From the October 2006 issue of Wealth Manager Web • Subscribe!

Beyond the Telephone

The hype over collaboration technologies continues, but many financial advisors, particularly those in small and mid-sized firms, have taken a wait-and-see attitude before expending the time and funds to experiment with the new tools. Some advisors, however, have taken the plunge and adopted intra- and inter-office collaboration tools. Additionally, several new technologies have significant potential for wealth management firms, even if many advisors are barely aware of their existence.

Getting the Message

The stereotypical image of an instant messaging (IM) user is a teenager sharing cryptic IM-shorthand messages with friends. Frank Moore, CFP and owner of Vintage Financial Services LLC in Ann Arbor, Mich., hardly fits that profile, but he and his staff of four employees frequently use IM for internal communications. Moore started using IM nine years ago, when he was affiliated with Raymond James. He learned that another James-affiliate had had good results with AIM, AOL's IM program ( Moore decided to try the software while spending most of the summer vacationing on Lake Michigan. "The office staff would take the call, tell the client I'd return their call in a minute, and then send me an IM so I would return the call. We became so accustomed to IM that when I returned to the office, we continued to use it all the time and have used it ever since."

Now, says Moore, IM has become the primary intra-office communication tool for Vintage Financial's staff. "We can use the phone's intercom system, but most of the time IM works well and it doesn't tie up the phones," he says. The staff also uses IM to reach Moore when he is working at home or on the road. His cell phone, a Palm Treo, has a keyboard that allows him to respond quickly. "If I'm out of the office or in a meeting where staff doesn't want to interrupt, but know that I need to be aware of something, they can send me a text message," he says. "For example, I might ask them for client information, which they can locate and IM to me during the meeting."

Moore tried using IM with clients when he first adopted it, but few of them showed an interest. He speculates that the lack of response was due at least partly to clients' lack of exposure to IM, but he has not attempted to reintroduce the technology since that first effort. Even though Vintage does not use IM with clients, the firm saves the log of all IM messages at the end of each day. The SEC audited the firm three years ago, but the inspectors did not ask to see the IM logs at that time.

Video Conferencing

Affordable, easy-to-use video conferencing has been an "almost-there" technology for years, but Keith Heichel, CFP and senior vice-president of Pinnacle Wealth Planning Services, Inc. in Mansfield, Ohio, believes it has finally arrived. Pinnacle works with approximately twenty CPA firms and law firms to provide financial planning and investment management services to those professionals' clients. Clients hire both firms as co-advisors, an arrangement that requires ongoing collaboration.

When Pinnacle began working with CPAs in 2000, the firm hosted quarterly dinner meetings with accountants and attorneys to review business results and share ideas. As the number of relationships grew, Pinnacle decided to host the meetings online. Heichel evaluated several services, including and, and chose the latter, which the firm has used for the past year. The video presentations consisted primarily of Microsoft PowerPoint, Excel and Adobe PDF documents. (In addition to three quarterly online meetings, Pinnacle continues to host an annual golf meeting during the third quarter.)

The firm's communications with its CPA- and attorney-clients leapfrogged into the 21st century after Bill Heichel, Pinnacle's president, saw the Motorola Ojo ( videophone during an episode of the television show "24" in February, 2006 and recognized the device's potential to enhance communications with Pinnacle's affiliates. Keith Heichel investigated the technology and decided to try it. "The Ojo is separate from your PC, and it combines video and VoIP (voice over Internet protocol)," he says. "The picture quality is fantastic--very smooth and no delays. The Ojo phone book has pictures of recipients--you just select and click on the recipient's picture to call him or her. If the other party doesn't answer, you can leave a video message."

Keith Heichel adds that response has been enthusiastic, and even those affiliates who aren't tech-savvy enjoy using the Ojo. All affiliates have one unit on their desk and several also have one in their conference room. The technology has been so successful as a collaboration tool that Pinnacle has started to offer Ojos to long-distance clients who have broadband connections. "We have clients in eighteen states," he continues. "We'd been using for quarterly meetings, but now we're providing Ojos to those clients whom we only get to see once or twice a year. That allows us to see them while we're reviewing the information that's displayed on their PCs. We pay the $299 cost for the Ojo and the $164 annual fee for unlimited service. We just started using it with clients two months ago, but so far those clients who have it are reacting well."

Entering the Blogsphere

Blogs caught the public's attention during the last presidential campaign when they provided reports that eventually made their way into the mainstream news media. If you're unfamiliar with blogs, they are online journals in which the author--or "blogger"--posts messages that may contain anything and everything from text to photos and multimedia. Readers are able to respond to posts and create an online dialogue.

Most blogs are written for external audiences. Russell Bailyn, a client services manager with Premier Financial Advisors, a registered investment advisor in New York City, started a blog ( in early 2005. His goal was to distinguish himself online and share his perspective on financial planning topics and financial news. The blog started as a traditional Website, but Bailyn later switched to Movable Type software (, which is designed to simplify the process of creating and posting blog entries. Bailyn reports that the cost of operating the blog is minimal, and it regularly attracts media attention.

Blogs are also taking on a growing role in what is called "social networking" within large financial services companies. A recent Financial Times article described how more than 450 employees at investment bank Dresdner Kleinwort Wasserstein have internal blogs. Employees are encouraged to share ideas, information and research that can benefit the organization on their blogs. While none of the wealth managers we contacted for this article are using internal blogs yet, that lack of adoption is probably related to the small size of the typical firm.

Working with Wikis

Almost without exception, when the advisor-sources for this article were asked if they were using wikis they responded, "What is a wiki?" Wikis are user-editable Web sites, of which, the online encyclopedia, is the best-known example. As principal analyst with technology consultants Forrester Research, Inc., Erica Driver explains how blogs and wikis differ. "A blog allows someone to post online and receive comments on that post," she says. "It's an online journal or diary. Wiki technology allows others to change the text of a Web page. If the information is frequently changing, and you want people to have access to the most current information, that's when a wiki is good. If you're trying to collect opinions, spread ideas, and have a dialogue amongst a community, then a blog is more appropriate," Driver adds.

Firms that wish to use a wiki can choose from several models. JotSpot ( offers free wiki set-up and hosting for a personal site; vendors such as JotSpot and eTouch ( also offer a range of hosted solutions.

Installing an enterprise version behind your network's firewall is still another option, with the number of users permitted to access the wiki determining the cost, according to Len Dorfman, vice president for product marketing with eTouch in Fremont, Calif. He reports that several of eTouch's financial services customers are installing wikis to replace their Web portals and to facilitate project management. The primary benefit of using a wiki is its simplicity and ease of use, Dorf-man says. "The technology requires no training to use--just a browser. You don't have to invest in other collaborative solutions to use one, and the adoption rates are phenomenal--people just start using them. You don't have to wait years to see the benefits of using it." Dresdner Kleinwort Wasserstein's experience supports Dorfman's claim: Over 3,000 pages have been created on the company's wiki, and more than 1,800 employees use the technology.

Regulatory Issues

On the other hand, several advisors familiar with the collaboration tools described in this article choose not to use them because of regulatory concerns. Les Abromovitz, senior consultant for National Compliance Services (NCS) in Delray Beach, Fla., believes those concerns are justified. NCS discourages the use of IM by its advisor-clients because it's difficult to monitor, and many firms aren't capable of retaining that correspondence. "It's our position that Rule 204-2 of the Investment Advisers Act applies to both e-mails and IMs," he says. "That means you must retain those messages for at least five years. Also, SEC rules require the appointment of a chief compliance officer (CCO). CCOs are supposed to monitor emails to determine if there is any misconduct, and they may not be able to do that with IMs."

Abromovitz also has reservations about blogs, which could fall under the same regulations as other forms of advertising. "An advisor might provide specific recommendations and be in violation of the rule which says that you should avoid ads that refer to specific recommendations you've made," he says. "Another problem occurs if someone comments on the blog about what a wonderful job the advisor has done or how knowledgeable he or she is. If that happens, it might be construed as a testimonial, which also violates rule 206(4)-1."

As newer collaboration tools develop, and the regulatory issues are resolved, it's likely that more independent wealth management firms will begin to use them. Workforce demographics will also add impetus, Driver says, because younger employees with experience in these technologies will consider them essential to their jobs. "If you think about the next generation of workers--the millenials, those born between 1980 and 2000--they grew up on this stuff," she says. "This is how they build communities and get answers. So it's very important for companies with retiring workforces or an influx of millenials to think about how these emerging technologies can benefit their business."

Ed McCarthy, CFP is a freelance writer in Pascoag, RI.

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