Backing up computer files is a vital but tedious way to protect a financial practice. Nevertheless, many financial advisers don't do it, perhaps because they think a hard-drive meltdown almost never happens or won't happen to them anyway.
The odds that such a meltdown will occur, however, are greater than many of them understand.
For instance, out of a fleet of more than 100,000 consumer-grade hard drives, 1.7% of those drives failed within the first year of operation, according to a survey from information technology people at Mountain View, Calif.-based Google Inc.
Among three-year-old drives, the failure rate rose to 8.6%.
The study was published last year, and it evaluated computer failure rates at the firm between December 2005 and August 2006.
TOO MUCH MONEY
Suffice to say it is a good idea to back up your computer.
Firms of moderate size often leave the decision to a consultant or staff member and most often rely on tape, DVD, or some type of networked storage setup.
These systems can cost as much as several thousand dollars to purchase and operate. That makes them too expensive, labor-intensive and time-consuming for a small firm to manage.
One solution is an online backup service, an option that has matured enough in the past few years to make it affordable, practical and a no-brainer for smaller firms.
The interfaces for the most part are intuitive, and recovery of data to a computer is simple.
Because disk capacity has be-come such a commodity, online backup services are now more affordable than they have ever been.
Remember that there are other important considerations beyond price, including that the backup process usually is automated, occurs at regular intervals, makes use of encryption technology and is protected from natural disasters.
Many online providers offer these features, but make sure you confirm that with any vendor you consider using.
In an e-mail, Oliver Tutt, an adviser and managing director at Randall Financial Group LLC in Providence, R.I., wrote that he had experience with two different online backup services, iBackup.com from Pro Softnet Corp. of Woodland Hills Calif., and most recently, MozyPro of Salt Lake City, a subsidiary of EMC Corp. of Hopkinton, Mass.
"I switched due to cost — cost per gigabyte has come down dramatically and there's no question, despite some reservations, this is the best option for a small adviser such as my firm," he wrote.
"We scan virtually all client-related documents for efficiency and space reasons, and all of our critical documents as well as data are housed on a computer. The only reliable option that makes any sense is online backup," Mr. Tutt wrote.
Randall Financial Group has assets of $20 million under management.
Other backup methods of protecting client and business information, including hard drives and redundant computers, are subject to theft, loss from disasters and human error, he noted.
But there are differences among online products.
For instance, Richard J. Krasney, a CFP and investment adviser with Krasney Financial LLC in Mendham, N.J., used an online service offered by Iron Mountain Inc. of Boston.
However, he dropped the service in favor of Washington-based Back-up.com, after upgrading to a new computer with the Vista operating system.
"After a hard-drive crash I decided to upgrade my system to Vista and Office Professional 2007," Mr. Krasney said.
"But when I went to retrieve my data from Iron Mountain, they told me that they were not Vista-compliant yet, and so I needed to go back to [Windows] XP in order to get my data back," he said. "This was just incomprehensible to me."
Iron Mountain is now Vista-compliant, a spokesman said.
"[Backup.com] is less expensive, and I can allocate bandwidth to multiple computer accounts, not just one computer," Mr. Krasney said.
However, before Mr. Krasney proceeded, he made a call to the firm's customer support department and made sure it was Vista-compliant.
Meanwhile, Boston-based Carbonite's chief executive David Friend said he isn't sure how many of his company's 100,000 customers are advisers, but 40% of them classify themselves as small businesses.
"Around 46% of our users have had to do some sort of restore," he said. "The saddest thing is that we hear from a lot of people only after they've had a disk crash and have the Sword of Damocles hanging over their head."
For more information, visit back-up.com, carbonite.com, upline.com and http://backup.ironmountain.com and mozy.com/pro.
E-mail Davis Janowski at [email protected].
