Taming the Paper Monster

Their decision to go paperless with ECM was driven not by cost or budget issues, but by the desire to grow their business, tame a paper monster that was consuming every available square foot of office space, improve customer service, and keep up with a rapidly-changing financial planning industry.

In their view, they had no choice as to whether to go paperless with ECM. They must go paperless if you want to survive and thrive in the financial planning industry. They were slowly becoming buried in paper, running out of space and spending valuable time looking for missing files. And as their investment business grew, their paper mushroomed, due to trade confirmations and quarterly investment statements. When their broker-dealer conducted our annual audit in 2004, it took a long time to find required forms. That’s when they knew they had to make changes.

At Texas Christian University’s annual student job fair, Blake Woodard was manning a booth when he ran into a local Laserfiche reseller.

“I had looked at several systems,” Woodard says, “but Laserfiche offered us the greatest flexibility to work like we always had, only using enterprise content management files instead of paper. Laserfiche used TIFF files instead of proprietary file formats and used SQL as its underlying database, which gave us the ability to move our data to a different system later if we needed to. Also, the SQL platform is scalable as our electronic storage needs grow.”

Woodard Insurance purchased enterprise content management software and installed it immediately. Transition to the new system was relatively quick, given that there was an existing document management system in place, just not a digital one. Client securities files had been moved from paper file folders to three-ring binders with topical dividers and, when it came time to implement a digital solution, this interim step made the process much easier.

Where the old paper files were in strict chronological order, the topical divisions in the client binders made organizing Laserfiche’s filing structure much simpler. “We immediately began writing scanning procedures that covered the naming, indexing and location of each document in a binder,” says Woodard. These flexible procedures are updated and refined as employees encounter new situations or better ideas.

ECM: Worth the Investment?

Financial advisors are facing increased regulation and, in some instances, overlapping regulations that will constrain business and also increase their workload, add to their storage needs and require them to do additional staff training. Never has there been a greater need for electronic document management (sometimes called ECM or enterprise content management ).

Most firms look at document management as filing, whether they use paper or electronic files, and it’s often likely that they’ve set up informal procedures for handling them. A properly designed ECM system integrates work-flow procedures and controls, which usually means it is tied into a database (client relationship management software, for instance). Other firms that aren’t using enterprise content management have set up a stand-alone indexing system—a folder tree like the one you find on a computer’s operating system. But without specific, strict controls, informal systems pose problems. One is that documents can be misfiled, or worse, that employees unfamiliar with the folder trees can simply create new folders for items that should have been placed elsewhere. This makes document retrieval difficult and frustrating, to say the least.

A common mistake made by some firms is to use a system that saves documents in a PDF instead of a more secure format such as a TIFF. This means documents can be altered after the fact, and the firm risks potentially violating federal regulations. While some scanner manufacturers have addressed this issue with post-imprint symbols and other coding mechanisms to ensure authenticity, there are still lingering doubts about the security of the original documents.

It may be tough to justify additional expenses nowadays, but the simple truth is that those advisors boasting an efficient document management system can bring their costs down over time—way down. These lower costs can soften the blow of any up-front expenses and fully justify the time commitmentnecessary to implement the systems.

If you’re associated with a broker-dealer, chances are it is already offering some level of document management (form capture, forms you can fill out, outsourced electronic storage, etc.). If not, there are a host of available systems that can transform your financial practice into a highly efficient operation by helping you go paperless.

The SEC and FINRA have both ruled on the acceptability of paperless storage, retrieval and recovery. They have even ruled on the acceptability of electronic signatures (with specific guidelines). Among other things, a planner’s document management process must comply with SEC and FINRA rules, Sarbanes-Oxley and the USA Patriot Act. There should also be a way for him to provide an audit trail.

So what is stopping you? It’s likely two things: the cost and the knowledge you need to get the job done right. A typical system such as Laserfiche Avante for example, can cost about $4,000 for the initial outlay to serve an office of four staffers (and the Avante system was designed to be affordable).

While it sounds like a lot of money, though, consider what such a system could do in shaving off staff time and increasing productivity and profitability. With such a system, there would be a much faster document storage and retrieval process. The office can also go paperless, allowing a planner to save a great deal of office space and reduce staff time enough to equal the salary of another employee. So you may wish to ask yourself, would I be willing to spend $4,000 to save up to $40,000? Also consider that the annual renewal costs are much less, even though the savings continue.

Most financial advisors are only aware of Laserfiche as a provider of document management solutions for the financial advisory profession. But clients such as the Mexican Immigration Service, the country of Uganda and the U.S. Congress also use the technology. The product allows users to build a more robust enterprise-level system later, if their firms grow.

Broker-dealers often provide their own documents, many times fillable PDF versions that advisors must transmit through secure, proprietary systems the B-D owns itself. If the B-D does not supply the advisor with forms, she may need to locate a reliable source, and there are at least two: LaserApps and QuikForms. Firms like these typically offer thousands of forms for download, though advisors use only a few. It would be wise to ensure that the forms you need are actually located in these databases before signing up for them. These services might also add a form for you, if they don’t already have it in their inventory.

You may also create your own forms if they aren’t available elsewhere. For this, you need Adobe Acrobat, either in its standard or professional versions. There is a much-overlooked feature in this program that permits you to take a PDF document and create empty form fields. You may only need to do this to a few forms, so it could save hours of staff labor.

However you choose to create documents, if you use a comprehensive document management system with automated work-flow features, you can significantly increase the efficiency and profitability of your practice.