Before disaster strikes, test your recovery plan

Fortunately for financial adviser Robert Bolen, the recent floods that inundated Nashville, Tenn., skirted his office in suburban Brentwood.

Although he suffered little more than the inconvenience of being stuck at home for a day, the floods gave him pause.

“I realized my disaster recovery plan had some holes in it,” said Mr. Bolen, the head of Bolen Dodson & Associates, a registered investment advisory firm that manages $65 million in assets.

As a result of the floods, he realized that his home PC lacked the PortfolioCenter software, among other tools, that he needed to carry out day-to-day business.

“It dawned on me that while I have online access to client data from a couple of different sources, I didn’t have the operational tools I needed,” Mr. Bolen said.

His experience should serve as a wake-up call to all advisers: It is time to review your disaster plan or, if you don’t have such a plan, to create one.

Jennifer Goldman, founder of My Virtual COO, which serves as an outside operations and compliance office for smaller advisory firms, recommends that advisers make a list of as many of the crazy things that they can envision — for example, their computer starts to smoke and there is no Internet connection or the exchange server that runs their e-mail system is under three feet of water — and then look at their service contracts.

Everything should be spelled out in the contract, but since these can be confusing and tedious to comb through, she suggests that advisers call their provider to go over their disaster-related questions.

If a water-logged Microsoft Exchange server is on the adviser’s list of worries, for example, the data and e-mail backup provider may offer to store the adviser’s Exchange server system configuration and program files so that he or she could download these quickly to a temporary site or hosting service.

Unfortunately, many advisers will be disappointed by the re-sponses that they get to their disaster-related questions, said Allan Lonz, president of AdvisorVault Inc.

“About all they [e-mail archiving providers] can do is replace PST files,” he said, referring to Micro-soft’s little-understood proprietary file type that stores e-mail and calendar data.

Mr. Lonz, whose company is a remote backup provider to small broker-dealers (not to be confused with the AdvisorVault secure vault product from Advisor Products Inc.) suggests that advisers take the same holistic approach toward disaster planning that they do with their day-to-day work. That involves considering the universe of data, files and settings they need.

“Everyone uses the term backup, but few advisers really take the time to ascertain exactly what that covers,” said Ms. Goldman. “At times we find that advisers have duplicated their efforts without even realizing it.”

In an initial assessment with one adviser recently, she discovered that he had signed up with two different online backup providers to cover the same files.

“Redundancy is great, but you don’t have to go overboard,” she said, adding that since the dual backups were happening in real time during the day, they were slowing the firm’s systems unnecessarily.

Although Ms. Goldman and other experts are big proponents of moving advisers to web-hosted applications, they recommend that self-hosting stalwarts keep their system disks (or copies), along with licenses, together in a fireproof box offsite.

There are many other simple and relatively low-cost procedures that advisers or their providers can implement to prepare their firms.

“We suggest that advisers image their servers,” said Steven Ryder, founder and president of True North Networks, an IT and backup provider to small and midsize businesses with customers in 23 states.

He likened server imaging to taking a snapshot of everything on a disk drive at a given time. This snapshot includes settings and program files in addition to the data that are usually replicated in traditional tape-based backups.

One advantage of server imaging these days, said Mr. Ryder, is that an adviser can move the imaged data to almost any server — even a low-end server from a no-brand vendor that a disaster recovery center might use — and still be able to use the data.

“Doing these types of things are fairly inexpensive ways to implement a quick disaster recovery without having extra hardware on hand,” he said.

One thing that every expert recommends is regular testing of backup systems to make sure they work They also suggest that a backup provider be located in another geographical area — important in the event of a hurricane, earthquake, flood or blackout — and that the provider have its own backup facilities, known as a failover location.

In the event of a disaster, a backup provider should be able to restore all data within 48 hours.

Most providers should have at least two tiers of storage, one for current backup data that allows for quick restores, and a second tier for archived data that is kept on non-rewritable media.

Please visit the online version of this story for embedded links leading to additional explanations of technical terms, for links to the companies mentioned, and visit our blog (InvestmentNews.com/technology) for an exhaustive list of questions that small broker-dealers should ask their potential backup providers.
E-mail Davis D. Janowski at [email protected].