This week I had a good discussion about technology for financial advisors with Bill Winterberg, one of the most technology forward minds in the Financial services market. Before joining the finance world, Bill was a software engineer for Hewlett Packard and this background in technology has allowed him to become a thought leader in the industry.

Bill currently writes technology columns for Morningstar Advisor, Advisors4Advisors.com as well as on his own blog called FP Pad. You can also find him doing his thing on Twitter from @BillWinterberg.

Q: Hey Bill, thanks for joining us. First tell me a bit about what do you do?

A: Wealth management and financial advisory firms work with me to optimize and streamline their client service processes through the use of technology.

Q: Over the past 8-10 years, what technology innovations do you believe have been the most significant to the way financial advisers work?

A: In my opinion, the Software-as-a-Service (SaaS) product model has been the most significant innovation to help financial advisors deliver superior service to clients. SaaS offerings in portfolio management, performance reporting, server backup, and document management allow advisors to outsource much of the infrastructure management and technical support, allowing advisors to focus on what they do best; serve clients.

Very cool. The number of SaaS options that advisors can choose from is increasing every day, which is a good thing for vendors and advisors alike.

Q: When the topic of cloud computing comes up in my conversations with advisors, security is the principle issue that keeps people up at night. What steps should advisors take to make sure their data is safe in the cloud?

A: Advisors must perform due diligence on a cloud computing provider and learn about the provider’s privacy policies, data encryption technology, and business continuity plans. I advise advisors to require a provider have an SAS 70 Certification from the AICPA at a minimum, indicating that the provider passed a third-party audit of its internal controls and safeguards.

Having that third-party audit has really become a must over the past year in order for a SaaS provider to prove reliable.

Q: What are the biggest advantages for advisors who move to the cloud?

A: The biggest advantage for advisors who move to the cloud is the ability to no longer be held hostage by one desktop computer in order to get work done. Instead, cloud computing is delivered through an Internet browser, so any computer including PC, Mac, or even iPad, can be used to access data and respond to client needs.

I would add to the hostage analogy that SaaS also frees advisors from lengthy product cycles, hardware maintenance and eliminates the high initial TCO that used to really limit advisor’s options.

Q: Other than security, what are some reasons that advisors avoid the cloud?

A: Advisors often avoid cloud computing because there is confusion over who owns the data entered into the cloud system. Most contracts for cloud services indicate that all data is owned by the advisor who can request data archives at any time, including at the termination of the contract. Also, advisors may select server-based programs over cloud computing due to speed requirements, as they want certain programs to run in real-time rather than wait for a slow Internet connection to respond.

At NetDocuments, connection speed was a HUGE concern for customers when we started in 1998, and though it still can be an issue, the proliferation of high-speed connections has really enabled SaaS apps to become more robust.

Q: How do SEC and FINRA compliance rules affect how you look at new technology?

A: Compliance with regulatory requirements, including those issued by FINRA and SEC, must be considered when exploring any new technology. Most regulatory requirements are put in place to protect investors and keep their confidential information secure. There are also business continuity requirements to ensure client service is not significantly interrupted during emergencies. New technologies must address these issues and allow advisors to enhance their client service while maintaining regulatory compliance.

Q: I believe that certain technologies can give advisors a competitive advantage. Do you agree with this statement?

A: Absolutely. I’m willing to bet that advisors who adopt paperless office, mobile device, and social media technologies are growing at a faster pace than those who do not.

Q: On lighter note, who do you have in the World Cup?

A: Germany. They’ve exhibited selfless, team-oriented play throughout the World Cup tournament.

I’d probably have to agree with the second half of that statement but my heart is with Da Dutch, which is where I spent three years of my life.

Q: And lastly, where will Lebron James play basketball next year?

A: Not Cleveland. As I’m not a big NBA fan, I’ll go with the reasonable choice of the New York Knicks, as their fan base and ticket prices can support a record-breaking contract.

We won’t tell our friends in Ohio…

I’d like to thank Bill Winterberg for his time and sharing with us the knowledge he has gained from his vast experience dealing with financial services technology.

If you’d like to be featured in a technology Q&A, send a tweet to either myself at @dannymjohnson, or to @NetDocuments.

Post written by Danny Johnson of the NetDocuments sales and marketing team.

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July 7th, 2010
Tags: finance, FINRA, Holland, Investment Advisor, Lebron James, Morningstar, SEC|
Category: Broker Dealer, Cloud Computing, collaboration, Financial Services Technology, Registered Investment Advisors, SaaS, technical support, Technology
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