FIVE years ago, Sheila M. Chesney was debating the value of converting to a paperless operating environment. The cost of was steep, but Ms. Chesney, principal of Chesney & Co. in Sheldon, S.C., decided to go ahead.
Today, she's glad she made the change.
"The five of us at our firm work at different locations, so it's the only way I can run the business," said Ms. Chesney, who manages $60 million in assets.
The transition to an all-electronic record-keeping environment cost about $15,000, and the company now spends less than $2,000 annually to maintain and operate the system, which contains 66,000 documents.
Advisers contemplating a conversion to paperless operations to take advantage of its benefits — long-run cost savings, ability to work remotely, greater operational efficiency and real estate savings — typically are concerned about the cost of the software and hardware needed to make the change. They also worry about the cost of inputting paper-based records and training their staff.
But in today's economic environment, vendors are making the transition more affordable.
"They're more willing to give you a better deal," said Brian LaPointe, vice president of sales at Long Beach, Calif.-based Laserfiche, a document management company.
Last fall, it lowered its prices by 10% on one solution. Laserfiche also offers its Avante system to new customers on a monthly basis, rather than an annual basis, to help with cash flow.
The sales team at Cabinet NG Inc. of Madison, Ala., hasn't cut prices across the board but has been more flexible in pricing since the downturn, said Jon Clark, vice president of sales.
"We haven't had to reduce our price, because we've always been very low; actually, we've been the thorn in everyone else's side," he said. "But we're now more sensitive in negotiating with advisers, and more flexible."
Mr. Clark said his firm typically charges $3,500 to $4,000 for a four-user paperless system. Conversions for larger firms can reach upward of $20,000.
What advantages do advisers reap for their investment?
Aside from the compliance and security benefits of having every document available at a keystroke, the chief value to advisers of going paperless is the huge reduction in staff time spent filing, organizing and retrieving documents.
Ms. Chesney said she recently re-ceived a letter from her county government seeking documents going back five years related to her business license and tax returns. It took her just 25 minutes to compile the information; she knows it would have taken far longer if she had to search paper files and make copies of the documents.
Real estate savings are another big advantage, Mr. LaPointe said. Going paperless enables advisory firms to jettison a considerable number of filing cabinets, which occupy costly office space. The extra square footage often allows firms to hire more staff members or add a conference room without having to lease more space.
Charles Flowers, an adviser with Abacus Planning Group Inc. in Columbia, S.C., which went paperless six years ago, said that removing file cabinets opened up floor space and eliminated clutter. The conversion also freed the staff to work offsite while having access to all of the firm's files.
"It allows people to have virtual employees," said Mr. Flowers, whose firm manages $500 million in assets. "When people work from home, they don't need to take a big box of paper with them."
In a panel discussion at the recent FPA Business Solutions 2009 Conference in Chicago, several vendors noted that current depressed business conditions have not dissuaded advisers from going paperless. The Financial Planning Association is based in Denver.
Advisers understand they'll earn a return on their investment within a year, said Mr. LaPointe, "and that's pretty much guaranteed."
In fact, long-term savings is one of the most appealing aspects of transitioning a practice, said Patrick Yip, director of Jersey City, N.J.-based iNautix LLC, an affiliate of Pershing LLC, who noted that real estate savings are particularly attractive.
He urges advisers to ask pointed questions of potential vendors to ensure they understand all system costs and that they make sure the product they choose meets regulatory requirements.
If the conversion boils down to a matter of cost, however, Ms. Chesney offers an opinion.
"Software companies are struggling to get clients," she said. "You can probably even negotiate on price. Everyone's looking for business."
E-mail Lisa Shidler at [email protected].
