By Joe Randle -- Web-based systems have made client communications for hedge fund managers more efficient and economical than ever before, but the question remains: How secure is your data?
Email and CRM tools in particular make it easy to provide a high level of customer care while reducing phone support, antiquated paper based systems, and mailing costs. However, email offers limited privacy and security, and is unsuitable for sending sensitive information to clients such as account information and financial reports.
Publishing these documents on a secure web site can greatly improve the privacy of the client communications. But not all web sites are created equal. Here are some things to keep in mind when shopping for an on-line system:
Does the web site make use of best practices with encryption and password security? Look for 256-bit TLS encryption. Your clients should have their own individual passwords and specific document permissions. Passwords should be stored in an encrypted format, and should never be sent to your clients over email.
Many sites allow you to notify your clients when their documents have been updated. Check to make sure that the web site doesn't send these documents to your clients via email. Instead, the site should send a link to your clients directing them back to the web site. This drives traffic to your site and allows you to see which clients are opening which documents.
Does the site provide document tracking and PDF watermarking? You should be able to open a document log and see which of your clients downloaded which documents and when. Your site should be able to stamp documents with a client-specific watermark so you can track those documents in the wild. Even printed copies of the documents can be traced back to the client who downloaded the copy, and you can even determine the exact date and time they downloaded the document.
One of the biggest problems with security is balancing transparency with privacy. Your clients demand to see (in detail) how their money is being invested, but your competitors would love to see the same information. Can your website prevent password sharing? Ask if your web site can be integrated with two-factor authentication systems such as RSA SecureID, and PhoneFactor. These systems force your clients to prove their identity to the web site using some physical object they carry (such as a hardware token, or a cell phone). However these systems tend to be quite expensive and they make the site much less convenient for your clients - increasing the chance that they'll ignore your website entirely and pick up the phone instead.
With a well-built secure website for your documents, you can save on printing and mailing costs, and increase the level of customer care you provide.
Joe Randle is the managing director of Synergy Graphix, a full-service web development, design, and print marketing firm that has been servicing the alternative investment management industry since 1996. Synergy's clients include leading hedge funds, private equity firms, fund administration, advisory, consultant and other financial services clients.