If financial advisers want to avoid being grounded before takeoff, there are valuable lessons from the unexpected technology breakdown that struck Delta Air Lines this week.
Thousands of flights were canceled or delayed Monday and Tuesday after Delta faced a system outage, causing some of its technology not to switch over to a back-up, according to Gil West, the company's chief operating officer.
When it comes to technology for any industry, any type of crisis can occur — advisers may lose internet access, or a program may stop functioning. That's when financial advisers must have a Plan B, Plan C and so on to save one's practice from losing time or clients.
With all of the information advisers keep on their computers and cloud-based software, it is imperative that there be a business continuity plan, and even a back-up for that, to ensure their practices run smoothly no matter what surprises occur, experts said.
"There is nothing that is completely bulletproof," said Neal Quon, co-founder of QuonWarrene, a technology consulting firm for the financial services industry. "It can happen to the best of systems."
Practices should have multiple back-ups of their information, said Wes Stillman, chief executive of RightSize Solutions, a technology consultancy agency. Advisers also should periodically copy the information on their cloud-based software to a safe, secure location they can easily access if they were to lose web connectivity.
"It may not be the most efficient but you could still have it and still communicate," Mr. Stillman said.
Facing a crisis without a plan can be detrimental to an adviser's brand, causing clients to miss a trade they wanted the adviser to execute or become worried that their information is not safe, experts said.
"The biggest consequence is they're not able to service their client should a need arrive," Mr. Quon said. Advisers should be thinking ahead of any potential meltdown what it is they would do if this were to happen, and how they could
communicate that to their clients.
There's also the potential that an advisers' entire system will be shut down, which could take hours if not days to remedy.
"It can literally destroy your business," said Timothy Watters, an adviser at Watters Financial Services in Paramus, N.J.. "Everything grinds to a halt."
When Mr. Watters first moved into his office space in 2008, he noticed the internet stopped working, and then the computer stopped working. Soon after, all of the computers he had stopped working except for the one still in the box. His IT guy, who was new to his company, spent the rest of the night and all of the next day figuring out the problem and getting the computers back up and running. It turned out to be a worm virus that was so new, not even the virus scanners picked it up.
"You could have this happen to you no matter what protections you do," Mr. Watters said.
He has taken a number of precautions since, including periodically updating a spare server he keeps outside of the office with all of the company's files.
Storing data in a local data center may mean quickly restoring a file or folder were it to be deleted accidentally, Mr. Stillman said.
Advisers should also check with their vendors and financial institutions about their disaster recovery plans they have in place, should a crisis occur, said Matt Lynch, managing partner of Strategy & Resources, a financial services consulting firm.
"A lot of it is selecting the right vendors and reviewing the right plans," he said.
Mr. Watters went the extra step to purchase cybercrime insurance, which provides clients with security if there were a data breach and reimburses the firm if it inadvertently sends money to someone other than the client, possibly due to a
phishing scam.
"If you aren't thinking constantly about that, you are being foolhardy for your own practice," Mr. Watters said. "But really you're not protecting the clients."
