Welcome to Tech Talk, InvestmentNews' daily discussion on technology for financial advisers. The blog features an exclusive panel of industry experts who are both passionate and knowledgeable about the latest developmens in advisor technology. Join the conversation every day with your thoughts on adviser technology.
I am currently dealing with a situation that should serve as a cautionary tale for advisory firms that use cloud-based services and the corresponding data storage. Like many advisory firms, we work with several cloud-based tech vendors for services we use in our business. We recently decided to make a change from one vendor to another, and we needed our historical data to import into the new system.
When we originally signed up for the service the terms were straight forward. There was no “termination fee” or exorbitant fees for exporting our data. What we discovered now many years later after using the service is that they have instituted fees charged by the size of the database to export our data, and given the amount of history we have they quoted over $5,000! For my own data! They slipped this new contractual term into their online license agreement of which is “clicked through” each time we enter the program.
When it comes to transferring data from one vendor to another, advisors should have the expectation of a reasonable cost associated with this service – I did. What many advisors don't realize is that hidden in the fine print in many cases is an additional cost of retrieving your data. So if you should decide to switch vendors or you need your data for an audit, you'll find that while you may own your data, obtaining a copy of it may be an entirely different animal.
3 tips to consider when dealing with a data storage vendor
1. Ask very specific questions up front about costs for data retrieval. Understand what's involved in the process should you need your data in the future. Do they have a standardized export process? Are there costs associated with data retrieval? If there is, does this cost vary based on reason (audit, switching vendors, etc.)? Don't let vendors hold your data hostage.
2. Agree in writing how the vendor will communicate changes to the terms and conditions. Technology makes it very easy these days for a vendor to send you an insta-message notifying you of new terms and conditions that may affect your initial expectations. If you have a vendor rep, make sure they communicate any punitive changes to your contract with you and let you know your options.
3. Perform an annual review of your contract. If you don't have an assigned vendor rep, make sure someone in your office is responsible for receiving any updates notices and reviewing them with you. This person should also review your contract terms and conditions on an annual basis.
The benefits of data storage help advisors today run a more focused practice, but it's crucial for advisors to stay informed of their rights to access their data. Hopefully by reading this, you won't have the same experience as my firm. Don't get caught by surprise, and always know your options.
What do you think? What has your experience with data vendors been like? Do you have any cautionary tales when it comes to "the fine print?" Join the conversation below.
Gregory H. Friedman, is the co-founder and president of Junxure and co-founder and president of Private Ocean, a Bay Area wealth management firm. He has been recognized three times by Investment Advisor Magazine as a Top 25 most influential advisor, was named one of six 2011 Industry Influencers by Financial Planning Magazine, and in 2008 received the prestigious IMPACT Award for “Best in Tech” by Charles Schwab Institutional.