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American Portfolios Dives Into the Cloud

American Portfolios begins its cloud journey with email archiving and compliance by LiveOffice.

Although adoption of cloud technologies in the capital markets remains a work in progress, moving applications into the cloud is catching on as firms explore every avenue toward efficiency. "During the boom you could hide inefficiencies," says David Furlonger, VP and fellow for Gartner Industry Advisory Services. "Now, with CIOs under pressure to rationalize costs, they are looking at new types of solutions, including cloud-enabled applications.

"Additionally, CIOs are being charged with generating growth," Furlonger continues. "Adding agility is one way to accomplish this, and cloud applications can provide the flexibility required."

Email archiving and compliance at American Portfolios provides a case in point. With 750 professionals in the field, the Holbrook, N.Y.-based broker-dealer needed a more effective way to monitor and store thousands of emails without adding staff or complexity. "With our previous email system, our 10-person compliance team reviewed all emails for representatives spread across 300-plus independent firms," relates Lon Dolber, American Portfolios' CEO and CIO.

"Having so few people responsible for so many emails was creating unacceptable risk," he explains, adding, "On the IT side, archived email storage volume had doubled in a short time," increasing operating expenses and hampering e-discovery efforts.

To resolve the compliance issues, Dolber envisioned a distributed email compliance system in which the firm's 100 supervising representatives each would take responsibility for daily review of his or her field staff's emails. Ideally, a new platform would solve the broker-dealer's archiving challenges as well.

The Journey Begins

Dolber started investigating cloud-based email archiving solutions in early 2008, contacting three prominent vendors. Eighteen months later, after internal deliberations, Dolber began calling the technology providers back. "Two of the vendors didn't know who I was," he recalls. "One of them even struggled with pronouncing my name."

By contrast, the response from LiveOffice (Torrance, Calif.) was first-class, Dolber says. "They knew who I was and quoted the exact nature of the original call," he recounts. "This gave me confidence that the vendor could deliver the level of customer service we wanted."

Another major plus of the LiveOffice solution, according to Dolber, was its interface, which was designed for business users, enabling compliance staff to take ownership of administrative tasks, such as creating and updating keyword alert lexicons. This would eliminate reliance on IT, which had been needed to make changes within the existing solution's programming code.

Also attractive was LiveOffice's well-established industry presence. "Since 50 percent of our representatives were already familiar with LiveOffice, we knew it would speed adoption," says Dolber.

Once a deal was inked in late 2009, the rollout proceeded quickly. Since 80 percent of American Portfolios' independent advisers already were hosted on the broker-dealer's internal Microsoft Exchange server, the main IT task was limited to creating a script that journaled emails to LiveOffice, Dolber explains.

Meanwhile, the firm's compliance team hammered out new policies and procedures. During this process, focusing on the business, not the technology, is critical, according to Dolber. "Forget about the tool and investigate how your hierarchy works," he stresses. "Make sure your firm has a defined hierarchy because all of the [cloud email archiving] tools are hierarchy-dependent." Also, ensure that hierarchy is dynamic for efficient updating as your business evolves, Dolber adds.

The new system went live in late January 2010, and LiveOffice began flagging emails and delivering them to the appropriate supervising representative for review, Dolber recalls, noting that the American Portfolios compliance department assumed an oversight role. Over the next three months, he relates, the old and new systems ran in tandem, which ultimately uncovered a glitch with handling e-newsletters.

"Many e-newsletters don't require compliance monitoring," Dolber explains. "But LiveOffice had difficulty filtering them out properly." As a result, supervisors initially investigated numerous unnecessary alerts.

As a workaround, American Portfolios developed a pre-filter that triages emails prior to transmitting them to LiveOffice. Currently, Dolber notes, LiveOffice is upgrading its solution to resolve the problem.

The only other downside to the LiveOffice technology, he adds, has been its incompatibility with American Portfolios' existing single sign-on system. "But LiveOffice has promised we'll have single sign-on compatibility by later this year," according to Dolber.

No Turning Back

Despite the hurdles, American Portfolios cut over to LiveOffice in April 2010 and never looked back. "Now we're catching instances where we need to counsel representatives early on, permitting us to head off possible compliance issues," reports Dolber. "Plus, the compliance team is altering the alert lexicon more frequently, with a few mouse clicks, without involving IT."

Further, Dolber reveals, American Portfolios recently met two e-discovery requests within an eight-hour day -- down from the two weeks required previously. "Actually, the email searches and file preparation took less than an hour," he observes. "The balance was downloading time, for retrieving the emails, and uploading time, for sending them to regulators."

With email chores reduced, IT can concentrate on other critical projects, such as deploying more SaaS apps. "Currently, we're implementing Socialware [Austin, Texas], which will allow us to embrace social media while maintaining compliance," Dolber reports. And a few months ago, the firm rolled out the cloud-based CRM solution Salesforce.com (San Francisco).

Not surprisingly, Dolber says cloud-enabled platforms are transforming his firm. "The impact has been dramatic," he stresses. "Due to LiveOffice, I can sleep better because I feel more confident [about our risk profile]. And by further leveraging the cloud, we're cost-effectively obtaining other advanced tools. Together, they're helping position us to grow."

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio

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