Lately, there has been an explosion of cloud-based storage offerings. Microsoft's SkyDrive, which until recently was used by few, if any, RIAs that we know of, recently revised the offering to include PC, Mac and mobile apps in order to better compete with Dropbox. The long-rumored Google Drive arrived almost simultaneously on the scene with its apps, and with its Google Apps integration. Not to be outdone, Amazon released apps for its cloud storage offering, thereby making the Amazon Cloud more accessible and competitive with the offerings mentioned above.
With all of these competing services, one might think that ShareFile, which was recently bought out by CITRIX, is fighting an uphill battle in its quest to win over advisors to its file-sharing solution. We're not so sure. From a modest beginning in 2005, ShareFile has grown into a firm with approximately 20,000 paying corporate customers and 3 million business users in over 100 countries. According to the firm's Web site, corporate clients include familiar names such as Pepsi, HTC, Nike, MetLife and T-Mobile.
CITRIX is a firm that many advisors are already familiar with. Their "GoToMeeting" online meeting platform is used by many advisors and vendors in the financial services industry. After taking a brief tour of ShareFile, we think it possesses some attributes that will make it very appealing to the financial advisor community.
Advisors face a host of challenges when communicating digitally with clients, but two issues trump all others: security and usability. Perhaps the greatest challenge advisors face today is ensuring the security of digital communications with clients. Both federal regulations, as well as the regulations of many states, require that advisors protect certain types of confidential client information. Space does not permit a detailed discussion of what personal information should and should not be protected, but some obvious examples are Social Security numbers, driver's license numbers and any type of financial account numbers or passwords relating to any of the above. (For further assistance on this topic, we suggest that readers use Massachusetts' "Standards for the Protection of Personal Information of Residents of the Commonwealth" as a guide. (You can obtain the PDF file here: http://www.mass.gov/ocabr/docs/idtheft/201cmr1700reg.pdf).
Usability is also extremely important. Advisor/client communications are key to a healthy relationship, so any impediments to communications are a negative. If clients find it difficult to use a digital communications system, they will become frustrated. This can lead to strains in the advisor/client relationship if not addressed promptly.
E-mail ranks high in usability; almost every client has one or more e-mail addresses, and most are comfortable with e-mail, but e-mail is inherently less than secure. There are ways to increase the level of e-mail security, such as encryption, but many advisors have found that e-mail encryption solutions create usability issues for clients.
Document vaults, such as those offered by a number of vendors serving this industry, can offer a high degree of security, but to date they have met with mixed reviews. Some advisors and their clients have adopted them with success, but others find them more difficult to use than competing consumer solutions.
Consumer-oriented file sharing and synchronization platforms like Dropbox have proved much more successful than the vault solutions this industry has adopted. It's not difficult to figure out why. Solutions such as Dropbox are intuitive and self-provisioning, plus they are compatible with a wide range of devices. As a result, users can easily access their information from a computer, a Web site, a tablet or a smartphone.
If Dropbox is so great, why hasn't it been widely adopted by advisors to date? There are a few reasons. In the past, some have raised concerns about Dropbox security. While files are generally transferred over an encrypted connection and encrypted on Dropbox servers after they are received, there are some risks. How great these risks are is open to some debate among security experts, but at least one major technology firm, IBM, recently banned the use of Dropbox (and iCloud and Siri) by its employees. Another issue is administration. Since services like Dropbox were originally designed for individuals, administrative controls were not a priority. Last October, Dropbox launched Dropbox for Teams to address the small business market, but the administrative tools, to date, are sparse.
ShareFile is a service that should address the security concerns of advisors, provided they sign up for the Professional Plan or higher (the Basic Plan does not include the stored file encryption, Outlook plug-in or Desktop sync discussed below). All data transfers through the ShareFile service are encrypted using 256-bit Secure Sockets Layer (SSL) encryption. Files uploaded to ShareFile servers are saved with 128-bit RC4 encryption. All files are scanned for viruses, and the network is constantly monitored for potential security attacks. Each file is saved with a unique encryption key, and the encryption keys are not stored on the same server as the files. This system ensures that even if someone were to gain physical access to the file server, they would not have access to the encryption keys. The log-in system is also secure. Each account is given a unique user name and password. Passwords are hashed using 128-bit MD5 encryption so even employees of ShareFile cannot access them.
ShareFile is easy to use, which benefits both advisors and the end client. Advisors can upload files of up to 10 gigabytes (the Basic Plan is limited to 2 gigabytes). In addition, ShareFile will customize your log-in page, so your ShareFile site can be branded using your firm's logo, colors and other design elements. You can even customize your URL if desired (for example, http://myfirm.sharefile.com).
Once the initial setup and branding is complete, you log on to ShareFile using any of the major Web browsers and create your first folder. To do this, you click the "Add Folder" button. You are prompted to give the folder a name, and a description if desired. You then specify, from a drop-down list, how you will add other users to the folder, if desired. Initially, you might create a folder for a client and manually create a client account associated with the client folder so that the client can access the account. Once advisors become familiar with the interface, they will probably want to create client accounts in bulk by importing the data (names and e-mail addresses) from an Excel spreadsheet. If advisors prefer not to do the setup manually, they can pay ShareFile a fee and ShareFile will perform the initial branding and create the initial file structure.
When an advisor sets up an account for a client, the client receives an e-mail notification with an advisor-created message, a user name and a temporary password that the client can change after the initial log-in. Once clients log in, they can only see the folder or folders that the advisor grants them permission to see. A common configuration might be to grant clients permission to use one personal folder and one or more global folders. The personal folder would contain confidential client information. Global folders might contain things like research, educational materials, newsletters, etc. The advantage of using global folders is that you only have to upload each file once, and all clients can access it.
As is the case with the Windows filing system, you can create subfolders within folders to keep things organized. Within a folder, you have a choice of two views: the list view and the thumb view. The former requires little space, but the latter allows users to view a thumbnail of each file, which some clients might find more appealing. Files can be sorted by a number of criteria.
As you create client accounts, you can specify what permissions clients have for each folder you grant them access to. So, for example, in the client's personal folder, you might grant permission to download files and upload files. You might also want to have the system automatically notify the client by e-mail when a new file has been uploaded to the system. For the global folders that the client has permission to access, you might only grant download permission and enable notifications. Advisors can set e-mail notifications for themselves as well. For each folder they create, advisors can choose to receive an e-mail notification every time a file is uploaded and/or downloaded from a specified folder.
In addition to client folders, advisors can set up folders for allied professions, so they can easily share information with an attorney, a CPA, an insurance agent or another professional.
The system offers other useful options. For example, you can view an activity log of all actions relating to a folder. You can add a URL to a folder so that it can be accessed directly when you type the URL into a Web browser. You can also have the system create a direct link to a folder. You can then cut and paste the link into an e-mail or a document.