When was the last time you backed up your data? If you don’t remember, you should back up as soon as possible. Effective backup is an important part of any financial advisor’s practice.
Data related to financial performance, client information and portfolio management are far too important to leave languishing on a single hard drive. One thing we know about all computer storage, even the solid-state drives found in modern laptops, is that it fails eventually. When yours does, your data should be stored safely somewhere else for later retrieval.
Traditionally, data backup worked using a “grandfather/father/son” system. Data would be backed up using three frequencies: long term (usually once a month), medium term (weekly) and short-term (generally daily). Monthly (grandfather) and weekly (father) backups were performed in their entirety, with everything copied. Daily (son) backups were incremental: only the data that had changed since the previous daily backup would be backed up to the tape or disk being used.
This process gave the owner of the data three levels of protection. At any time, there would be at least three different sets of physical media containing company data. If daily data wasn’t recoverable, the firm could at least access the data for the prior weeks and months. This backup process also gave organizations access to various versions of a file. So, if an employee did something today that messed with a file, you could retrieve yesterday’s version and begin working from there. If you realized that an error had been introduced last week, you could retrieve the version from two weeks ago.
Cloud computing
However, these days, grandfather/father/son systems aren’t as necessary, thanks to the introduction of cloud-based backups. Cloud computing works on the basis that someone else handles the data for you, effectively automating the whole process in the background and guaranteeing that you can access your data whenever needed. These systems usually offer continuous, incremental backups, meaning your computer is always synchronized with the online service.
Cloud-based backup services generally will use an Internet connection to replicate your data. Typically, you copy a folder or file to the cloud location, where it will be available whenever you need it.
There are plenty of cloud-based providers to choose from that offer business-class backup services, such as Crashplan (www.code42.com/crashplan), Mozy (www.mozy.com) and Carbonite (www.carbonite.ca). Most offer features such as continuous backup and the ability to access your files from multiple devices. You also will want the service to handle “versioning,” which keeps several old copies of a file, so you can roll back in time and access versions of files from days or even weeks earlier. Versioning is the modern equivalent of the grandfather/father/son model.
Other things to consider with cloud-based backups include: any storage limits for your account (you may run out of space in the cloud and end up paying more than you anticipated); the operating systems that are supported (if, for example, you are a Linux or an Android user, you might find your platform unsupported by some services).
But perhaps the biggest concern with cloud-based backup services is security. As your data are being stored elsewhere, it’s important that you encrypt the data to protect them from prying eyes. It’s not enough for the backup service itself to offer encryption because, in many cases, the encryption keys that provide access to the data may well be stored on the service’s servers.
In turn, this could allow employees of the backup service provider to access your data. Some data-backup solutions enable clients to manage their own encryption keys – meaning you, as the client, would be the only one who can unlock your data stored in the cloud. The downside is that if you lose your encryption key, you also lose all of your data backups.
The old-fashioned way
In addition to all this, some financial advisors may be distrustful of a third-party offering to store data in some unknown location, outside their control. One alternative is to back up locally using good, old-fashioned physical storage.
There are several options here. Most computers will offer a DVD writer, which will enable you to copy your data onto a disk. This process can be slow. One alternative, tape drives, offers higher-density storage but also can be sluggish. USB keys are perhaps the fastest option, although they are also the most expensive storage medium. Whichever method you use, you need to make sure you use a desktop application that encrypts your data and handles grandfather/father/son models for full protection.
The alternative, and a far more convenient method, is simply to save your data to another hard drive. These days, external desktop drives for a PC or Mac are just one option. Another is network-attached storage (NAS). This is a storage array that connect to a network so multiple users can store their files on the array. This is a good way to collect data from one or more clients while making it easily accessible to others on your team. After the initial hardware investment, you also avoid the annual fees inherent in cloud-based services.
Make sure the software you use to manage any backup to an external drive understands file versioning. Apple Inc.’s Time Machine feature, which is baked into the OS X operating system, supports this.
Although external hard drive backups are all well and good, you need to consider that there’s the risk you may run into the same problem with a local hard drive that you have with an external desktop drive: hardware reliability.
There’s a chance that your external drive or NAS-based backup could give out at the same time as your PC hard drive, which would leave you without your data altogether. That may seem like an outside possibility, but a lightning strike could easily fry all of the devices on your electrical circuits. For this reason, plug all sensitive equipment – including your PC and external drive – into a surge protector.
This won’t save your devices from physical disasters such as fires, floods or theft. So, consider a fireproof and waterproof drive, such as one from the ioSafe RAID family, for added protection. Then, lock this drive in a hidden closet in the office. Even then, you should encrypt your data.
If you have a business with more than one office, you should consider off-site backups, which allow you to back up your data to your other offices without going anywhere near the cloud. You could accomplish this using a small-business server with a storage array that serves all the computers in your offices and is accessible from outside your offices via a firewall, so your advisors can access their data from anywhere.
This server should have a backup program designed to communicate with another computer at your other office. The computers then can back up data to each other, ensuring that at least one machine retains your data, even if the other was damaged.
Clearly, there’s a multitude of options to help you back up and protect your data. The important thing is to actually use one.
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