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Have Financial Advisors Gotten Off Track With Client Vaults?

Posted by Michael Kitces on Thursday, February 16th, 2:30 pm, 2012 in Client Trust & Communication

Once upon a time, the purpose of a client vault was to use it like a vault. It would store important client documents to be accessible if/when needed. It was designed to be the digital equivalent of a safety deposit box in your local bank's vault. But at some point over the past several years, we began to shift, and the client vault became not only the place we store the files we access rarely, but the ones we access regularly. Advisors increasingly made it the centerpiece of their efforts to securely share files and collaborate with clients. Yet in reality, this is quite impractical. Just as you don't regularly go to your local bank vault to constantly move things in-and-out of your safety deposit box, so too do we need to stop using our digital data vault like a collaborate file sharing tool. Just as going regularly to your bank every time you need to check on something would be a huge hassle and a negative experience, so too is using the data vault as a collaboration tool a negative client experience. It's time for a better alternative.

The inspiration for today's blog post comes from a presentation I saw last year from technology consultant Bill Winterberg called "Transformative Technology You Can Implement Today". In the presentation, Winterberg highlights the remarkable inefficiency of client vaults when advisors use them as collaborative tools.

For instance, the graphic below from Winterberg's presentation highlights how a typical advisor and client might use a vault. The advisor wants to share a new report or financial planning document with the client, which entails the following steps:

1) Go to the client vault website
2) Log in to the website
3) Navigate to the client's file folder
4) Upload the file to the client's file folder
5) Send an email to the client notifying them that the file is available

In turn, this advisor process then leads the client to:

1) Receive the email 
2) Go to the advisor's vault website
3a) Log in to the website
3b) Forget the password, have it emailed
3c) Go back to email, get the password
3d) Go back to log in to the website
4) Navigate to the correct file folder
5) Download the file

And of course, if the client is truly working collaboratively with advisor, and any changes are made to the file, then the entire 10-step(!) process repeats in reverse, with the client executing the steps to log in and upload the file and email the advisor it's there, and the advisor logging in to retrieve the file. Simply put, this is a painful client experience, made worse by the detour many clients will go through with steps 3b, 3c, and 3d. In the end, most firms that I know, when pressed, will admit that no more than 10%-25% of their clients use the vault with any regularity, and often more than half the clients have never logged into it once.

So what's the alternative? Winterberg suggests that the ideal solution should look more like Dropbox than a client vault. For those who aren't familiar, Dropbox is a file synchronization service, where your files may be stored in a central "vault" on the cloud, but you interact with them via the normal file folders on your desktop, which are continuously updated. Multiple computers can be connected to a single central Dropbox, and as a result any changes to a file that occur on one computer are automatically updated and synchronized across all computers.

Imagine the client experience. When you finish working on a financial plan update, or have a report to deliver to the client, you simply save the file in the client's folder on your computer or server, the way you already do. And that's it. Having already done the setup once to the client's own home computer, the new file automatically updates and propagates across all computers that share the Dropbox. When the client gets home and looks in the folder on their own computer, there's the file, ready and waiting. If the client makes any changes and saves the file, it's automatically updated back to the advisor's computer. No 3rd party website to log in to with passwords to remember (or forget), no interface where you have to remember how to navigate to the right place and how to upload and download files, no worries about whether everyone is working from the latest version of the file. It all happens automatically, without any effort beyond the steps you already take to save your files in a folder on your computer.

So far, there have been two caveats to implementing this process. The first is about security. Dropbox in particular has had some criticism of its security, especially an incident last June where accounts were accessible without a password for a brief period of time (although it's not clear if any users actually experienced a material breach of personal information, and the company was very proactive in addressing the problem). However, more robust and secure (albeit also more expensive) options are coming forth, such as ShareFile, which incorporates both a client vault feature and the ability to synchronize local computer folders to the vault. Ultimately, as more cloud services take shape, expect to see more offerings in this space (which I'm sure experts like Bill Winterberg will highlight when available).

The second challenge is "merely" operational, but difficult for mid- to large-sized practices, which is the complexity of managing a folder-sharing synchronization service across what could be 5-10 or more advisors and 500-1000 or more clients. Although this challenge is not insurmountable, it does create additional complexity in ensuring that the right folders are shared with the right clients, that files don't end out in the wrong place, and developing batch programs to automate repetitive processes in the firm (for instance, generating reports for 500 clients and making sure that each report ends out in the right client folder, without manually dragging-and-dropping hundreds of files). Ultimately, though, this too can be addressed, likely with a combination of effective features from service providers, and perhaps a little bit of custom technology programming for the firm based on its own processes and procedures.

Notwithstanding these short-term challenges, though, the bottom line is this: vaults should be for storing stuff, not for collaboration. Proactive and client-friendly collaboration tools that lead to a good client experience have to allow the client to interact with them the way he/she is accustomed and comfortable. There are a few technology options out there already, and more will be coming soon.

So what do you think? Do you use a client vault service with your clients? How many of your clients really use it? Would a file synchronization service work better? Would you adopt this with your clients? 


  • http://www.blueleaf.com John Prendergast

    It is simply insane NOT to use Dropbox.

    The security concern is a headfake. Dropbox security is at least as good if not better than ANY of the rinky dink little client vault vendors.

    The management issue is important, particularly for larger firms but for smaller firms it's pretty simple. This issue is why Blueleaf (My firm) and I'm sure others will automate the provisioning of the folders.

    The other more secure solutions will mostly lose to Dropbox due to cost. If you are a firm with even 100 clients you will pay over $300/month to share folders with all your clients. Dropbox may be free or at most $10/mo. For larger firms the contrast is even more stark.

    Hard to see any rational alternative to Dropbox.

    • http://N/A Chris Connelly

      The actual secure solutions are all reasonable. Everyone I have looked at is under 100/ month for 10-20 people to have access. This is a cell phone bill. I will pay 100 bucks a month to have a trusted vendor keep my info, as opposed to having DropBox keep it, while they are working on fighting lawsuits and also creating integrations with facebook...??!!

      • http://fppad.com Bill Winterberg

        Chris,

        ShareFile may prove to be attractive. Plans for advisors run about $100/month or less and allows *unlimited* client accounts.

        The link to my interview with Rob Kirkland of ShareFile is on YouTube:

        http://youtu.be/PcTaVW8kK68

  • http://fppad.com Bill Winterberg

    +1 on John's comment!

    I'm interviewing Rob Kirkland of ShareFile (by Citrix) tomorrow at the T3 conference and expect to upload a video in the coming weeks on my website.

  • http://www.cedaradvisors.com Tim Kober

    We are using box.com and Google Apps. The box.com enterprise version includes a minimum of 3 user accounts and *unlimited* client accounts, which inherit the enterprise security attributes. Cost is $750 per year with 600GB storage. We see this a good value, as measured by ability to easily collaborate with clients and each other, and efficient workflows.

    Workflow efficiency is gained through Google Apps integration, which dropbox and sharefile don't have. When your your tools are integrated, magic happens when you right-click on a file.

    Instead of asking the client to navigate to the file, send a secure shared link. the workflow becomes much simpler for both advisor and client.

    Scenario: send a confidential file

    *Advisor workflow*
    1.Copy the file to the shared client folder
    2. Right-click the file in box.com, select send with Gmail
    Action: a new Gmail tab opens in the browser with a secure link to the file in the message body
    3. Address the message
    4. Add a comment
    5. Send

    *Client workflow*
    1. Open email message
    2. click on the secure link
    3. login to box.com
    3. view file (no navigation required!)

    Since DocuSign is integrated with both Google Apps and box.com, account form workflows using DocuSign to TD Ameritrade are streamlined as well.

    Scenario: open a Roth IRA account
    1. assistant completes the application in Laser App and saves a PDF
    2. Advisor right-clicks the file in box.com, selects sign with DocuSign
    Action: a new DocSign browser tab opens. login.
    3. Match the template to the form
    4. address the form by selecting the client from Google shared contacts (Nice!)
    5. review the form
    6. send

    The client receives an email and e-signs the form. The completed form is auto forwarded to TD, and the advisor receives a notification email from DocuSign that the form is complete.

    • Mark Brice

      Great examples Tim, I use google apps and box.com as well, but per your post I think I need to learn more about the integration between the two. Thanks for sharing.

    • http://fppad.com Bill Winterberg

      Tim,

      Do end-clients have the option to install the Box.net desktop sync tool (http://www.box.com/business/features/box-sync/) to eliminate the need to manually log in to the Box.net website to view files?

  • Holly Gillian Kindel

    Michael and Bill can you help me remember my Dropbox password?

    • http://fppad.com Bill Winterberg

      Holly,

      You can follow these instructions: https://www.dropbox.com/help/168

      • Holly Gillian Kindel

        Thanks Bill AND I was kidding!!!!!!!!!!!!!! :-)

        • Michael Kitces

          I just assumed you must have saved it in a protected file inside your Dropbox folder. :)
          - Michael

  • http://fppad.com Bill Winterberg

    As Michael predicted, I reviewed ShareFile in my Morningstar Advisor column for March.

    A Document Vault Your Clients Might Actually Use
    http://advisors.morningstar.com/advisor/t/52744814/a-document-vault-your-clients-might-actually-use.htm

    And here's a video interview with ShareFile's Rob Kirkland:
    http://youtu.be/PcTaVW8kK68

    (Michael, I hope your new blogging platform will support links!)

  • Bill Winterberg

    Oops! Satire is so hard to pull off on the Internet!

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