• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Technology>Embracing the Cloud

Related Content

  1. Videos
  2. Articles
  1. Session 3: Best Investment Ideas Roundtable

    A panel of Morningstar equity, mutual fund, and ETF experts detail several individual investment opportunities and sensible investing strategies for income and growth in today's tough market.

  2. Session 1: Is the Economy Really Losing Steam?

    Morningstar director of economic analysis Bob Johnson addresses recent sluggishness in the economy and makes the case for better growth in the second half of the year.

  3. Session 2: Midyear Portfolio Checkup and Risk Factor Review

    Director of personal finance Christine Benz will help you check your true exposures and stress-test your holdings in session 2 of Morningstar's 2012 Midyear Financial Checkup.

  4. Tackling the Retirement-Income Challenge

    Premium Member Video: Financial experts John Ameriks, Sue Stevens, and Bill Bernstein address how to allocate fixed-income assets, the importance of total return, the role of annuities, retirement distribution rates, and more in this special panel discussion hosted by Christine Benz.

Embracing the Cloud

More advisors are ditching their servers in favor of the cloud, minimizing IT costs and freeing up more time for client service.

Bill Winterberg, 02/09/2012

The average financial advisor's office contains a hodgepodge of hardware infrastructure to support a wide array of ordinary business activities. It's not uncommon to find a combination of servers, varying in age and performance, responsible for all of the firm's e-mail traffic, database access, and file storage. Then there are a variety of peripherals connected to the servers, like external tape or USB backup devices and network firewall systems, all adding to the complexity of maintaining a reliable and functional environment.

Most advisors acknowledge they are not experts in managing their information technology, so they either hire dedicated employees for day-to-day administration or contract IT management and support to an outside service provider. However, finding IT professionals with practical knowledge of the financial services industry--and its obligatory regulatory requirements--is an undertaking with long odds.

When I encounter a service provider who offers an IT platform aimed at offloading much of the burden of local infrastructure management and has experience working in financial services, I am compelled to share it. One such provider is Right Size Solutions, Inc. of Overland Park, Kan.

Infrastructure Services
Founded in 2002 by Wes Stillman, Right Size Solutions offers cloud infrastructure services, otherwise known as "infrastructure as a service" (IaaS), primarily to CPAs, registered investment advisors, broker-dealers, trust companies, and community banks. In addition to taking over the administration of much of an advisor's IT infrastructure, the company creates virtual server environments that advisors access via remote desktop connections.

Right Size Solutions uses Microsoft's Remote Desktop Protocol to allow advisors to connect to their virtual infrastructure using Windows, Mac OS X, Linux, Unix, and Android operating systems over a Secure Sockets Layer (SSL) connection. "We've used Citrix servers and VPN in the past, and have grown into and settled on Microsoft's protocol for its stability and cost-effective management," Stillman said.

The platform significantly reduces the burden of managing hardware in an advisor's office and leverages many of the advantages of cloud computing. Right Size Solutions' team performs daily backups, disaster recovery testing, virus protection, software update management, and many other services on behalf of its clients.

Financial-Services Applications
Right Size Solutions' experience with applications specific to the financial-services sector helps set it apart from many of the virtual IT service providers in the marketplace today. Right Size Solutions' clients use programs familiar to advisors, such as Junxure, Schwab Performance Technologies PortfolioCenter®, Advent, Lacerte Tax, and Quickbooks.

Right Size Solutions has also been through a number of regulatory audits on behalf of their clients, from the Office of the Comptroller of the Currency (OCC) and FDIC for their banking clients to the SEC and FINRA for those in financial services.

"Many of our clients struggled with audits prior to hiring us, trying to manage data reporting, enforce backup procedures, and control employee access all on their own," said Stillman. "After we came in, we significantly improved their audit standing, eliminating potential issues on the technology side."

Advisor Experience
To get a sense of how advisors have adjusted to operating in a cloud environment, I contacted several firms regarding their experience (references were provided by Right Size Solutions).

Roger Kruse is principal of FFP Wealth Management in Minneapolis, Minn., and has been a client of Right Size Solutions since October 2010. FFP Wealth Management has five employees and provides financial planning and portfolio management services for approximately 200 clients.

Prior to transitioning its infrastructure to the cloud, FFP Wealth Management had one dedicated server in the office with a variety of software applications installed, including Junxure CRM, Schwab Performance Technologies PortfolioCenter®, QuickBooks, Lacerte Tax, and the Microsoft Office suite.

The firm first considered cloud infrastructure services after an SEC audit in 2008. "The auditors felt that even though the server was in a locked computer room in a locked office suite in a locked professional office building, it could be stolen," said Kruse.

FFP investigated solutions from several providers before ultimately selecting Right Size Solutions. "Right Size Solutions was the perfect fit for FFP," said Kruse. "We found that the Right Size staff was very familiar with the various software [applications] we used and how we used them," Kruse added. "We also spoke with other users who were quite satisfied."

Cost certainly played a significant role in the evaluation of the cloud infrastructure model versus internal servers for Kruse. "A large part of buying new computers is the cost of the operating system and office [software] products. All of this is included in the Right Size Solutions service," he said. "We also eliminated the cost of the backup services and support from our former tech provider."

Lower Cost, Fewer Headaches
Jennifer Henderson is CEO of Pinnacle Wealth Planning Services, Inc., which is headquartered in Mansfield, Ohio, with additional offices in Medina, Columbus, and Cleveland. Pinnacle has 18 full-time employees who provide financial planning, investment advisory, and pension consulting services for 435 clients.

Pinnacle moved its infrastructure to Right Size Solutions in June 2011 after initially contacting the company just three months prior. When asked what solidified Pinnacle's decision to move to Right Size Solutions, Henderson cited data security, disaster recovery, seamless remote usage, and long-term cost savings as the primary factors.

In addition, Henderson was also attracted by Right Size Solutions' familiarity with software applications used by the firm, including Junxure, Black Diamond Performance Reporting, and MoneyGuidePro financial planning software. "They take care of the integration issues that my staff used to spend hours trying to deal with, and they've taken all of our IT issues off our plate so that we can concentrate on our clients," said Henderson.

Like FFP Wealth Management, Pinnacle Wealth Planning Services moved its local infrastructure to simplify administration and realize cost savings. "We had two servers in a separately cooled room and an expensive backup system, the third system in three years," added Henderson.

"We pay Right Size Solutions approximately the same as we did our former local IT support, but over the long run, we will save significant money on hardware and software costs," said Henderson. "We saved $10,000 on our Microsoft 2010 upgrade because all Microsoft upgrades are included at Right Size, and we were approaching the time to buy a new server, which saved us another $10,000."

More Options, Lower Cost
Moving one's infrastructure to the cloud is not as daunting of a prospect as it once was, and the costs for such services have become much more attractive for firms of all sizes. Right Size Solutions offers hosting on a private virtual local area network, located in a SSAE 16 Type II (formerly SAS 70 Type II) certified facility in Kansas City, for roughly $120 per month per user. Pricing includes all basic maintenance and management of the cloud infrastructure, enterprise-level backup, disaster recovery, business continuity services, and virus protection. Hosted e-mail and large storage capacity is also available for an additional fee.

For Kruse, the flexibility and scalability made possible by moving to the cloud positions his firm for growth. "I am anticipating adding six to 12 staff and advisors in the next two years, so our technology had to accommodate our vision. It also had to accommodate FFP offices to be opened in remote locations."

The capabilities of cloud services continue to increase while prices have simultaneously fallen to affordable levels. Advisors who want to focus their energy on client service and business growth would be wise to outsource their IT infrastructure management and embrace the benefits and flexibility of the cloud.

Bill Winterberg, CFP, is a technology and operations consultant to independent financial advisors. His comments on technology have been featured in a variety of financial industry publications. You can view more information about Bill and see his schedule of upcoming speaking engagements at his Web site, FPPad.com. The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.
blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.