The new buzzwords in the technology world these days are “cloud computing” and “software as a service,” otherwise known as SaaS. But what are these concepts, and how can you use them in your financial advisory business?

SaaS turns the traditional notion of computer applications on its head. Instead of running software directly on your desktop computer or on the small-business server humming away quietly in the corner, SaaS customers use software running across the World Wide Web — through the “cloud” — on computers hundreds or thousands of kilometres away.

Cloud-based software applications are becoming increasingly popular, especially among small businesses. One of the reasons is that many small and medium-sized businesses — especially those with 10 employees or less — lack in-house information-technology expertise.

Financial advisors usually have enough trouble managing the day-to-day tasks of sales, portfolio management and keeping up with markets. So, managing your own data and applications effectively goes beyond simply installing software. Data must be backed up and security must be managed to stop sensitive information from being compromised. As well, server operating systems must be maintained and updated with new software patches.

In addition, advisors must tackle the problem of taking information with them on the road. The conventional approach involves lugging along a laptop computer with client data copied to the hard drive. However, that approach brings its own set of problems. If the PC is stolen and the data is not encrypted, then the advisor who loses that laptop risks loss of reputation and potential penalties from regulators. And, of course, copying data from one computer to another can often leave you without the necessary data when and where you need it.

Cloud computing is designed to solve some of these problems. Technology companies have been offering applications hosted online for some years now, enabling users to access the software and data that they need using little more than a web browser. This enables you to access all the functionality you need using a tablet computer, such as an iPad, if you really want to slim down.

Cloud-based applications span a full range of functions. Some focus on specific tasks, such as client-relationship management, and are available in more generic flavours or in versions available specifically for the financial services sector.

In the former category, you’ll find services such as Highrise, a CRM application offered by Chicago-based cloud-computing applications specialist firm 37Signals LLC. Highrise, which you can rent on a monthly basis for individuals or small numbers of users, enables you to enter contact information or import contacts from a variety of sources, such Excel spreadsheets. You can track prospects, existing clients and deals.

37Signals also offers other generic cloud-based applications, covering project management, internal company communications and group chats.

There are many other cloud-based applications that cover a wide variety of tasks. Bellevue, Wash.-based MangoSpring Inc. offers an integrated suite of real-time communications and collaboration tools. Seattle-based Untitled Startup Inc.’ s RowFeeder offers social-media monitoring services, which could be useful for advisors using platforms such as Twitter. Atlanta-based LoopFuse Inc. offers an online sales and marketing automation application of the same name to help you shorten your sales cycle. And San Antonio, Tex.-based online-hosting company Rackspace US Inc. provides a service called AppMatcher, which enables you to register a profile and then uses the information that you provide to help find applications that might be suitable for you.@page_break@Although many of these applications will prove helpful, you may prefer a solution developed specifically for the financial services industry. Canadian cloud-based applications for financial advisors are relatively rare, but some exist south of the border.

One such system, provided by West Chester, Penn.-based Big Brain Works LLC, is called Grendel Online. It features modules charged individually on a monthly basis. The basic CRM module includes workflow management, opportunity tracking, and product and account management. There are four modules in total, including a client information portal and an account-aggregation system.

Although the Grendel Online service is based in the U.S., it is being used by a handful of Canadian financial advisors. One of them is Patrick Driedger, an advi-sor in Morden, Man., who has been in the financial services industry for five years and who is allied with Windsor, Ont.-based Sterling Mutuals Inc.

Driedger didn’t go looking for cloud-based software specifically, but he turned to Grendel Online after being disappointed with the desktop-based CRM systems he had used. “For a financial advisor, it’s important to know a client’s employer’s information, for example,” he says, “and his or her relationship to someone that they refer you to.”

Driedger has been using Grendel Online to good effect — even though the system has not officially launched in the Canadian marketplace yet. Are there enough differences between the Canadian and U.S. financial advisory markets to cause problems? “The changes are more in wording than anything,” Driedger says. “[The U.S.] structure and our structure is almost identical.”

The compliance regulations in the two countries are very similar, and Grendel Online’s executives point out that the firm’s service enables users to include their own branding and content, so clients see the specific compliance text that their advi-sors insert.

There are other options available to Canadian advisors. For exam-ple, Burlington, Ont.-based Manulife Securities Inc. rolled out an online CRM suite for 1,500 advisors across Canada a couple of years ago. Other companies, such as San Francisco-based online CRM provider Salesforce.com Inc., have created application programming platforms that let third-party software developers build industry-specific services on top of their core code. Salesforce.com offers a version of its service for the financial services industry, entitled Salesforce for Wealth Management.

Cloud-based applications might relieve some of the administrative pressures on your business. These applications carry a number of side benefits, including the ability to allow you to travel freely among computers in different locales. You may find that cloud-based applications give you greater functionality than your desktop software and — perhaps most important, from a financial perspective — you can pay for the services as you go rather than up front for an expensive software package.

But while cloud-based computing has several advantages, should you be storing potentially sensitive customer data on other people’s computers in the cloud? From a legal perspective, there seems to be little stopping you. The federal Personal Information Protection and Electronic Document Act doesn’t forbid the export of data beyond Canadian borders, but it does require organizations to be transparent about where it is going.

The Office of the Superintendent of Financial Institutions also has approved the use of cloud computing, although it is worth checking in with your provincial regulator to ascertain its legal policies. IE