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The Digital Wire

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When Norm Boone installed Voice over Internet Protocol (VoIP) throughout his three financial advisory offices in 2005, the transition had some bumps. “The conversation was garbled one-third of the time,” says the founder and president of San Francisco-based Mosaic Financial Partners. “And obviously when you’re talking with clients on important matters, that’s a big issue.”

Still, Boone felt drawn to the new technology, convinced that services linked with VoIP would dramatically improve customer service. He liked the fact that clients could call one main number, and still be connected to the remote office in Tahoe. And should an advisor in Tahoe be on vacation, the receptionist in San Francisco could pick up the call and take a message, rather than have a client languish in voice mail limbo.

So Boone pushed for some adjustments, including installing a separate DSL line in both Tahoe and a second office in Lafayette, California, just for VoIP calls, and now feels the firm has reached cruising speed. “I’m a big believer that to stay cutting edge, you need to give top-quality advice while staying on top of new technologies,” he says. “That’s what lets you grow into a bigger company.”

As VoIP transitions into more of a mainline business technology, investment advisors are increasingly making the switch to this new form of digital communication. The benefits are many. While startup costs can be sizeable, monthly fees tend to drop dramatically as users save money on cheaper service plans, and also by having to make fewer maintenance calls. Price points for smaller firms, even those with one or two advisors, have also come down as service and system providers are starting to cater to smaller-sized businesses.

Then there are the bells and whistles–often free with VoIP service–that are attracting advisory firms as well, including voice mail that can be accessed from the Web, one-click calling for clients, conferencing capabilities, and systems that dovetail with existing customer relationship management (CRM) software. “It was a huge cost savings,” says Jim Freeman, national sales manager for the Boston-based broker/dealer Cantella & Co. “But the big reason we switched was that we felt we could provide better services to our clients. With us, call quality went up.”

However, in a sector so dependent on customer service, where financial data is discussed, security and dependability are paramount. Voice sent over the Internet turns into data packets, just like an e-mail, and can be intercepted. Plus a phone line failing can be a death knell to a firm.

Putting the pieces together correctly can eliminate many of these concerns. Installing a second Internet line as a back up can cushion the impact if a phone line falters. Finally, hiring a security expert for installation is critical–something financial advisors should be monitoring for the safety of their clients anyway.

New offerings in the marketplace are taking many of these points into consideration, creating links between analog, mobile, and VoIP systems for backup purposes, and installing encryption so lines are secure. “You don’t get VoIP just because everyone else has it,” says Bryan Cohen, a systems engineer with CDW, the computer vendor and consultant in Vernon Hills, Illinois. “Like any good phone system, you get it so you can communicate, and because it can benefit your business.”

Secure Solutions

Fidelity’s move to VoIP has been slow, but steady. Teaming with Cisco, Fidelity pushed early by offering its active traders a “click to call” option on its Web site, enabled through VoIP.

By pushing the button online, those investors are instantly connected to a rep at Fidelity, while their account details are loaded on the rep’s PC as the call goes through. Plans to make the service more widely available are in the works, but without any specific time frame. “This is clearly a crawl-before-you walk situation,” says Dan Tonelli, senior VP of telecom architecture and technology at the Boston-based Fidelity.

Where Tonelli says the firm has not dragged its feet, though, is security. As VoIP moves over the Internet, Fidelity wants to make sure that calls are not only protected from theft, but also from being heard by the wrong person. That’s why Tonelli installed encryption software throughout the network. “Security is our top concern,” he says.

Ed Skoudis, an instructor with the information security institute SANS, and founder of Intelguardians, an information security consultancy based in Washington, D.C., agrees that security is something that financial firms should push. As mentioned earlier, VoIP takes audio calls and turns the information, or data, into small packets that travel across the Internet like any other data, such an e-mail or credit card numbers. Just as an e-mail can be captured, so can these voice packets, which can then be pulled together, and turned back into audio. Result? An instant wiretap.

Most Internet service providers, like Verizon, Time Warner, and Comcast, send this data over private backbones–think tunnels that run along the main Internet highway, but protect them from mixing with the rest of the riff-raff. But there are still off-ramps, so to speak, as the data moves from one transfer point to another, that might not be as secure. “With encryption, hackers can still capture these packets, but it sounds like gibberish,” says Skoudis.

Skoudis believes firms shouldn’t stop at encryption, but also make sure its systems are patched regularly and hardened. “The problem is that vendors advertise that these call managers are an appliance,” he says. “You just plug in and you’re done.” Not good enough, says Skoudis. Instead, a tech consultant, inside IT team, or even the vendor should tighten certain settings and also shut off services that a firm won’t be using, in effect locking the doors that a company knows it doesn’t need to use.

Cisco couldn’t agree more, and its latest service aimed at the small business user has data-switching security features built into its appliance, says Eren Hussein, senior manager, unified communications solutions marketing with the San Jose, California-based company.

Meant for firms with 49 employees or less, the new solution works in tandem with a service provider’s Internet line. With a list price of about $600 per phone, Cisco’s system clocks in higher than a regular cordless from Best Buy. But then there are the features; the system allows a user to have music on hold simply by plugging in an iPod or other MP3 player. Outlook connects to the software so advisors can click on-screen to place a call, and the solution also integrates with Microsoft’s CRM system, bringing up a client’s account as they’re dialing.

Advisors can also link mobile calls to VoIP with Cisco, even if the two calls are on different carriers. The result? An advisor chatting on his cell phone with a client can come to the office, click a button, and move that call to his desk phone without the client ever noticing. Video calls are also possible, with a small camera that sits on a PC, letting up to three people videoconference together. However, plans to offer true Web conferencing for the smaller firm are still in the works. “Yet with our acquisition of WebEx, the potential is clearly there,” Hussein says, referring to the Web-based conferencing system.

A Simple Choice

For firms with a one or two-person operation, Vonage is a choice that can get an advisor up and running with VoIP in just a matter of minutes. Other options can include turning to a local cable company, like Time Warner or Comcast, both of which offer VoIP services to many customers across the country.

As for Vonage, while 90% of its business is aimed at the residential customer or single user, the Holmdel, New Jersey-based firm does offer a couple of plans that can scale up slightly for offices.

Pricing starts at about $40 a month for one voice and one fax line with limited minutes, scaling up to approximately $300 a month for six voice lines with unlimited minutes. A selling point for Vonage, however, is that any telephone–cordless, regular, or even virtual–can work with Vonage, not burdening a small shop with having to invest hundreds of dollars upfront to buy a digital system like Cisco’s.

Still, the extra services are much fewer. While the standard services are there–free voice mail, call forwarding, and caller ID–the product is not robust enough to tie into CRM software. While an advisor can upload contacts into Vonage’s Web-based program, making one-touch calling possible, those contacts are stored on Vonage’s server and not on an office PC.

However, the company is working to make more features available to a business customer by year-end, says Brooke Schulz, senior VP of corporate communications for Vonage. Up ahead? Giving customers a mobile option, and adding more customization, such as control call-forwarding where the system would recognize a client’s number, and direct it to an advisor’s cell phone, or even play a message just for that client, instead of merely sending him into a voice mail box. “This gives advisors the power the make their firms look bigger,” says Schulz. “It gives more personalized service to your customer.”

For a firm that really wants to batten down the hatches on security, however, CDW’s Cohen has concerns about Vonage. While Vonage’s Schulz admits Vonage does not currently encrypt the data stream, he says it doesn’t have to as calls travel along Vonage’s Level 3 network and not along the public Internet. Still, Cohen says that before the call moves from an office phone to Vonage’s pipes, it must travel along someone else’s pipe such as a cable line from Time Warner or a DSL line from Verizon, where the packets can be grabbed. “Anything is possible,” concurs Schulz. “But it would be like finding a needle in a haystack.” Counters Cohen: “What chance is there that a hacker is looking at your haystack? Slim. But there are a lot of hackers. And if you look long enough at a haystack, you will find that pin. But if it’s encrypted, that pin might look like a piece of hay, and that’s even better.”

Efficiency Over Perks

Michael Kitces knew that replacing his advisory firm’s legacy PBX phone network was just a matter of time. “We had an old Panasonic system, and they have gone out of the phone business,” says the director of financial planning with Columbia, Maryland-based Pinnacle Advisory Group. “We were stuck, couldn’t do any upgrades or adapt.”

The goal in Pinnacle’s search was to find a system that could scale as the company continued to grow, and had enough stability so that the advisory firm wouldn’t have to rebuild from scratch again. “Or at least, we wanted to cut down those odds,” says Kitces.

After looking at several providers, Pinnacle settled on Avaya, a fairly new, but extremely popular name in this growing field. Startup costs for the new network were considerable. Kitces estimates that with labor, digital phones, software, and new servers, the company invested between $15,000 to $20,000 for about 20 lines. And there were a few problems in making the switch. Luckily, Pinnacle kept the old PBX system as the company transitioned so it could implement the VoIP on a comfortable timeline before flipping the switch.

Two years later, however, Kitces raves about the new technology. While the company chose very few of the so-called bells and whistles that the Avaya VoIP system offers, it is thrilled with VoIP’s efficiency. Kitces’ favorite feature? The ability to route vendor calls immediately to the right employee, rather than through the receptionist. “We want the front desk to handle legitimate or prospective clients, rather than putting them on hold to transfer a call from a vendor,” says Kitces. Another plus? Controlling its own phone system. “In order to move extensions, we used to have to make a service call,” he says. “Someone would come out, charge us their travel time, and it would still take two to three days. Now it takes eight minutes.”

Of course, Pinnacle does have someone in-house dedicated to handling IT issues, as well as an outside IT consultant for what Kitces calls “heavier-duty problems.” However, Avaya believes that neither is completely necessary with its system. While not as much of a pure plug-and-play option as Vonage, the Basking Ridge, New Jersey-based Avaya is still a very simple solution for small businesses, and some of its plans are aimed squarely at small shops of fewer than 20 employees.

Avaya’s Quick Edition is based on peer-to-peer technology and allows an advisor to just plug a phone directly into a router where it practically self-installs. Starting at about $400 per phone, it’s a much cheaper solution than its higher-end plans, which can start at about $11,000 for an office of Kitces’ size. However, Avaya’s solution provides an even greater price savings than just the switch from PBX to digital, by incorporating SIP standards. SIP is a new way to code VoIP data universally, so that the packets move faster, and are easier for carriers to prioritize. Service providers, like Verizon, that offer SIP lines allow a user to subscribe to fewer VoIP service lines. While a T1 line that supports 24 users might cost $640 a month, says Avaya, a SIP service supporting the same number of users can be as low as $350.

But while Kitces may not have been as interested in the extras Avaya offered, they are worth noting, including Avaya’s conferencing bridge service that allows up to 64 employees to be calling in at the same time. “We had a financial company with 35 employees spending $2,000 to $3,000 a month on conference calls alone before switching to us,” says Joe Scotto, global director of product and solutions marketing, small to midsize business, for Avaya.

The solution can also tie in with Outlook to make on-screen calls possible, and integrates with ACT, Microsoft’s CRM, and Goldmine. Scotto adds that voice recognition software, available on Avaya’s larger platform solutions, “is on our roadmap for small business plans,” he says.


Those wanting a solution today might want to choose one like Avaya. However, those who are still on the fence, and willing to wait a bit longer, might find more players in the market when they’re ready to leap. The newest? Microsoft’s Response Point, still in beta testing and not expected for sale until summer, says Jeff Smith, senior product manager for Microsoft Response Point.

Meant to work with VoIP and PBX, the system will be a simple box, like a router, that plugs into an existing network. While Smith won’t name the service providers that will be supporting Response Point, Microsoft has been running some of the beta tests with Verizon, he says.

Like Avaya, Response Point will sync with Outlook. But Smith emphasizes that one of the system’s best features is its ability to work in a mobile environment. An example? Dialing a client in Hong Kong through the office system from a mobile phone, and not paying for the international charge. Other features include voice dialing, by pressing the response-point button, and linking in with a PC-based phone book

Supporting up to 50 employees, the solution seems scalable for the smaller sized advisory firm. But with Microsoft unwilling to announce pricing until the service is available, it’s unclear how competitive it will be with other plans, like Avaya’s, that are currently on the market.

Still, Smith believes its main selling point will be for companies who don’t want to give up their PBX system either as they make the transition to VoIP, or because they want a back-up if either service goes down. Response Point can support nine outbound calls on a normal service, and eight on VoIP, says Smith.

As with any new technology, having a backup is always a safe bet. A PBX line that’s scaled down to the cheapest call plan, or cell phones that can be grabbed if a T1 line or DSL crashes, plus a system that can support both, can make the difference between business continuity and business lost. “When you pick up your phone you take it for granted there is dial tone,” says CDW’s Cohen. “But what if you didn’t hear it?”

However, investment advisors considering the transition to VoIP should also consider factors tailored to their specific business needs such as voice mail that can personalize a message to a client that a check was received, call routing so clients aren’t kept waiting, secure lines so financial data is protected, and cost savings that are crucial to keeping a firm in the black. “Communications is one of the most important aspects of business,” says Cohen. “And a good VoIP phone system can be flexible, grow in scale, and match the competition.”