All the buzz about cloud computing has many financial advisors perking up their ears and wondering how cloud computing can benefit them.
Cloud computing is simply defined as access to processing power from a virtual source. You never interact with it, your applications do. The cloud enables you to take advantage of on-demand network access for a shared pool of resources, eliminating the need to have extensive document storage on your personal computer.
Cloud-based applications for financial advisors can offer many benefits, including:
- Access anywhere there is an Internet connection
- IT management isn’t required
- No software needs to be installed
- No hardware other than your usual workstation
- Instant upgrades are immediately available at users’ fingertips (versus the older method of needing to buy and download the newest software)
Not All Clouds Are Equal
Advisors should note that not all types of clouds are equal. There are two distinct types of cloud computing: shared clouds and private clouds. The main difference between a private cloud and a shared cloud is that the vendor using a private cloud is in complete control of the performance of its Web-based applications with one mission: to supply its customers with a uniform level of service. In a shared cloud environment, one vendor’s application can affect the performance of another vendor’s application.
This is an important distinction for financial advisors to understand because they are dealing with critical client data that requires a certain level of performance. In private cloud environments, in periods when processing power usage goes up, such as during quarter- and year-end reporting, the vendor can apply more or less processing power based on anticipated demand. In technical terms, the vendor has a sufficient amount of rack space to provide consistent service even when demand is at its highest level.
Software as a Service (SaaS)