Journal of Financial Planning: November 2011
Bill Winterberg, CFP®, is a technology consultant to financial advisers in Dallas, Texas. His comments on technology and financial planning can be viewed on his blog at www.fppad.com.
I imagine something like this has happened to you more than once: as you’re on your way to meet with a client, you realize you’ve forgotten to grab a document off the printer, or forgotten to copy the latest version of your presentation to your laptop. You can either turn around to retrieve it, running the risk of being late to your meeting, or frantically call your office, asking someone to find what you need and email it to you.
Life would be so much easier if you had a way to access your documents and information at any time from nearly any location. Things would be even better if the documents you worked on while in the office stayed synchronized across all the other devices you use for work, including your laptop, mobile phone, and tablet computer.
Online document storage services make it possible to store and synchronize important files you work with every day and make them accessible from any location with an Internet connection. For this column, I’ll address the basics of how many online document storage services work and highlight the pros and cons of several popular providers for use in a financial planning environment.
Online document storage is the process of placing documents and files on a remote server accessible over the Internet, typically managed by a third-party service provider. Document storage only accounts for the storage of files on a remote server and should not be confused with document management; it lacks many of the robust features offered in document management applications.1
Online document storage services offer several benefits over file servers maintained in a financial planner’s office. Files stored online are automatically backed up to prevent data loss in the event of a hardware failure or hard drive crash. Many service providers employ data redundancy across a network of servers located throughout multiple data centers.
Online storage is typically much less expensive than the cost of maintaining onsite servers, which can require expensive maintenance and upgrades. Online storage users simply pay for the amount of storage space required and can increase their allotted storage capacity at any time.
Documents stored on online services are also generally well protected from unauthorized access. All online document storage users must create accounts with standard user login credentials. Industry standard AES-256 encryption is often employed to secure data stored on online services, equal to the encryption applied by banks and financial institutions to their online applications.
However, online document storage is not without its drawbacks. Security, encryption, and data protection policies vary widely among online storage providers, so it is imperative that planners perform due diligence before storing sensitive files on such services. Also, as documents are accessed over the Internet, planners need to have contingency plans in place when Internet access is not available or the online provider experiences a service interruption.
With the basics of online document storage addressed, let’s explore some of the more popular online services you can use to store and access your files. Each description is followed by a summary of its respective pros and cons.
With more than 25 million users, Dropbox (www.dropbox.com) is one of the most popular online document storage services. Dropbox is a cross-platform service that supports Mac, Windows, and Linux operating systems and also features mobile applications for iOS (iPhone and iPad), Android, Windows Phone, and BlackBerry.
Dropbox offers free accounts with 2 GB of storage and paid accounts up to 100 GB available for $19.99 per month or $199 per year. Dropbox’s popularity is attributed in part to its extremely simple user interface. After an account is created, a small synchronization application is downloaded and installed to a local computer. During the installation process, a folder labeled “My Dropbox” is added to the computer’s file directory. That folder functions like any other folder on the computer, but any document or file saved inside is automatically synchronized to the Dropbox Internet service.
The synchronization application can be downloaded to more than one computer, which subsequently synchronizes the contents of the Dropbox folder across all connected computers. Files can also be added to the Dropbox folder from the Dropbox website using a standard web browser.
One powerful feature of Dropbox is the ability to share a folder with one or more other Dropbox users. From the Dropbox website, users can send an invitation to join an existing folder using that person’s email address. When accepted, files in the shared folder stay synchronized between accounts. Simply drag and drop files to the shared folder. No more uploads, downloads, email attachments, or version-tracking techniques are needed.
Pros: Simple drag-and-drop interface, easily share folders with other users, supports nearly every mobile device
Cons: Data encryption keys are stored by Dropbox, criticism for ambiguous Terms of Service statements regarding company access to uploaded material
Box.net (www.box.net) is another popular online storage provider with about 6 million users. Like Dropbox, Box.net supports Mac, Windows, and Linux operating systems and has mobile applications for iOS, Android, and BlackBerry.
Box.net offers free personal accounts with 5 GB of storage and paid personal accounts up to 50 GB for $19.99 per month. But unlike Dropbox, documents stored in personal Box.net accounts do not synchronize with a desktop computer. Desktop synchronization requires the paid business plan that costs $15 per user per month, which also includes 500 GB of storage.
Box.net does offer integrations with many popular business applications, including Google Apps, Salesforce.com, and Microsoft SharePoint. Users of those applications can access files and folders saved in Box.net directly within the program without having to manually open the Box.net website.
One nice feature of Box.net is the ability to embed a file or complete folder directly on a page within your website. Box.net provides the source code needed to embed files. This can be useful for embedding, for example, a list of your most recent newsletters on your website without having to update your site’s code or perform an FTP upload for each new file you add. Simply add files to an existing Box.net folder already embedded using code provided by Box.net. However, note that Box.net files are embedded in web pages using Adobe Flash, so they can’t be viewed on an iPhone or iPad.
Pros: Attractive, easy to navigate web interface; easy web-based collaboration with other Box.net users; files and folders can be embedded into any web page; extensive third-party application support
Cons: Most file management must be done via Box.net website unless one pays for the business plan to enable desktop synchronization, files embedded on website not viewable by iOS devices
SugarSync (www.sugarsync.com) shares many attributes with Dropbox, including desktop synchronization for free accounts, a simple drag-and-drop interface, and folder sharing. It supports Mac and Windows operating systems with mobile applications for iOS, Android, Windows Mobile, and BlackBerry. The company does not publish its number of users.
A free SugarSync account is available with storage up to 5 GB. Paid accounts are available at a monthly cost of $4.99 for 30 GB, $9.99 for 60 GB, $14.99 for 100 GB, and $24.99 for 250 GB (annual subscriptions receive a discount), making SugarSync one of the lower-cost online storage services available.
As with Dropbox, users can install the SugarSync Manager on any computer, where it subsequently creates a folder called the “Magic Briefcase.” SugarSync will synchronize all files and folders stored in the Magic Briefcase, but it also allows any folder on a computer to be synchronized with the service. Dropbox doesn’t allow that unless you install a third-party developer add-on to enable this functionality. The selective folder sync is a convenient option for users with extensive legacy folder structures—they do not have to move existing documents to a specific folder in order to benefit from online backup and synchronization.
If you’re away from your primary computer, files and documents can still be added to SugarSync using a unique email address assigned to your account. Simply attach a file to an email, send it to your SugarSync address, and the file will subsequently appear in the folder labeled “Uploaded by Email” in the SugarSync Magic Briefcase.
Pros: Free starter plan offers 5 GB of storage, low cost per gigabyte, any folder can be synchronized via selective sync, can upload files via email attachments
Cons: Data encryption keys are stored by SugarSync
SpiderOak (www.spideroak.com) is less well known among providers in the online storage market, but what separates it from services like Dropbox and SugarSync is a strong approach to security. Before I highlight SpiderOak’s security features, here are the standard account options.
SpiderOak supports Mac, Windows, and Linux operating systems and mobile applications for iOS and Android. Free SpiderOak accounts are available with 2 GB of storage. SpiderOak Plus accounts cost $10 per month for every 100 GB of storage desired. SpiderOak also does not publish its number of users.
SpiderOak offers much of the same basic functionality as other providers, including online backup and file synchronization across multiple computers. However, file sharing is different, and is performed through the use of a private, web-based “ShareRoom.” To share files with others, you create either a unique web URL or a user ShareID and RoomKey (login and password) on the SpiderOak website and share it with others. Using a ShareRoom to share files is a bit more convoluted than sharing folders on Dropbox, but ShareRooms enforce strict access controls. ShareRoom guests can view and download files, but they cannot upload their own files.
Regarding SpiderOak’s security, I noted in the cons section for Dropbox and SugarSync that the services store encryption keys for files. That means that even though files stored on the services are encrypted, some company employees do have the ability to decrypt your files when necessary (for example, when legally required to do so). This condition makes some planners and compliance professionals uncomfortable regarding the protection of sensitive files.
Instead, SpiderOak uses client-side encryption keys, often referred to as “zero-knowledge” data encryption. Files are encrypted before they are saved online, and the encryption keys are stored only on the user’s computer. Client-side encryption offers a high level of privacy because the service provider is unable to decrypt any data stored on its platform without access to encryption keys.
Another security feature SpiderOak has that others mentioned in this column do not is two-factor authentication for web and mobile device access. Planners using Schwab Advisor Services for asset custody services are familiar with two-factor authentication—they must add a random six-digit number, or token, generated by a physical security card, to the end of their Schwab account password. Both the password and six-digit number must be correct in order to successfully log in. During the login process, SpiderOak sends the token information to the user via SMS message to a mobile phone.
Pros: Strong privacy protection with client-side encryption, optional two-factor authentication to log on, does not outsource hardware and data centers
Cons: ShareRoom interface not particularly user friendly, guests cannot upload their own files to ShareRoom
Any time clients’ personally identifiable information leaves the confines of a local network, financial planners must consider the protections in place by third-party providers to ensure the security and privacy of that information. Can planners and advisers use online document storage services for client files? It depends.
If you are a registered representative, first check with your broker-dealer’s compliance department before you store any documents with client information on online services. Your broker-dealer may prohibit the use of such services, or it may offer a list of approved third-party providers.
Registered investment advisers must perform their own due diligence of service providers and evaluate the policies and procedures in place. In brief, I recommend either using a provider that supports client-side encryption or adding your own encryption to client-related files before uploading them to online services that do not.
Select Your Favorite
By no means does this column comprehensively review each online storage provider’s features and drawbacks, nor does it cover all of the other providers with similar services. Other services worth investigating include Amazon Cloud Drive, Apple iCloud, Carbonite, Egnyte, JungleDisk, Mozy, Windows Live SkyDrive, Wuala, and ZumoDrive.
When you begin to use online storage and synchronization, you should never again find yourself without access to that important document when you need it most.
1. Winterberg, Bill. 2011. “Five Misconceptions About Document Management.” Journal of Financial Planning (May): 38–40.