Financial Advisor Marketing & Technology

Marketing & Technology For Independent Financial Advisors


RIA Best Practices In Using Consumer File Sharing Apps

The ease of use of consumer file sharing apps like Dropbox and Box makes them so convenient, but advisors must be thoughtful about using consumer file-sharing apps in their practice.

Dropbox and Box are best-in-class file sharing apps, but they are not built expressly for investment advisors.

I recently interviewed Chris Winn, founder of AdvisorAssist, a leading operations and compliance consultancy, about use of Dropbox and other consumer file-sharing apps by RIAs and registered reps. I honestly did not know where Winn was going to come out on this issue. His response is important because investment advisors are obliged legally to take care with a client’s personally identifiable information. Liability and regulatory issues are involved, and Winn is an independent expert.

To hear Winn advise against using Dropbox and other file sharing consumer apps with clients in favor of a system like AdvisorVault validated my thoughts in creating a secure client communications portal to meet the specific needs of RIAs.

Informed by Winn’s comments, here are a few of the issues advisors must consider as consumer file-sharing apps grow in popularity with consumers:

Compliance-Configuration. Dropbox, Google Docs, and other file sharing apps may have the features necessary to enable a configuration that forces prudent practices by clients. For example, clients sharing documents with you should be forced to create create password at least eight characters in length (preferably 10) and that use at least one non-alphanumeric and one upper-case character. But you must configure consumer apps to enforce such policies.

Internal Versus External. Winn says using Dropbox and other consumer file-sharing apps are okay for use with staff but not with other professionals or clients. If a client is using his own Dropbox account with you, you do not control the security policies of the client or outside professional.

Fast And Easy But Not Carefree. The near-instant access ease of file sharing apps makes it easy to give little thought to security. Yet people are posting personally identifiable data in many places more often.
Supporting Consumer Apps. Advisors who do not create their own dedicated client portal will find that their clients have done so and that it is scattered across the World Wide Web, which means advisors will often find themselves supporting an array of file-sharing apps. Instead of spending quality time with clients, you spend time time supporting clients with tech problems.

One Client Portal. Unless you do it for them, your clients over the next few years are probably going to create their own online vaults. You’ll have lost the opportunity to organize your clients’ personal financial information on your firm’s website.

Winn and I have collaborated together on A4A webinars and other projects for nearly three years, but he never brings up solutions made by Advisor Products and I’ve never asked him to do so. In this instance, however, the growing popularity of online file-sharing apps made the question inevitable and his answer important.
The three-minute video below is actually a short snippet from a longer interview with Winn posted to Advisors4Advisors. Because Winn spoke about Dropbox versus a solution from Advisor Products — AdvisorVault — I removed this portion of the video from A4A and  posted it here because it’s basically an endorsement of AdvisorVault. However, getting an endorsement from an independent  compliance consultant I really respect makes me proud.

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