Adviser Curtis Smith doesn't have to worry about getting to the office; it comes to him.
He has created a virtual office by using online technologies for the day-to-day tasks that he formerly did on a desktop computer attached to servers. “I've got everything I need now online,” Mr. Smith said.
Convenience, ease of management and — in many cases — substantial cost savings are leading advisers such as Mr. Smith to embrace what is referred to as “cloud computing,” a practice common in other industries which is now becoming widespread in financial services.
Cloud computing topped a list of 10 key technologies and trends for 2010 at an annual technology exposition in Florida last week sponsored by Gartner Inc., an investment technology market research company.
“The exciting part of this is that in 2010, I think I'm going to be so much more efficient than ever before,” said Mr. Smith, a certified financial planner whose firm, Interactive Capital Management Co., has $22 million in assets under management.
Little training needed
Cloud computing, which is also known as on-demand computing or software as a service, typically uses the same desktop applications with which most advisers are familiar, only in upgraded versions that can be accessed remotely through the Internet. Little, if any, additional training is usually required, and the software cost may even be lower than before.
By outsourcing these services, advisers also save on the cost and effort of maintaining their firms' local servers and have more time to spend with their clients. Yet another advantage is that many online computing services are backed by large companies that have more safeguards for protecting sensitive client data than do small, individual firms storing information on their own servers.
Compliance and regulatory considerations are also generally not causes for concern, advisers said. In fact, in many cases, services such as online backup and archiving actually help advisers in meeting such obligations.
When Mr. Smith switched from hosting his own Schwab PortfolioCenter system to another firm, True North Networks, he cut his annual bill to $1,200, from $3,000, because the latter offers the application at a discount.
He has also adopted MoneyGuidePro
financial planning and Salesforce customer relationship management software, both of which are online applications. The firm's file storage, sharing and backup service is NetDocuments, another cloud application, and Mr. Smith keeps his books with Quicken Online.
“No longer having to do the software updates, that's been great,” said Mr. Smith, adding that in the past, “I'd often have to bring in the computer consultants to handle that for me.”
Doug Pauley, a principal at Pauley Financial Services Inc., has saved about $12,000 in the last year by phasing out the aging Dell servers in his office and switching to online computing.
“The overall effort involved in maintaining resident software really requires that you be a medium-sized firm,” he said.
Mr. Pauley said the change has allowed the firm to reduce its Internet service provider costs by 61%. Computer maintenance costs are also down 41%, though he added: “Software costs are about the same as they were when I was running resident-based systems.”
Ted Rich, a principal with Vinoy Capital LLC, a two-adviser firm, switched to cloud computing initially to improve performance reporting at his firm, which manages $145 million in assets. He signed up for Black Diamond Portfolio Reporting's online reporting system, which has since become the central hub of his firm's technology system.
“I can tell you the time we've saved in not doing the old performance report dance at the end of the quarter is enormous,” Mr. Rich said. His firm now makes client data available online and no longer prints, mails or e-mails reports — a process that once took principals and staff two to three days to complete.
Another big plus has been that Mr. Rich's partner, who is based outside Denver, used to have to dial in through the firm's network in Florida but can now simply connect online to access client data and programs. No longer having to maintain the firm's local servers and virtual private network has saved thousands of dollars in consulting, maintenance and licensing fees.
Hurricane-proof
For Interactive Capital Management's Mr. Smith, the move online has had positive effects on his personal life and future plans. It has allowed him to travel more frequently with his wife while staying connected to clients — and he no longer worries about a repeat of last year when he was locked out of his Sugar Land, Texas, office building for two weeks after Hurricane Ike, leaving him unable to access his work and client documents.
As Mr. Smith contemplates retirement, having everything set up and available online will also make succession planning or selling his practice much easier, he said.
Sean Cunniff, research director at The Tower Group Inc., said that while formal research of online technology adoption in the financial advice industry is lacking, advisers are embracing the practice.
“Accessing their applications over the web is actually happening, especially among smaller advisers and breakaways, because of the low cost of entry,” he said, alluding to the higher costs associated with advisers' purchasing and maintaining all their own hardware and software.
E-mail Davis D. Janowski at [email protected].
