Advisers: How do you know when it’s time for an upgrade?

Financial advisers, whether solo practitioners or members of a multiperson firm, need to think regularly about whether their technology is keeping pace with their business needs. Experienced advisers and technology experts have plenty of advice and experiences to share.

Consulting or collaborating with peers online and at industry conferences should top an adviser’s list of ways to stay abreast of new technology.

Darren Tedesco, the managing principal in charge of technology at independent broker-dealer Commonwealth Financial Network, has worked with advisers for years to make sure Commonwealth’s technology stays ahead of their expectations. He said that a big part of that has been to attend technology-based conferences regularly and talk to other advisers and technology vendors.

There are other, more concrete steps he takes, though, especially when it comes to hardware and physical infrastructure needs that every adviser should adopt and apply to his or her planning regimen.

“Every year, we review our three-year technology plan to make sure we have capacity on all fronts: disk space, bandwidth, etc.” he said.

“One piece that often amazes me is how often I talk with advisers who don’t think about their Internet connection speed,” Mr. Tedesco said.

He explained that while T1 lines were adequate years ago, trying to make do with the typical 1.5-megabits-per-second bandwidth in today’s environment of bandwidth-intensive applications “is akin to trying to stuff a bowling ball down the bathtub drain.”

Firms that have download speeds of less than five megabits per second should be upgraded if possible.

MOVING TO VERIZON

That is part of the plan for Ritter Daniher Financial Advisory LLC. John Ritter, a principal of the registered investment advisory firm, said he and his partner are planning to upgrade to Verizon’s business-class FiOS fiber optic Internet service to support several of its application upgrades.

Verizon Communications Inc. remains the only carrier to provide this service directly to small businesses. The promised speeds range from the entry-level download speeds of 15 megabits per second, with five-megabit-per-second uploads to 150 and 35 Mbps, respectively, at the highest end. Your results in actual usage, of course, will vary but should still be superior to most cable and DSL connections.

At the very least, advisers who are relying heavily on the Internet for accessing cloud-based services such as portfolio management, customer relationship management, trading or other services should consider having the highest-tier cable or DSL connections possible in their area.

Eliot Weissberg, an adviser and owner of The Investors Center Inc., which manages $125 million in assets, said that throughput has been a concern, but he tries to stay up-to-date.

“Between our two offices, we have nine people, including three advisers, so we have made sure we have high-end business cable modems and a 20-megabit-per-second downstream connection in order to make sure performance won’t be an issue,” he said.

Hardware upgrades are another often-overlooked issue among advisers.

A good rule of thumb among technology experts and consultants is that you should replace your computers (be they PCs or Macs) every three years or so.

“Sure, you can try to stretch the equipment out a few extra years, but since the derivation of Moore’s law has held constant, upgrading computers every three years means that processing power has doubled twice in that timeframe,” Mr. Tedesco said.

Moore’s law is named after Intel Corp. co-founder Gordon Moore’s 1965 paper describing how manufacturing advances should allow for annual doubling of the number of transistors one can place on an integrated circuit, and has been extrapolated and applied to general computing power ever since.

APPLICATIONS AND SOFTWARE

Jeffrey Daniher, the other co-owner of Ritter Daniher Financial, said he knew beforehand that his firm would need a lot of additional bandwidth to carry out its master plan.

At the heart of that plan was a shift to using the Advisor X (10) platform of Tamarac Inc.

For years, Ritter Daniher had succeeded on a “do it yourself” diet that included relying on homegrown Microsoft Excel spreadsheets for its account re-balancing, Junxure CRM and a host of other software — all of it running on in-house servers.

The firm’s move to Tamarac and its re-balancing technology, reporting engines, and Microsoft Dynamics’ web-based CRM system would make it almost totally reliant on its Internet connection.

At the same time, Mr. Daniher said, selecting the new system should allow the firm to be ready for growth, something that just was not tenable with its old infrastructure.

ANTICIPATE PROBLEMS

“We did not undertake this without trepidation, but a few things happened that made us want to change or start looking,” Mr. Daniher said. “One was the pain we experienced trying to move clients out of some bond funds and into others. It was just impossible to systematize this, and we knew it would not work well if we had to do it in a short period of time.”

“That got us to exploring the different types of asset re-balancing systems out there, and we started our homework by talking to our own network of fellow advisers, including our [National Association of Professional Financial Advisors] study group, and then attending the TD Ameritrade [Holding Corp.] national conference and the [Technology Tools for Today] conference” before eventually settling on the Tamarac suite of offerings, he said.

It took a scare during his daughter’s graduation ceremony a few weeks ago, however, to help affirm the firm’s decision.

“Ritter Daniher servers are offline,” read the text message on his smart phone.

“It ended up just being a power flash, and they came back online, but I decided then that I did not want to be both the chief cook and the bottle washer on this stuff,” he said.

E-mail Davis D. Janowski at [email protected].

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