You are on the phone, stalling for time while you find that piece of paper with the notes you took a week ago regarding what you were going to do for Mrs. Jones. What is her first name again? Where is that piece of paper? Finally, unable to stall any longer, you break down and say, "If you only saw my desk, you'd understand." And you say to yourself, "If I could only see my desk, I might know where it is!"

Well, it has happened to the best of us; it has plagued even the most organized of us; it has been the undoing of some of us. But in the offices of Personal Financial Consultants, we have overcome the paper problem. There are no papers in our office ... and we function quite well without it, thank you.

Envious? We don't blame you. So let me explain what the paperless office is, how it works, and how you can put it into action for your own offices.

Scan And Store

What is the "paperless" office? It's an office where documents are scanned and stored. They can be annotated, indexed and searched. They can be viewed, printed, faxed or sent as an image file to an end-user. The paperless office provides access to all historical data in the form of a small jukebox tower filled with CD-ROM's and DVDs, or stored on a large hard drive. The greatest thing about it is, provided you have a laptop, data can be accessed from wherever you are-from your car or at a client's location. You can display a document on the laptop screen, transfer it over a wireless modem and print the document to a printer or fax at a remote location. Using other wireless technology, you can access client investment transactions and eliminate the need to "see" a paper statement.

The financial planning industry, under ordinary and traditional circumstances, deals with large quantities of paper. And each piece is handled many times. It could, for example, arrive at your office in an envelope. It's opened by a secretary and put in your in box. You read it and decide on appropriate action. You probably give it to someone else to act upon. It has to be physically filed, possibly in a filing cabinet that takes up a lot of space. And it will more often than not generate more paper-a letter in response, or the completion of forms. That's a lot of paper, and it's a lot of handling. A paperless office would eliminate both the paper and the multiple handling.

Is Our Industry Ready?

We think so. In addition to our paper client files being nonexistent, all our firm's accounting records-bills, financial statements, personnel and payroll records-are digital. We receive downloads daily from the investment companies that are directly added to our clients' accounts in our computer system. We have our sales tickets on our computer and will be doing investment applications online. We provide bank information so that the client will write no check. We also are looking for an electronic signature box so that the signature will be directly transmitted and the client will not have to sign anything.

Planners often need to be able to produce historical information periodically; retrieving information electronically is a lot more efficient and a lot faster than going through paper files. Planners also need to keep documents for legal purposes, and one of the nice things about electronic data is that it doesn't age the way paper does. It doesn't get torn or fade; it doesn't smudge or carry coffee stains.

Legal And Regulatory Concerns

A paperless office is superior to one filled with paper. It eliminates not only original documents but also the many copies of documents that might have been stored in different filing cabinets around the office. In a paperless office, the only equipment required is computing and electronic data equipment. Traditional office equipment like fax machines, photocopiers and filing cabinets-and space to house them-is no longer required. And because there is less paper to manage, offices need fewer staff. All of these things make the paperless office more cost-effective and more efficient than the paper-based one.

Are regulators going to be satisfied with electronic records? With the technology known as "WORM" (write once read many), documents cannot be altered electronically. In the United States, if we destroy the paper files, the electronic ones are the valid ones. Keeping paper files is only needless duplication, although regulators would prefer them because they want to see the document closest to the original.

For the images to be used for legal purposes, they must be in a form that cannot be altered, so paperless office managers need to make sure they are stored that way. There are different regulations in this regard for NASD broker-dealers than for RIAs. If documents are available, they must be produced rather than an image. Still, electronic storage of data is very appealing from a compliance perspective because it's permanent, it can be electronically dated and timed, and it contains evidence of who entered the document.


To safeguard against potential loss of information we suggest two backups. We have two backups off site, one in a fireproof safe in our home and one at another location. And let me ask this: If your office burns down or is flooded, what backup do you have for your one and only paper files?


To design a paperless office, you need equipment rather than paper. You need storage media, computing power, scanning and imaging equipment, indexing and searching software, and specially trained personnel. Regarding storage media, you'll need a hard drive or disks with complex optical storage options. Before you can decide upon which is the most suitable, you need to ask yourself not only how much storage you need now, but also how much you'll need in the future and how much you'll need as a safeguard.

Your processor will need to be at least 500 MHz. with at least 128 megabytes of memory. The faster your processor is and the more memory you have, the better off you will be. You can use two types of scanners-a flatbed scanner and a high-speed scanner. While higher in price, the high-speed scanner allows a greater amount of work to be done efficiently. Regarding indexing and searching software, you'll need file folders and indexing capabilities. You will also need OCR (Optical Character Recognition)-some brand examples are Laserfiche by Compulink, ImagePlus by Exigent and Scansoft and PaperPort by Visioneer.

Staffing And Getting Started

A paperless office eliminates the long-term need for a large staff. We would suggest that planners consider whether to hire a service to do the conversion or to hire short-term employees (i.e. college students, part-timers from households with children, etc.) to do the work in-house. Services are worth their money because this is their specialty, and the cost and disruption to a planner is obviously short term. An alternative is to have planners hire computer-literate people to scan in-house, allowing them to maintain effective control of all files.

Confidentiality is a big concern, so we chose to do the scanning in-house. Training short-term employees saves both time and money-time in which a planner would have to learn how to scan or teach someone else, and money in avoiding costly errors. All practices will obviously still have a need for some staff to maintain the office and the scanning system. Those are the people who will need to be trained, preferably professionally, to scan and maintain the new system.

As you convert to a paperless office, you'll need to think about how to file and label the images in folders. When OCR'ing and indexing, think about what data should be searchable. Images should be able to be paged through or searched like a file. They can also have folder tabs and labels. But remember that images by themselves are unwieldy for large searches. OCR'ing and indexing is more suited for large quantities of paper, but it uses more computer capability and it's harder to "just look" for documents and requires more preparation time to input into the system.

Some of our older documents, especially inactive files, are scanned in large batches, OCR'ed, and left under a single file name. This takes less preparation time and simulates what an archived paper file would be anyway. On the other hand, each new document entered on a daily basis into our system is heavily indexed and placed in one or more labeled folders or tabs. This makes future retrieval options a snap, as you can quickly identify a document by company, client name, date, etc.

The total cost for our system, hardware and software, was about $15,000. We decided to lease the hardware. Training and ongoing input of documents is a cost concern, but this is not rocket science. When using an outside scanning service, a per-page cost of anywhere from 5 cents to 20 cents was quoted to us. The in-house time is the going hourly rate for a data-entry employee. We paid between $8 and $10 per hour for such personnel. The input system is easily learned, and the retrieval is even easier. The key factor is that time is taken to set up the electronic system, like your paper system, using the advanced computer capability to speed up complex retrievals.

Clients will need to move with the times, too. They "sign" forms on computers electronically. They transfer their money from their bank account to their investment account in nanoseconds. All that transacting is done on a screen in front of a client. We enjoy immediate validation.

Don't be left standing there with manila folders, pencils and erasers in your hands. Be part of the (r)evolution. Be at the forefront of the paperless office. Serve your clients with the most efficient and cost-effective standard available today. If you are left behind, "the good old days" will not be so good.

Sharon A. C. Kayfetz, CFP and RFC, is vice president and owner of both Personal Financial Consultants and Personal Financial Consultants Securities, a NASD broker-dealer, in San Ramon, Calif. Her e-book Paperless Office in a Box will be available this fall. She can be reached at paperless [email protected] or at