From the June 2013 issue of Investment Advisor • Subscribe!

Summer School: 4 Tips to Protect Your Tech

The year is half over, so take time now to implement these strategies

Illustration by Ellen Weinstein. Illustration by Ellen Weinstein.

Can you believe the summer is already upon us? For me, it is amazing to think this also means we are into the second half of 2013 (or that 2013 is half over, for those of you who think of the glass as half-empty). Time ticks by faster these days. From a technology perspective, this can be both good and bad. The good part is that you have more new choices and features, and opportunities to increase efficiency are continuously introduced. The bad thing is that you can easily fall behind the times if you are not keeping up with today’s technology solutions and tomorrow’s as well. Allow me to offer four thoughts and ideas that you should understand in order to maintain your firm’s place in the technology world.

First, your clients are likely much more confident using technology to conduct their affairs than you might believe. It is so easy now for anyone to become a competent user of today’s technology devices. Unlike yesteryear when it was very common to wait before purchasing new technology products, people now pre-order or even stand in line to get the latest smartphone or tablet. The message for advisors is that you need to ensure your client-facing technology keeps up with the rest of the technology world. For example, if email is one of the primary channels you use to communicate with your clients, then it is important to recognize how this medium might change for them. Specifically, new technology products provide the ability to have dynamic home screens that automatically update content from multiple sources identified by the user. This could be news stories, blogs, social media or websites. This might sound high-tech, but it is intuitive and easy to use, even for a non-tech-savvy user. Ultimately, it means your clients’ inboxes might not get as much of their attention as they used to. Now, some advisors might be saying, “That’s not my client”—that is, that engaging with your firm via technology is not important to them. That certainly could be the case, but I would urge you to view this as a temporary condition at best.

Second consideration: Is cloud technology really taking over the desktop world? Actually, it is. Don’t get me wrong: The desktop is not dead, nor is it going to be extinct in the near future. However, a significant majority of technology service companies are building new technology for advisors that is cloud-based. Another large majority of existing desktop solution providers are also building new cloud-based solutions to either replace their current platform or to augment their current offerings. It is also getting easier to leverage the cloud. There are more choices available in each product category that offer a variety of cost/benefit options. The question is, for firms that have one or several core systems that are desktop-based, what is the cloud strategy for these desktop products? The cloud strategy could come in various forms. The most common course for advisors to take is to either use the cloud version of these products or to switch providers. However, you might have come to love and rely on a desktop system that may never be specifically built for the cloud. If so, don’t give up; you might consider using the cloud as part of your network, and try using an outsourced server solution to host your core application. Bottom line, if a majority of your current technology products are not cloud-based, then you have some work ahead of you to become familiar with how cloud-based services can improve your firm. Otherwise, I do believe that your firm will not be as efficient and scalable in the years to come versus your peers.

The third thought is something you ignore at your peril. The security of your systems, data, client information and overall environment unfortunately will continue to require more and more of your attention. Each day, if you are not keeping up with security threats, the financial, business and reputational risk of a security lapse increases. It is really a shame, but the more we leverage technology in our businesses, the more possibilities there are for someone to use these same solutions against us. A dozen years ago, did you ever really worry about somebody fraudulently using your client’s email to request a wire transfer? Probably not, but today that is something you should be concerned about. Put simply, you must continue to evaluate your areas of risk and then use technology with well-defined procedures and policies to mitigate these risks. The goal must be that your firm is getting better, smarter and more experienced year after year in protecting your firm, your data and your clients. If your security systems and policies haven’t been updated in the last year or more, don’t wait any longer. If you don’t know where to start, check with your custodian for guidance—they should be able to assist.

One last idea: There was a time in our profession when it was hard to find technology products built for other industries and groups that were equally attractive to advisors. The Microsoft product suite is a prime example. Every program advisors used was written with Windows in mind. This environment is changing right before our eyes, and I expect advisors will have more opportunities to use solutions that weren’t necessarily built for this profession but can be used on the operating system they are familiar with. This is already very true in the app world for tablets and smartphones. Examples include apps like Power Presenter, Tripit and Speaktoit. Don’t be afraid to cast a wider net when you are considering your next technology solution.

Sometimes being too comfortable with your technology solutions can lead to your firm falling behind. In addition, technology decisions that you made just a year or two ago could be revisited in this fast-changing world. Take the first step this summer, especially in technology areas that are unfamiliar to your firm. Scout out new technology—you may find programs that become very important to you in the years ahead.

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