If you're tired of endless software upgrades, server glitches and IT bills, it may be time to consider cloud computing. Cloud computing involves, at its most basic, moving your computer applications and programs to the Internet rather than your desktop. At the extreme, cloud computing involves outsourcing all your IT functions, from back-up to support and applications, to the Internet, or cloud.
Here are six reasons you might want to consider a switch to cloud computing:
1. Low Costs
The costs of cloud computing are hard to beat, especially for a new graduate or a newly independent planner. When you're starting fresh, you can get set up quickly and cheaply with the applications and programs you need to run, including financial planning and investment software and client relationship management applications as well as back-ups and software updates.
"I find that keeping the network or the computers running smoothly and the software updated and secure can be quite costly, not just in terms of money, but in terms of time, too," says Russ Thornton, AIF®, CEO of Thornton Wealth in Atlanta.
Julien Mordacai, principal and consultant with All Back Office Consulting in Edenton, N.C., says while the costs to enter a cloud environment vary depending on how big your office is and how much outsourcing you want to do, it is much less than the tens of thousands of dollars you might have to spend on a server, office back-up systems, desktop software and IT help.
2. Low Barriers to Entry
A major benefit to cloud computing is the speed at which you can have an office up and running. Mordacai notes that he could have a server functional for a new client within a few hours, although doing the research work to assess a particular planner's needs and get them fully operating could take a week or two.
Think carefully about how far you want to go into the cloud. Virtually any type of application or program you need or want to run-from investment management and financial planning applications to broker-dealer applications to office apps and client relationship management programs-is available in the cloud. You can also buy back-up space to store all your scanned documents, and your application vendors will provide redundant back-ups to all your information that is stored on their applications. In addition, you can outsource your office support and IT support functions via the cloud.
3. Improving Security
"The data is secure because it is being accessed through encryption set up by people smarter than us," says Dave Williams, CFP®, of Wealth Strategies Group in Cordova, Tenn. "Clients like accessing their data through a cloud environment because they know it's secure, they know they can get access to it, and they know we are able to bring together a lot of their records."
Williams believes that cloud computing is more secure than an environment with paper, in-office servers and desktop applications. In addition, going to a cloud environment meets the Security and Exchange Commission regulations covering disaster recovery and business continuity.
It's important to assess each potential cloud computing provider in terms of security, asking questions about back-up servers, encryption and other issues. Any reputable provider will also allow you to set up systems allowing differing access levels for your staff, depending on their level of responsibility.
4. Increased Mobility
As a newly formed RIA, Eric Lybarger, principal and owner of Evergreen Global Investment Group LLC in Golden, Colo., says one of the major benefits in cloud computing is the instant mobility.
"I used to work with a large broker-dealer and when I was traveling, I sometimes would have difficulty getting my computer connected to the Internet with all of the proprietary software on my laptop," he says. "There were times when I was traveling when I wanted to be able to take care of a client's business on the spot, but I wasn't able to. Now, I can do it in an instant."
The instant mobility feature works for clients too, because if you work with a broker-dealer or custodian who is set up to work in the cloud-which most are-your clients can access their financial information from anywhere.
5. Limitless Scalability
With applications software, you can buy only the licenses you need right now, and add more as needed. The same goes for storage space, according to Lybarger.
"I've replaced my filing cabinet with a scanner," he says. "Scanning paper documents is a tedious and time-consuming process and scanned files can take up many megabites, so I can see how this can quickly chew into my allocated cloud 'memory' space, which is currency 10 gigabytes."
6. Strong Compliance
Planners who are already in the cloud believe that their compliance program is stronger than it was before. For Thornton, who is registered with the state of Georgia (not large enough to require registration with the SEC), his business continuity plan includes an appendix that lists all the Web sites and his user names and passwords so that, in his words, "If I get run over by a truck tomorrow, whoever comes in to take over can access my business continuity plan and pretty much pick up where I left off."
He adds, "In the event of an audit, I think most regulators are pretty comfortable with the concept of using Web-based solutions and having stuff stored offsite. As long as you can access it when you need it and you follow through what you say in your documentation, you're in good shape."
Lybarger notes that his client relationship management application in the cloud allows him to comply with regulations that communications and notes to and about clients can't be altered in the future. In addition, every transaction, note, e-mail or communication about a client is attached to that client's name, so everything is easy for him, or an auditor, to find and trace.