From the April 2011 issue of Investment Advisor • Subscribe!

How Good Is Your Phone System?

New technology has made the humble telephone a powerful tool

When was the last time you evaluated your current phone system? Yes, I said phone system. For many advisors, your phone system is not likely a high priority. In fact, perhaps you have been using the same phone system for years. Maybe you wouldn’t even refer to it as a phone system.

Your initial needs for your phone system were probably very simple and didn’t require much sophistication. However, as your firm continues to grow in assets and employees, is your phone system keeping up with all of your needs? More advisors are spending time working outside of their main office—whether it is at home, a second home or another location for an extended period of time. Given this situation, how many phone numbers does it take to keep track of your comings and goings, and those of your associates? Do your clients or associates first try your office and then your mobile phone and then perhaps even your home number? The good news is that the technology behind phone systems has really improved over the years. In addition, today there are also a number of phone system providers that target small- to medium-sized businesses.

As with any technology purchase, selecting the right phone system or determining if your existing solution is adequate requires a thorough needs assessment. Many of the phone systems available have an extensive list of features and functionality. Examples include a “follow me” feature where you instruct the system to ring a certain phone depending on the number dialed. Specifically, you can direct your main phone number to ring your office first and then your mobile phone. Or you could direct the system to immediately ring your home office when your main office phone number is dialed. In this case, your client knows one number to contact you and you direct the phone or phones at which the main number will ring.

Another more sophisticated example of the latest features is utilizing the “heads-up” display that several phone systems install on your personal computer. This software is especially useful if you have multiple associates in different locations. The software can tell you if someone is on the phone, who they are speaking to, and how long they have been on the phone, as well as many other details. This technology simulates an environment in which everyone is located at one location because of the information available on each associate’s computer screen. These are just two very different examples that demonstrate the variety of features available with the  phone systems that are on the market today. There is a long list of features available, so it is important for you to consider your specific needs before you fork over any cash and perhaps overpay for a solution.

One of the reasons why phone systems have made so much progress over the last several years—particularly for systems available to small- and medium-sized companies—is the availability of broadband Internet connections which are at the foundation of VoIP-based systems. VoIP, which stands for Voice over Internet Protocol, is the technology that allows voice communications to be delivered over the Internet on IP-based networks. In the early stages before broadband, the quality of VoIP phone systems was very inconsistent and unreliable. Today the technology has improved significantly and many businesses (including my own firm) use a VoIP-based phone system. Put simply, VoIP technology allows a firm to achieve a number of the upscale benefits of having your own customized telephone switchroom within your own office, where previously it required much more expensive hardware, software and network infrastructure. The costs were simply too prohibitive for most advisors to consider. Score another gain in productivity improvements made possible by technology advancements.

One of the initial benefits with a VoIP-based phone system is dealing with the somewhat cumbersome but likely common task of moving associates within your office. A VoIP-based phone system makes it much easier to accomplish this task. In many cases, an associate just needs to bring his or her phone along to the new location, plug it in to any Internet network connection, and presto! The new location is connected to the office phone system. Changing phone numbers and re-routing calls is also a relatively easy task. Conceptually, think of a VoIP-based phone system as just another extension of your overall technology network. This includes the ability to actually connect with your phone network wherever you have a reliable Internet connection. For example, let’s say you plan to rent a home in Hawaii for two months during the winter. As long as the home has a stable broadband connection, you could potentially use your VoIP-based phone to make and receive phone calls—just as if you were in the office. And when you make a phone call, the caller ID displays your office phone number (or whatever number you choose). This is quite a benefit if you are someone who likes to remain connected to your office (and perhaps to your clients) when you are traveling.

Once you have decided that a VoIP-based phone system is appropriate for meeting the needs of your firm, the next step is identifying the right product. As with other products available to advisors, your phone system can be installed locally in your office or you can outsource the technology infrastructure (a “hosted solution”). Cisco has provided business phone systems for years, and now offers systems designed for smaller businesses, and the number of companies offering competing products has increased and is certain to grow. An example includes Fonality, a VoIP communication provider founded in 2004 that specializes in small- to medium-sized businesses. Fonality has several product lines available depending on the size of your firm, number of locations, sophistication of calling needs and many other variables. Grasshopper is another company that offers several phone system “extenders,” which can enable you to enjoy advanced features at entry level prices. Grasshopper is not necessarily designed as a replacement of your existing phone system, but can be used as an add-on to meet certain needs without having to replace your entire phone system. There certainly are a number of providers offering phone system solutions today; the business in general is very competitive, so you may be able make your technology dollars go farther than you thought. However, be careful not to let the price alone drive your decision. The quality and service of your phone system is critical. Do your homework and due diligence. It is especially beneficial if you can speak with other firms that are already using the phone system that you are considering.

Phone systems have not historically been the most exciting technology available to advisors. However, I believe that this has changed dramatically during the past several years and you now have more solutions available that are worth your consideration as you evaluate your voice communication needs. After all, it should be easy for your clients to contact you with one number. It should also be easy for you to route your phone calls to the right number depending on where you are working that day; therefore your clients won’t need to dial multiple numbers in order to locate you or other associates at your firm. This may sound very simple, but it is quite powerful when you begin to discover all the ways you can benefit from it. It is likely that with today’s phone systems we are witnessing just the beginning of the feature advancements to come. “Hello” has never been more powerful.    

Dan Skiles is the executive vice president of Shareholders Service Group in San Diego. He can be reached at dskiles@ssginstitutional.com.

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