The good news regarding document imaging and management is that most advisors are already storing some of their documents electronically. The challenge for advisors is making sure that they have the right system in place for their firm.

Given all the choices available for document management systems, where do you begin? As with any technology purchase, you need to identify both your short- and long-term needs. For many advisors, the initial need for a document management system is to get rid of paper files and to have easy access to documents electronically. However, meeting this need gets much more complicated if you have a large firm and multiple staff members who will be responsible for scanning your documents. Another need might be to implement workflow using the document management system. The goal here is that the document is “routed” electronically throughout your office as each individual or department completes their respective work.  

Considering all the systems available, it is worth the effort to identify your specific document management needs. Be sure to include your compliance department in selecting a system. Each document management system can use different file types, structures and audit trails to store information. Given your firm’s compliance needs and regulatory reporting requirements, it is very important that you select a system that meets the appropriate rules and regulations.

Once you have selected a system, make sure you start with the correct computer network architecture and scanning methodology. The initial temptation for many firms is to start scanning files right away to get rid of file cabinets as soon as possible. This can turn out to be a huge mistake and a significant waste of time. You could easily find that after scanning a couple hundred documents, your scanning methodology and structure has inherit conflicts and will not work with all the different types of documents used by your firm. It is better to start with the documents of one of your more complex clients—meaning several different types of accounts and activity. Then, you can use this client as the foundation to make sure your file structure and naming convention can accommodate all scenarios. This is critical because if it isn’t consistent or clear, it will increase the chances of potential issues when you can’t efficiently locate a document later. Most importantly, have a well-defined plan and if you have multiple users scanning documents, make sure that nothing is assumed.

Any firm using a document management system should follow a checklist before shredding any document. This may appear as a no-brainer, but you better check and double-check that a group of documents is properly labeled and stored on your system before you send them off to be shredded. Another best practice is to make sure that all of your scanned documents are properly included in your back-up process. This is especially important as your use of the system expands as your firm grows. Having all new associates spend a day scanning and filing documents is another best practice that should be considered. This provides an opportunity to quickly understand your document management system. Furthermore, it can also prevent any “rookie” mistakes in working with the system, such as incorrectly labeling or misfiling a document.

Identifying the right document management system for your firm and achieving the expected efficiency gains is not a simple project. It might appear simple on the surface—after all it is just paper, right? The reality is an advisor’s business is surrounded by different types of documents from internal and external sources. Sometimes, the greater number of choices can make it much harder to select the right system.