be. There’s also a functionality called portfolio manager that does performance reporting. There’s also functionality for compliance, to review trades, review e-mail correspondence and so on. Then we also have Wealth Vision, which is an LPL-interfaced branding of eMoney [from eMoney Advisor in Conshohocken, Pa]. We have account aggregation. eMoney Advisor also has a great retirement planning platform. So we use that.

Rebalancing has been a tough one for me. I use a program LPL provides and I would like to find something better. I’m going to look at this Tamarac. As far as contact management is concerned, we use Maximizer [from Maximize Software Inc. in Vancouver, British Columbia]. It’s my favorite. I’ve tried a lot of CRMs and I have yet to find anything that comes close. I always like to look at new stuff.

We don’t have everything web-based and I’m sure many of you don’t have everything web-based. I do a lot of traveling. I find that what I use is Microsoft Remote Desktop Connection. I find that invaluable for being able to work on a laptop, where I can access any of my computers in the office. From anyplace, from any computer, I can access it.

There are a lot of things that a lot of us aren’t aware of in technology. Something I just discovered maybe eight, nine months ago — you send a client a document, you can leave audio notes on the file. It’s great. A lot of clients love it. You leave a two- or three-minute note. It’s a little speaker icon. You double-click on it. They hear you explaining a particular paragraph and they love it.

Mr. Siskin: Being with Raymond James Financial Services [Inc. of St. Petersburg, Fla.], I use their platform for the majority of the client information. I use the account opening and maintenance program. This is all web-based. We’ll link the family, so when they go online, they can see all of their accounts from the 529 plans and various retirement accounts, all in one view. We’re using a program called Business Analyzer [from ProClarity Corp. in Boise, Idaho]. It will analyze my practice at one clip, giving me my top 20% clientele. We have where the revenues are coming from.

Raymond James has a compliance software program, which will give me alerts if I have accounts that are overweighted in a particular sector or have a majority of their holdings under one position. There will be some suggestions of what we may do. Raymond James hooked up with Microsoft and they’re trying to create software all integrated with our clients’ holdings. We have Ibbotson Asset Allocation Library [from Ibbotson Associates, a subsidiary of Morningstar Inc. of Chicago]. We use Forefield Advisor [from Forefield Inc. in Marlboro, Mass.] for some of the technical questions that come up. I have a T-1 line in my branch with a [virtual private network] connection. We use web-based Outlook for all our e-mails. Raymond James is spending a fortune in the technology arena and we benefit as advisers under their program.

InvestmentNews: Do they provide rebalancing?

Mr. Siskin: It depends on the program we’re in. I’m not a complete fee-based adviser. I have both transactional, along with fee-based. We have a mutual fund asset allocation model called [Raymond James] Freedom Accounts. Then we have private money managers. They will have rebalancing under their own strategy. So I don’t personally use any rebalancing software. A large percentage of my clients are in the municipal bond market. So other than maturity dates and coupons, not rebalancing, they like to receive the checks in the mail. My branch has some portable hard drives that we use in backup. We rotate them, so they’re off-site. We try to keep everything online. If we can get to 100% web-driven, that would be nice.

Ms. Chesney: The web is not a very viable option for us because of the sheer volume. Someone told me yesterday that we have something like 31,000 documents saved in Worldox now, because every e-mail from or to a client is saved. So if we were audited, we could pull every e-mail. If you came and asked me from Jan. 3 to March 12, we could pull all of those off and dump it into a CD in a split second.

InvestmentNews: You’re one of those folks that the regulators love.

Ms. Chesney: It would be easy. We could slice it and dice it any way you want. The sheer volume of data makes it impossible to do from the web, because of the demands of the data going back and forth. You are really limited to a physical backup.

Mr. Daniher: The question is, What are you backing up? Are you incrementally backing up? Are you backing up everything? We had a case in point in our office about two weeks ago, where someone said, “This Junxure record is missing.” Somehow the upgrade or someone deleted it by accident. My backup is what I had as of yesterday, or the day before, or maybe a week earlier. I’m well protected to back up my systems if a lightning strike wipes out my server. If someone maliciously deleted 27 files and I did not know about that, at some point in time they’re going to fall off my backup and override them.

There are a lot of very important things that we overlook. I make money by talking to clients as a financial adviser. It so happens that my business runs on technology. We do have a technology consultant, but for my small company, I’m one of the people who is the primary interface for that. I don’t have the time to stay as up-to-date as I would like to. This is a rapidly changing environment. So we’ve elected to go with solid, keep-it-simple, working solutions, keeping our eyes on the next generation, trying to be aware of what it might offer, but not trying to jump at it, because it’s burned us before. I like my toys as much as anybody, but there’s play and work.

COMMUNICATING CONCEPTS

Mr. Scott: One thing I don’t hear being discussed, and I find for myself invaluable as a time saver, and also because I have carpal tunnel syndrome, is speech recognition software. It’s fabulous. I can sit there and pump out letter after letter in nothing flat, and I love it.

Mr. Siskin: Which program?

Mr. Scott: Dragon Naturally Speaking [from Nuance Communications Inc. in Burlington, Mass.]. It works great.

Mr. Daniher: I used Dragon Naturally Speaking five or six years ago and it didn’t work.

Mr. Scott: I’ve had it happen where I’m dictating something, and the phone rings, and I pick up, and I start talking to somebody on the phone, and it’s transcribing everything I say.

Ms. Moulton: We have a client that has carpal tunnel to the point that he really can’t operate the keyboard at all. He does all his software, all his web navigation, all his reporting, everything through Dragon Naturally Speaking.

InvestmentNews: How well do your various applications all communicate with one another?

Mr. Scott: Not very good. Most of them don’t.

Ms. Chesney: I used to work for IBM [Corp. of Armonk, N.Y.]. All these years ago, we used to talk about putting information in multiple times. I don’t think that has changed. I think you still have to input information multiple times. We make a lot of use of GoToMeeting [from Goleta, Calif.-based Citrix Online LLC, a division of Citrix Systems Inc. in Fort Lauderdale, Fla.]. It’s tremendous because our clients are not local to us. We don’t actually see a client in an office ever. I think we have two licenses. So it’s $468 a year for two of us. We rob GoTo-Meeting because we use it so much. It’s a steal. Your client can look at your computer screen.

Ms. Moulton: It’s just a no-brainer. My company has people all over the United States and we’re on that all the time. The GoToMeeting accounts are as in demand now as the physical meeting rooms.

Ms. Chesney: Microsoft Live has a similar function. I tested it. The cost was terrible.

Ms. Moulton: And it’s complicated.

InvestmentNews: Is it difficult to re-educate your client to use this instead of meeting with you?

Ms. Chesney: We have a lot of physicians who aren’t going to meet with you during the day anyway. I was driving around like a nut meeting with these people in the evening, on the weekend. When I hired my stepdaughter to work with me, she said, “I think we should do GoTo-Meeting.” I thought, “These people are not going to think I’m worth the money.” It has never come up. They think it’s great. It’s a little bit of a learning curve. Some of the smartest people in the world can’t figure out how to log into GoTo-Meeting. Once you get past that, it never has become an issue.

Ms. Moulton: Maybe your 80-year-old client, you’re not going to push them, but these 30-year-olds, they don’t know how to operate a filing cabinet. They need to Google their documents. So making that leap is important.

Mr. Daniher: We looked at other versions of the web meetings. They were expensive and not easy to use. I hear GoToMeeting advertised. I’ve seen it. Other people have used it. I assumed it was as expensive as the others. I just learned something new. I wanted to use it, but didn’t want to pay the license fees.

Ms. Moulton: [The upcoming Arlington Heights-Ill.-based National Association of Personal Financial Advisers Practice Management & Technology Conference to be held in Las Vegas in October will] focus not just on gadgets, but the hard issues of integration and account aggregation. Think about all the things that are available on web portals now. It’s not just posting your documents, but it can be a way for your client to send in a referral. It can be a task management system where you can assign tasks to your client.

Mr. Daniher: How to use Junxure, as opposed to just having it.

Ms. Moulton: How to really bring it to life and struggle, because every adviser out there is struggling with the integration questions.

Mr. Daniher: I consider myself pretty technologically savvy, and yet I wasn’t aware of the cost of GoToMeeting. So, partly, you have to subjugate your ego and say, “You know, I’m going to take advantage of the Gen-X’er who comes in with an idea,” especially if you’re older.

Mr. Scott: There’s another functionality that is much like Go-ToMeeting. Does anybody use Camtasia [from TechSmith Corp. in Okemos, Mich.]?

Ms. Moulton: We do. We use it to create screencasts for training [which are inexpensive and relatively simple videos usually meant for posting online].

Mr. Scott: So you can do the same thing, except your client can view it later on. You don’t have to do it simultaneously.

Ms. Moulton: If you put on your portal a screencast or a blog every time the market crashes — and hopefully your clients are trained not to panic, but in the rare event they may panic — they can go and hear an updated message from you in person. It’s a great technology. It’s cheap. It’s $400 for Camtasia.

Ms. Chesney: One of the things that I think is the fault of most advisory firms is that they’re too cheap. I will go to different meetings or conferences and I’ll say, “Well, we did Worldox, and we did this and that, and we just did Tamarac.” They’ll look at me like, “You must be out of your mind. You spent thousands.” Worldox probably cost $15,000 to put in and install. It’s probably worth 10 times that without a doubt in my mind. People look at me like, “Well, we would never do that. We’ll use [Microsoft Windows] Explorer.”

Ms. Moulton: Until they hit the inflection point and they can’t grow. If they don’t want to grow, that’s okay. If they do, then they have to spend money.

Mr. Daniher: To play a little bit of devil’s advocate, there’s so much hype out there. There’s so much puffery, branding, vaporware. Just wait. The next new thing is coming out. So you can get this paralysis by analysis. “I got to wait for this.”

Ms. Moulton: And you’ll never do anything.

Mr. Daniher: We try to integrate into our business eating the elephant continuously, but one bite at a time. How you want to serve your clients is more critical than what tools you use, because there are sometimes several different tools that will hit your goal. Quoting Zig Ziglar [an American author and motivational speaker], “How do you hit a target if you don’t know what you have?” You can throw money at it and get the latest gee-whiz thing.

Mr. Scott: Speaking of that, one thing that can be very helpful is knowing what your clients want, being able to survey them. Years ago, I had Dalbar [Inc. in Boston] survey my clients to see how I was doing, what they wanted to see me do more of, and so on. I spent I don’t know how many thousands of dollars. Today, with stuff like Constant Contact [from Constant Contact Inc. in Waltham, Mass.], Boomerang and SurveyMonkey [from SurveyMonkey.com, a licensee of TRUSTe in San Francisco], you can create a survey like that. This Constant Contact is like $5 a month. You just need to come up with questions. That’s an incredible tool that nobody is using. It’s so valuable to know what your clients think about you, what they think about your service and what they would like to see more of.

InvestmentNews: Do you see a place for services like Mint [Software Inc. in Mountain View, Calif.] or Geezeo [in Hartford, Conn.], to help the Gen-X’ers and the kids of your clients, by offloading some of the advisory basics?

Mr. Daniher: I just heard about Mint the other day. I plan on checking it out because it sounds like something we’re looking for. You can have a couple of different accounts in a place. Our minimum fee is $500 a month, but I would like to help my clients’ children. So you’re able to say, “Well, here are some other tools.”

We blasted an e-mail to all of our clients about some airline tools — one is Kayak [from Kayak.com in Norwalk, Conn.] and one is Fare Compare [from Cheapflights Inc. in Boston]. You’re just touching your client and helping them to know that you’re thinking about them and doing your job better.

Ms. Chesney: You find that throwing people at the problem is still the rule of the game. I think it’s largely because most people are so afraid of (a) technology and (b) of outsourcing. Those are the two crucial pieces to having a successful firm. I talked to someone the other day and she was a fairly small firm and had four people doing financial planning. Financial planning is a loss leader in the business. I can’t imagine that it wasn’t costing her $160,000 a year, after you give the people some level of benefits, right? I said to her, “You know, there are other ways of doing that.”

Mr. Siskin: Strategic partnership is how I’m building that. Not outsourcing it, but having it as part of a team. So that I know that my clients are protected.

Mr. Daniher: The buzzword a few years ago was MDP, or multidisciplinary practice. You’re building an alliance of other service providers that respect you, respect your clients. You don’t own it, but there’s an understanding that you’re going to help service my people.

Mr. Siskin: Right. I want to keep control and be the quarterback, if you will, of the team.

InvestmentNews: Are any of you using tools to help the collaborative process?

Mr. Daniher: We’re starting to look at [Microsoft Office] SharePoint for our own internal stuff.

InvestmentNews: There’s a service called Referral Key [from Referral Key Inc. in Boston]. Are any of you trying to leverage technology to help you with the collaborative process, especially when it comes to other [certified public accountants] and lawyers, making sure they refer clients to you, and you to them?

Ms. Moulton: I think that’s going to come as the natural part of the adviser portals.

Mr. Daniher: My challenge with referrals is it isn’t a one-to-one. I may have a dozen attorneys that we work with, who are qualified estate planning attorneys, but I try to match them up by personality and by client. I would love to have that type of tool so we could work together.

Ms. Moulton: FamilyOfficeNetwork [LLC in San Diego] offers a service like that for collaboration with other allied professionals.

Mr. Daniher: Central DeskTop [Inc. in Pasadena, Calif.] is something we’ve been using, which is a web-based SharePoint. We can schedule a meeting, have our own dialogue. I can upload a pdf of this article. Say, “Hey, guys. Here’s some information for you.”

Ms. Moulton: Google Docs [from Google Inc. in Mountain View, Calif.] is rapidly becoming that, very ubiquitous. We’ve been giving Google Apps a spin. They’re not a business-quality standard yet. You still would be pining for all the fancy stuff you get in the [Microsoft] Office [applications], but we will all be in that environment at some point. Microsoft is aware that they’re the bread and butter of the operating system and fat client machines, and that they will lose business to the web services. With the failed acquisition of Yahoo [Inc. in Sunnyvale, Calif.] recently, they have $50 billion to now redirect toward that effort. They realize very much so that they need to get in that space very quickly to be competitive.

InvestmentNews: If you had an open line to the vendors, what would you ask them to fix?

Mr. Scott: I really am leery of those programs that charge you a large up-front cost. It’s really frustrating. I like a fee-based approach where you pay monthly. Generally, you’re going to get better support. The bottom line is, if I’m in the middle of doing something, and I run into a glitch and I want the answer, I don’t want to e-mail somebody and I maybe get an e-mail back two days later explaining what the problem is. I want to get on the phone and talk to somebody right now, who will be able to resolve the issue right now. I’m willing to pay for that. A lot of those programs where you pay a one-time, up-front fee sell these support packages. So you got to pull out your credit card, and you’re typing in all this stuff. Then they give you a number that you’re supposed to memorize. I just want to be able to pick up the phone right away. “Here’s my problem. Solve it.”

Mr. Daniher: My beef would be, don’t do everything. How much of Word are features I’ll never use? I don’t need my word processor to do [computer-aided design]. I want it to help me type a letter. My learning curve is such that I need to have a tool that’s going to be solid, and work, without having to be super-fancy. The corresponding part of that is I need to be able to read the manual. Now manuals are gone and it’s online help. It works if you know how to use it, but I can’t go take the book home anymore. I’ve got to buy a third-party book that’s [very] thick, and all I really need to know is [only a few] pages, but it’s all scattered throughout. “You’re doing too much,” is what I would say. You’re offering me features and benefits that really aren’t of interest to me.

InvestmentNews: LPL I know has technical support for various parts of its platform. If they had an all-inclusive package that they offered for an additional fee, is that something that you would want from them?

Mr. Scott: LPL charges me monthly anyway. I get very good support from LPL. I have no problem there. Maximizer is a good example where I love the program, but the support is not very good. You only pay when you upgrade. I would love to talk to somebody up there and say, “You know what? I pay every time I upgrade. I have six stations. I pay $700 to $800. Charge me $700 or $800 a year and bring me the upgrades automatically and give me support.” I’ll pay it. I don’t care.

What I would say to these software manufacturers is, “Forget the manual. I don’t need the manual. Dumb it down and make a Camtasia recording on it.”

Mr. Siskin: I’ll call up. As far as Raymond James, if it’s hardware or software, they will go on my computer. I’ll walk away and get a cup of coffee and come back and it will be corrected. They have very good support.

Ms. Chesney: I’ve been extremely lucky. We have a great IT guy, who, if there is a heaven, will go to heaven. I take the position that we will buy the best that there is. I’m not worried about the cost.

Mr. Chesney: We all need a geek. That’s really important.

Ms. Chesney: Our Worldox support is a terrific company. Tamarac is well worth looking at. I’ve talked to them about their tech support, and it comes down to finding really good people and paying them. Tamarac has made a commitment to running a good company that way. So you get really good response.

If I had a criticism of anybody, it would be Schwab. I think they could do a way better job of Portfolio Center, in terms of its flexibility. We send very little extra paper. We don’t even put a big financial plan in place for a client. Our clients don’t read it. They don’t want it. We keep things to one page. My employee who uses Portfolio Center a lot just feels like, in an age where you can do much of anything, their reporting capability is poor. You should be able to change it so that it gives the client a really nice streamlined package.

Ms. Moulton: Black Diamond [Performance Reporting LLC in Jacksonville, Fla.] or the newer web-based portfolio management systems have that flexibility, but it’s a smaller company. So it’s a risk-mitigation question in terms of technology choice.

Mr. Scott: We talked earlier about how a lot of shops skimp and save and don’t want to spend money. I think that’s a big stumbling block for advisers. They can’t make that leap. I could never buy a TV today and plug it in and make it work by myself. There was a time when you could do that, but today, I’ve got a home theater guy that comes in if I buy a new TV and he puts it all together. The technology has gotten to the point in the office where if you don’t have a specialist, you’re never going to make it to the big leagues.

InvestmentNews: When do you know you need to bring in someone?

Mr. Siskin: When you lose a day’s work.

Ms. Chesney: You have to look at where your business is going. When you start the business, you’re the jack-of-all-trades, master of none. You do a little bit of this and a little bit of that. If you figure out you want to serve a high-net-worth client, it does not serve a high-net-worth client if you’re paying the bills and doing the technology. You have to pay somebody for something. You might as well pay for the things that have a real good payback. Having an IT guy is one of them.

Mr. Scott: Let’s take the analogy of two mountain climbers. One sees the summit and that’s where he wants to go. The other one is out there for some reason. When that guy runs into an obstacle, he’s not going to get beyond that obstacle. He’s just going to climb around in circles. The guy that has the vision is going to find a solution. If you have that vision, you’re going to realize, “I don’t have the savvy to handle this technology. I need help.” Then you’ll seek it out.

Mr. Daniher: I laugh at this because it’s so common sense, but yet it’s not. It’s uncommon common sense. Our clients hire us because they don’t know how to do financial planning. That doesn’t mean that we’re tech experts. So why don’t we hire people who have the expertise, just like our clients hire us? It’s about leverage. It’s about using your resources. Technology lets our small firm compete with anybody.

Ms. Moulton: It’s technology and human capital.

InvestmentNews: Do you see virtual [chief technology officers] as a trend going forward?

Ms. Moulton: All these small shops can’t hire a full-time [chief information officer] or CTO. It’s just not practical. They don’t need it, either. I say to the advisers exactly what I think you say to your clients. That is, you are very good at assessing the situation, putting a plan in place, implementing that and then monitoring and adjusting as the financial and their life conditions change. Everybody doesn’t do the same thing for their technology in terms of assessing where you are, getting a plan, implementing it. It will be a continual process of monitoring and adjusting because the technology tide waters are constantly churning.

Ms. Chesney: If I’m going to sit across the table from you, and you have $15 million of net worth, you’re paying me for sophisticated portfolio management. I don’t think you want to know that I’m figuring out the backup system tonight after you leave. That makes no sense at all. You also probably don’t want to know that I’m going to go back and create your financial plan on Microsoft Word. There’s a depth to the business that I think you have to get to. Like you say, if you see — if you look at the summit. If you want to have a job as a finance planner, a place to go every day and you get an income from it, then it might work fine, but you don’t have a growing business.

Mr. Daniher: There are synergies, too. We were with LPL and left them to go independent. LPL and Raymond James have continued raising the bar [in providing technology services]. So have TD [Ameritrade], Schwab, Fidelity. The custodians or the people that you work with — they are our best ally and [we] use the people at Schwab, [we] use the people at TD [Ameritrade] because they do this all the time. You don’t have to invent the wheel.

Mr. Siskin: They’re trying to keep you in that platform by offering you these services.

Ms. Moulton: When I was speaking with LPL last week, they said we’re looking for a platform that will be so good, it will make the advisers want to stay, but fully let them own the data when it’s web-based, and get it out easily without a bunch of shenanigans.

Mr. Siskin: At Raymond James, rather than buy an outside vendor for asset allocation software, I will give them 30 basis points for that benefit. It just makes it easier to manage my practice, but you do need those particular tools in the business plan. They’re realizing that we could easily go to the Schwabs, but that’s a lot of work. I respect everyone that’s [building a platform for independent advisers], especially in this [economic] climate. It’s hard to be completely independent like that. It’s a full fee-based practice.

Ms. Chesney: The barriers to entry are low. You could get a laptop and a client.

Ms. Moulton: You get a couple of clients and a laptop, but barriers to growth are enormous.

Ms. Chesney: Virtually impossible today.

Mr. Daniher: Not without being willing to spend the money and the time. I think being an individual doing it all yourself, good luck. Maybe an ensemble, a couple of people doing it, where you’ve got different strengths. At my firm, when I was doing the tech stuff, John was worried about compliance and Rhonda was worried about the accounting. We all had our own crosses to bear. Now that we’ve grown, we can start outsourcing those things and I can worry about my clients. That’s what I want to worry about, not why did the computer just give me the blue screen of death. My suggestion is, if you’re not running two or three monitors, that is a no-brainer. Run three.

Mr. Scott: I run four. Three for myself and one for my clients, when they come. So I have one monitor that’s facing them.

Ms. Moulton: And a nice conference room where you have a projector and a white board, so you are not just handing them a stack of paper any more.

Ms. Chesney: We use one of our monitors for Bloomberg [LP in New York]. I understand why [Michael Bloomberg is] a multibillionaire. It’s worth every penny. We are a very sophisticated active portfolio-management shop. If you say it’s $25,000 a year for that service, we can make that up just in good portfolio management pretty easily. We give the client little screen shots of things that show them why we’ve done what we’ve done. He’s got a proprietary service that I haven’t found anywhere else.

Mr. Daniher: We have some services that we pay a lot of money for, research that I can’t find elsewhere. I don’t mind paying for it. I will pay for value. One way that I also try to stay ahead of what’s next is I read Wired Magazine [published by CondéNet, a division of Condé Nast Publications in Wilmington, Delaware]. It’s not a financial planning magazine. It’s not a tech magazine. It’s a vision where things might be going and what I might need to be aware of.

InvestmentNews: Where do you guys see technology, as it relates to you, going in the next five to 10 years? What are your hopes and dreams?

Mr. Siskin: Everything on a hand-held.

Ms. Chesney: One of the technologies that is a little bothersome to me is telephone technology. We use a service called GotVMail [from GotVMail Communications Inc. in Needham, Mass.], which works pretty well. It’s an 800-number service that will route calls to each of the four phone numbers — the follow-me feature. I can see challenges just because we’re growing and there are probably other ways we can do it better. There’s a little bit of a delay. If it has to get to the second or third phone number, for example, the client could be on hold. Forty seconds can seem like a really long time. So that’s a challenge. Phone-system-wise, I think we need to do some work.

Mr. Scott: As human beings, we have this thing called herd mentality. The herd now is global and is getting all the same information at exactly the same moment in time. Everybody is following everybody else. I find that very challenging as an investment adviser. There’s the damage that the herd can do, now that it has these tools. They get all of this information at the same time, and they have a tendency to interpret it the same way. So you get these extraordinary days that we’ve had recently, where the market will be down 300 points and close up 300 points, just unbelievable swings.

Mr. Siskin: We have to get used to the fact that our country is not the leader any longer. Now it’s a global market and we have to interpret all that information that comes out right away.

Ms. Chesney: We expect to have $1 billion under management in 10 years, without a huge client base. So the service level required under that business model is pretty significant. It needs an incredible technology foundation to support that. I want to limit it to the people who are really good at what they do. So that’s the biggest challenge.

Mr. Daniher: My hope is for simplicity. I want to use tools to filter the technological deluge of information. I want to better utilize the feeds where the information I need comes to me. That which I don’t want is precluded. That’s why Amazon [.com Inc. in Seattle] is so attractive. Prices aren’t the best, but they’re pretty decent. You can go there quickly and make your decision.

The other factor that I see here is security. I don’t want to be a Chicken Little and say, “The sky is falling,” but I think there is going to be some major disruption and identity theft. We have people in Eastern Europe and Africa who go beyond phishing. I’ve had phone phishing calls now. “Hi. This is your bank and we need you to enter in your numbers.” They’re getting very good at what they’re doing. If it’s all digital and it’s just account numbers, it’s a click away. That just gives me pause.

Ms. Chesney: One thing we’ll use is video. We were in Tokyo last year and the Japanese were way ahead of everybody. For $100 you can get a pretty terrific videocam. We’re thinking over the next couple of years that we’ll buy those for the client. Without seeing the person, you do miss the personal contact. That would be the next level.

InvestmentNews: Do you see any commonalities among all your clients?

Ms. Moulton: The move to the web is inevitable. The Amazons and the Googles coming together will change our landscape in 10 years. Once we remove the barriers to the technology, we’ll take the information out of everyone’s brain and put it in the system, to be able to create a high-quality consistent experience for clients which doesn’t have to be driven by the principal. Your more junior people can do it and your business has a higher valuation because it doesn’t walk out the door with you. It will be just a movement away from the desktops.

Mr. Daniher: What I want for technology generally is it just works. It doesn’t have to be jerry-rigged, customized and constantly fed and diapered.

Ms. Moulton: Think about your phone. Your car gives you directions, but you have to hook up your Bluetooth [from Bluetooth SIG Inc. in Bellevue, Washington]. If the car right next to you also has Bluetooth, you’re talking to his wife. It gets pretty complicated.