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Investment Advisor

 

From Investment Advisor Magazine

Negotiating With Host
Choosing between an in-house or hosted e-mail solution
By Victor Silva

Although in the financial services sector most “official” communication still depends on the telephone authorization, the signed letter, the wire transfer, or the mailed prospectus, much information in the financial sector now is transferred by e-mail—including recommendations, marketing materials, and client-relations materials.

This transfer of information exists in a world of precise oversight including self-regulation, regulation by state and federal overseers, internal and external auditing, industry standards, and legal obligations. Along with this complex environment comes a high level of legal exposure extending not only to employees but also to managers and officers who sometimes face personal liability from matters contained in those electronic communications.

All this electronic communication requires the same level of compliance as more traditional communications with regard to privacy, security, records retention, ongoing compliance, and recovery and discovery of information.

This transfer of information must be completely secure; it must produce a recoverable audit trail; it must be protected from outside tampering and from the barrage of spam interfering with e-mail today; it must be disaster-proof, easily recoverable and secure from viruses, phishing, network attacks, and fraud.

Sometimes, brokerage offices and other financial services organizations believe the best way to secure their e-mail and e-messaging information is to purchase their own servers, put them in a secure place, buy the latest software, purchase safeguards in the areas of security, disaster recovery, and continuity, include anti-spam/virus/phishing/spyware features, build firewalls, institute an off-site backup system, make certain that the entire system is compliant as well as secure, and hire staff to manage the system.

Comparing the Options
Being in control of your own electronic communications system has its benefits, to be sure, but achieving this level of performance is becoming more complicated and more expensive, particularly when dealing with an increasing number of offices, or with remote or mobile employees. As a vendor of hosted e-mail services with whom our valued customers have entrusted this crucial aspect of their business, we can’t pretend to be unbiased, of course, but our experience in serving those customers has given us a unique view of the e-mail issues faced by advisors and the brokerage and other firms with which they choose to partner.

Among those issues are these:

  • There is more spam to deal with, billions of messages to block every day; if not blocked properly, spam can not only cut down on efficiency, but can distract from important messages to and from clients.
  • Security is always a concern where personal financial information is involved; while it is possible for banks and brokerages headquartered in large buildings to designate physically secure areas for information technology, this is not always as easy for independent financial services offices or branches.
  • End users are demanding more functionality from their e-mail system and require 24/7 availability. As e-mail, e-messaging, and collaboration software becomes more sophisticated, it requires more expensive hardware and more fully trained—and higher salaried—people to keep it up and running; often, an e-mail administrator can be dealing with as many as 50 vendors at a time, including patches and upgrades.
  • In the event of a natural disaster, facilities can be compromised; although off-site backup helps, re-establishing services and maintaining business continuity can be complex and expensive; any disruption in client services is always expensive.

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