Web Exclusive: A Home Base In Cyberspace

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By Jim Robinson, RHU, CLU ChFC, CFP, MSFS

Advisors doing business in cyberspace--not merely
prospecting, qualifying or announcing their presence on a
virtual billboard. The day when insurance and financial
advice will be given online is coming. It's now merely a question of when.

RealGlobal.com must deploy more than passwords. Its security

must use several hacker- and virus-resistant strategies.

 

 

Editor's Note: For an industry that makes a living from

informed speculation, Advisor Today rarely has a speculative

article submitted to it. This is one of those too-infrequent

instances. Jim Robinson has created a richly imagined near

future for insurance and financial advisors.

Like all good prognostication, it roots itself in basic

fact and then follows its own logic into uncharted, sometime

dangerous waters. (For instance, those who favor commissions

instead of fees will find not a lot to cheer for here.) It

is, however, always an exhilarating and thought-provoking

trip. Too many advisors are either suspicious of, or daunted

by cyberspace. And many others are simply in hunkered-down

denial.

However, the spirit of Mr. Robinson's piece is the Zen-

like and very reasonable strategy of going with the flow

when confronted by an unstoppable sea change. Ultimately,

the precision of his predictions is less important than the

fact he has laid plans for an unforeseen future that

nevertheless is looming in front of all of us.

Advisor Today prides itself on keeping readers up-to-

date on best practices. Mr. Robinson's piece reminded me

that this magazine should occasionally celebrate the best

horizon-squinting. And, assuming other practitioners choose

to submit their own "imaginable futures," we will . . .

Kevin Sheridan.

Text:

Financial service practitioners will need to control

the cyberspace in which they share and collaborate highly

sensitive information if they are to use the Internet as a

tool to manage and grow their practices.

Existing Web-based applications, such as email, text

chat, instant messaging and screen-sharing, do not address

the need for interactive multimedia communications. In

addition, Web-based conferencing tools, training

applications and presentation solutions address only a small

portion of the real-time interactive communications needs of

the financial service practitioner.

As it stands now, the use of the Internet could lead to

breaches of confidentiality, resulting in lawsuits, loss of

professional designations and the demise of a practice.

Financial advisors need to create a truly global online

environment that allows them to grow and expand their

practices.

An idea whose time has come

But why build a global practitioner community that's

purely a financial services technology and communications

company? Why do financial practitioners need a special

financial cyberspace highway and e-tools to facilitate their

e-commerce activities?

Consider America Online, the world's leading Internet

service. AOL has 24 million members worldwide, 1.2 million

subscribers who use the service at peak times, 110 million

emails daily, 200 million stock quotes daily, 5.2 billion

Web URLs served daily and 64 minutes of online activity per

member daily. (These statistics do not include AOL's other

Internet services like CompuServe, Digital City, MapQuest,

MovieFone, Netscape and Spinner.)

These AOL numbers represent more than 25 million online

users across a wide spectrum of work and life styles. (And

this does not include the millions of users from other

online services.) Why would these online users leave the

comfort and convenience of the Internet to seek an advisor

by phone or in person? One could answer "Because they have

to," but soon this may not be the case.

Financial advisors need to build a special cyberspace

highway with collaboration and e-commerce tools that aid in

communication with clients, prospects and peers. This global

community would facilitate financial planning, product

planning and cutting-edge client service. Such a community

must be user-friendly, allowing the financial service

practitioner to focus on his core competencies while

offering technologies that relieve him of the worries of

creating and maintaining a secure website.

The mission of such a website would be to be a global

medium as central to the financial practitioner's business

as practice management, sales software systems and the

telephone.

For the purposes of this proposal, let's call this

online community RealGlobal.com. (The name is fictitious--it

is used here simply for illustration purposes.)

Rules of engagement

But RealGlobal.com can be as easily defined by what it

does not do as by what it does do:

It should be product neutral and not commission

driven to be acceptable to all advisors.

It should not engage in the sale of insurance,

investments or property and casualty products.

It should not offer divorce, financial, retirement

or tax planning services.

It should not compete with industry associations and

organizations in accrediting or licensing financial

service practitioners.

It should not be a direct provider of educational or

continuing education services.

It should not compete with the work and mission of

established nonprofit professional organizations--it

should complement them.

Selected pages with heavy traffic would carry time-

sensitive and topic-specific links to industry websites and

online magazines. The Web page featuring these links would

carry the following message: "RealGlobal.com maintains that

`content' is better left to the experts. The focus of

RealGlobal.com is stellar Web-based collaboration for

financial service practitioners. This is our core

competency."

A true B2B collaborative site

RealGlobal.com has to be a true business-to-business

and practitioner-to-practitioner site. It would provide

collaboration tools to enhance communication among

practitioners as well as communication between practitioners

and their customers. These areas of communication would

include:

Business-succession planning

Cash-flow planning and budgeting

Charitable giving

Developmentally disabled children

Divorce planning

Education funding

Employee benefits

Estate planning

Executive compensation

Financial planning,

Investment and asset management

Legacy asset planning

Elder care

Life insurance

Health insurance

Disability and long-term care insurance

Multi-risk management (property and casualty

insurance)

Retirement issues (including distribution planning

and tax planning)

RealGlobal.com would not actually perform financial,

insurance or investment planning. Instead, it would make

these processes better.

Security is key

The challenge for Real Global.com lies in both

customizing collaborative services for the financial

community and securing this collaborative environment more

tightly than a drum.

Many Internet and security experts maintain that

conducting a financial transaction, divulging confidential

information and completing an online profile that asks for

personal information on an Internet website are much safer

than using an ATM or giving credit card information in

person. Yet it is amazing the number of people who would

hesitate to complete a financial transaction via the Net,

but who would perform the same transaction via a cellular

telephone. Internet security technology has evolved to the

point at which it is safe to complete financial or

confidential transactions on a website-it is much safer than

throwing away a bank statement or handing a credit card to a

waiter.

It cannot be over-emphasized that confidentiality is

the true currency between practitioners and their clients.

The goal of RealGlobal.com would be to offer a secured,

global collaborative environment that members would use to

communicate with each other; transfer files, documents,

sales proposals and illustrations; and send email messages

including instant messaging. It would also enable members to

consult or partner on client cases.

RealGlobal.com must deploy more than passwords. Its

security must use several hacker- and virus-resistant

strategies, such as dedicated servers, firewalls, encryption

and secured socket layers (SSL). (See sidebar.)

Services within a secured site

The collaborative services of RealGlobal.com would go

beyond existing Web-based applications like email, text

chat, instant messaging and screen-sharing. Services would

also include Web conferencing for online client meetings,

"colonies" for real-time collaborating with experts and

peers and online seminars with coaches.

RealGlobal.com would partner with professional

organizations and associations to provide the best possible

seminars. It would not conflict with their continuing

education, licensing or credentialing business models

because RealGlobal.com would offer the Web conferencing

medium, not the content or the administration of the

continuing education.

Personal online coaches and topic experts would be

available in the colonies and Web conferencing areas.

RealGlobal.com would offer a smart knowledge base for

consulting and collaboration--even using PDAs.

Here's an overview of what could be offered by the Web

conferences:

As today's extended enterprise of employees, customers,

suppliers and partners becomes larger and more

geographically dispersed, the Web is becoming a critical

medium for conducting business globally. Forrester Research

estimates that 93 percent of firms will do business on the

Web by 2002 and that business-to-business e-commerce will

grow from $406 billion in 2000 to $2.7 trillion in 2004.

The rapid and broad acceptance of the Web as a medium

for business communications is presenting new opportunities

to streamline complex business processes and conduct

transactions more efficiently. As a result, sophisticated

Web-enabled interactive communications have become

increasingly necessary as companies seek to become more

efficient and effective.

International Data Corporation estimates that the

worldwide market for Web-based collaborative service and

support will increase from about $14.5 billion in 1999 to

approximately $42.8 billion in 2003.

RealGlobal.com would offer 24-hour access to Web

conference facilities customized for use by financial

service practitioners. Web conferencing could be configured

on the following service levels:

Level 1

Video Voice-Collaboration Tools and Streaming

Presentations

Technical expert, colony consultant or personal

online coach

An example of this would be a financial

practitioner, client and spouse (these count as

one), the technical expert who is an expert in

transferring ownership in a family limited

partnership and the CPA.

Level 2

Voice-Collaboration Tools and Streaming Presentations

(No Video)

Technical expert, colony consultant or personal online

coach

An example would be a financial practitioner, four

business partners (these count as one), the

technical expert on business valuation and the

attorney.

Level 3

Voice Only (No Video Collaboration Tools or Streaming

Presentations)

Technical expert, colony consultant or personal online

coach

An example would be a financial practitioner,

client and spouse (these count as one), the

technical expert and the CPA. This might be a

follow-up call to discuss plan implementation.

Level 4

Member-to-Member Video/Voice Collaboration Tools,

Streaming Presentations

Technical expert, colony consultant or personal online

coach

An example would be a focus group or a study group

that meets once a month to discuss practice

management issues or advanced planning concepts.

It could also be a CPCU group that meets once a

month to discuss commercial and industrial

insurance issues.

Level 5

Member-to-Member, Voice-Collaboration Tools and

Streaming Presentations (No Video)

An example would be financial practitioners

discussing a specific case using their companies'

sales tools, illustration systems and sales

presentations.

Level 6

Live Forums, Video Voice-Collaboration Tools and

Streaming Presentations

Technical expert, colony consultant or personal online

coach

An example would be groups with more than 10

people in forums hosted by a technical expert or a

personal online coach.

Level 7

Live Forums, Voice-Collaboration Tools and Streaming

Presentations (No Video)

Technical expert, colony consultant or personal online

coach

An example would be an online seminar series for

financial practitioners and a series of seminars

for financial practitioners and their clients.

Level 8

Monthly Online Meeting and Voice Only (No Video

Collaboration Tools or Streaming Presentations)

Technical expert, colony consultant or personal online

coach

Colonies and their functions

A colony would consist of people with the same

interests. The word colony instead of chatroom is used to

describe the online communities where professionals

collaborate because they are more than chat forums.

Colonies are designed to facilitate one-on-one or group

discussions in a secured, private environment. They would

have the same high level of security as all other sections

of the site, including passwords.

RealGlobal.com must protect financial service

practitioners and the highly sensitive information they deal

in. Again, breaches of confidentiality could result in

lawsuits, loss of professional designations and even the

practice itself.

The colonies would allow advisors to send and receive

instant messages, collaborate with voice and visual

integration, consult in private on a case-by-case basis with

topic experts or other professionals, enjoy one-on-one

sessions with personal online coaches, have intimate client

discussions, partner with other professionals and send and

receive sales presentations.

RealGlobal.com colonies would recognize that neither

all financial practices nor the interests of all financial

professionals are the same. As a result, the colonies could

be designed with specialty focuses.

Colonies might be structured in the following

categories:

CPA Colony. This private colony will focus on the

global community of accountants, bookkeepers and

comptrollers who serve the small-business community.

Company-Specific Colonies. These colonies would focus

on the global community of financial service companies.

RealGlobal.com would tailor colonies to meet the specific

compliance requirements and concerns of a particular

company. RealGlobal.com would build, maintain and monitor

customized colonies for sales, idea exchange, workrooms,

weekly and monthly meetings, meetings and sessions with

topic experts, colony consultants and online personal

coaching sessions

Financial Planner Colony. This private colony would

focus on the global community of advisors who specialize in

financial planning. It would offer two areas of focus:

financial planning and fee-based-only financial planning.

Financial Practitioners Resources Colony. This private

colony would focus on the daily tools and news that help

simplify the day-to-day running of a practice. It would

offer three topical areas: business resources, consumer

credit and tools.

Insurance Colony. This private colony would focus on

the global community of financial advisors whose specialty

area is one or more of the following: life insurance, long-

term care, mutual funds, annuities, property and casualty

and commercial insurance.

Investment Advisor Colony. This private colony would

focus on the global community of advisors who specialize in

private money management and asset management advisor

services.

Idea Colony. This private colony would focus on

practitioner ideas, concepts, techniques and skills shared

in a highly collaborative environment.

Stockbroker Colony. This private colony would focus on

the global community of financial professionals with wire-

house and stock-brokerage specialties.

Online seminars

RealGlobal.com would also offer online seminars via

streaming media at two service levels: seminars-on-demand

and seminars with personal online coaches or topic experts.

Developing customized online seminars will not be

cheap. Typically, e-learning service providers charge from

$10,000 to $60,000 to develop one hour of online

instruction, depending on the complexity of the topic and

the media used. HTML pages are easier (and thus usually

cheaper to develop), while streaming-video presentations or

Flash animations cost more. RealGlobal.com seminars will be

about15 to 30 minutes long. Again, RealGlobal.com must not

conflict with the continuing education, licensing or

credentialing business models of the professional

associations and organizations. It would provide the medium

and not the content or continuing education process.

Bandwidth is a key factor in delivering high-quality

online seminars and the lifeblood of all Internet

transmissions. Broadband technology is rapidly evolving and

allows for a hyper-fast Internet connection that enables

online seminar providers to deliver quality presentations.

Topic experts and personal coaches

RealGlobal.com would provide topic experts, colony

consultants and personal online coaches. The goal of these

topic experts would be to create an easy and intuitive

experience for people who have interest in their specific

area of expertise. Topic experts would coordinate and

control traffic in and out of the colonies, write articles,

create lively newsletters and provide the Web's best links

in terms of their topics. Topic experts require a deep

knowledge of, and passion for their areas of interest and

the skills to build a strong community using chats,

newsletters and bulletin boards. They would be required to

submit a resume that demonstrates why they are uniquely

qualified to speak on a subject.

Financial practitioners will have access to personal

online coaches, which will enable them to move to the next

level of expertise in a specific product or service area.

Personal coaching would also be available for practice

management processes such as referral-building, sales

skills, technology and training an administrative assistant.

In addition, personal coaches would be available for

all other areas of the advisor's practice. These industry

experts will benefit from the exposure and activity of the

advisor, who, in turn, will gain easy access to credible

information and assistance.

Smart knowledge base

RealGlobal.com would enable the financial advisor to

arrive at solutions to problems and easily navigate through

the consulting and collaboration processes--at their own

pace and without distraction. Financial advisors would be

able to do this at any time--during business hours or at two

in the morning.

RealGlobal.com would enable financial advisors to find

instant answers to issues associated with any known planning

situation. The dynamic knowledge base of RealGlobal.com

"learns " with each consultation. This smart knowledge base

would have powerful search capabilities, ensuring that the

financial practitioner obtain fast answers to quick

questions. This knowledge base would also accommodate PDAs.

A financial advisor would be able to use a Palm organizer or

a cellular phone to receive information from the knowledge

base.

Online financial calculators

All financial websites have financial calculators.

RealGlobal.com would have a broad suite of online

calculators, as befits its global nature. The calculators

must contribute to the daily practice management or

practitioners will not use them. RealGlobal.com online

calculators would provide user-friendly solutions for

practitioners working in all areas of financial services:

banking, lending, investments, insurance (including property

and casualty, employee benefits and financial planning.

Gaining your clients' trust

If you want to step up to the highest level of success

as a financial service practitioner, you must gain the

complete trust of your clients when collaborating with them

online. That's what a global community such as

RealGlobal.com would enable financial service practitioners

to do.

In the near future, global customized intranets such as

the fictitious RealGlobal.com will free financial advisors

from planes, trains, automobiles and sleepless hotel nights

when dealing with clients in far-off cities or countries.

These global intranets will provide financial cyberspace

highways and collaborative tools needed by financial

advisors worldwide. They must accept their mission, which is

to build and maintain global meeting places that will be as

central to the advisor's business as best-practices

management, sales software systems, PDAs and the telephone.

What they will deliver to financial advisors is value-added

services-not merely exciting technology.

[slug: author blurb]

Jim Robinson, RHU, CLU, ChFC, CFP, MSFS is CEO of A-PAL

Online, LLC. He has been providing support to financial

service practitioners for more than 20 years. He can be

reached at 678-566-2702 and at jim@apalonline.com.

[slug: sidebar for robinson article, sept 01]

Head:
Loose Talk about Tight Cyber Security

Deck:
An advisor's guide to firewalls, encryption and secured
socket layers.

As in any other aspect of life, feeling safe in

cyberspace is preferable to feeling as if a mugging--virtual

or otherwise--is lurking just around the corner. All of us

want that archtypical "clean and well-lit place," even on

the Internet.

And for advisors, their very livelihood depends on

safety in cyberspace. While it can be said that they sell

peace-of-mind, the truth is that this peace comes at a

price. Clients essentially swap intimate, private details

about themselves for the ability to sleep soundly at night.

Thus, advisors need to be doubly certain that their piece of

the Internet is secure.

Which brings us to a contemplation of the various

security measures that can be brought to bear in cyberspace.

While advisors don't need to have a deep understanding of

what can be done to keep their online client records

private, an overview is advisable. After all, there was a

bestseller just a few seasons ago devoted to cultural

literacy--the minimal amount of cultural knowledge every

citizen should have. So you must view the following as an

exercise in cyber-cultural literacy. Ultimately, it's useful

stuff to know--and who knows? It may help you win on The

Weakest Link.

Financial advisors would willingly use the Web to

expand and manage their practices if they could be assured

that authentication, confidentiality, data integrity and

nonrepudiation will hinder or prevent breaches in client

trust that lead to lawsuits.

Here's a brief explanation of these components:

Authentication: Customers must be able to assure

themselves that they are, in fact, doing business and

sending private information with a real entity--not a

"spoof" site or a person masquerading as a financial

services practitioner.

Confidentiality: Sensitive Internet communications

and transactions, such as the transmission of client data,

financial and business information, must be kept private.

Data Integrity: During transmission on the Internet,

communication must be protected from undetectable alteration

by third parties.

Nonrepudiation: It should not be possible for a

financial service practitioner, client, prospect or peer to

claim that he or she did not send a secured communication or

did not make and receive a secured communication.

These four qualities can be attained through the

knowledgeable use of a variety of Internet security

measures:

Dedicated servers are the first line of defense. They

create insular intranets and extranets. An intranet is

basically an internal or private Internet used strictly

within the confines of a company, university, organization

or association. RealGlobal.com (see main article) would

deploy a global intranet with an extranet component to reach

clients and other professionals. The difference between an

intranet and an extranet can be somewhat blurry, but

generally an extranet implies real-time access through a

firewall.

Firewalls provide added security by blocking access to

unauthorized users. A firewall might be a dedicated server

equipped with a dial-back feature or software-based

protection called defensive coding.

Encryption is a way of coding information so that if it

is intercepted as it travels over a network, it cannot be

read. Only the party with the right type of decoding

software can unscramble the message. The two most common

types of cryptography are "same key" and "public key." In

same-key cryptography, a message is encrypted and decrypted

using the same mathematical key (which is passed along from

one party to another in a separate transmission). A more

secure method is public-key cryptography, which uses a pair

of different mathematical keys (one public, one private)

that have a particular relationship to one another. In

public-key cryptography, any message encrypted with one key

can only be decrypted with the other key--and vice versa.

A Secured Socket Layer (SSL) is a protocol that enables

encrypted, authenticated communications across the Internet.

SSL is mostly--but not exclusively--used in communications

between Web browsers and Web servers. SSL ensures three

important functions: privacy, authentication and message

integrity. In an SSL connection, each side of the connection

must have a security certificate--something that each side's

software sends to each other. Each side then encrypts what

it sends, using information from both its own certificate

and the other side's certificate. This ensures that only the

intended recipient can decrypt it--and that the other side

can be certain the data came from the place it claims to

have come from. It also ensures that the message has not

been tampered with. SSL comes in different "strengths:" 40-

bit and 128-bit. 128-bit encryption is approximately 3 X

1,026 stronger than 40-bit encryption.

A Digital Certificate is a specially prepared software

file that functions as an electronic credential in

cyberspace. Think of it as a business license, an employee

ID badge or a customer membership card. It identifies the

certificate owner, authenticates the owner's membership in a

given organization or community and establishes the owner's

authority to engage in a transaction. Digital certificates

are like fingerprints. Hackers can't assume the identity of

the user because they can't get their hands on the user's

unique digital fingerprint. Other security tools would be

firewalls and intrusion-detection software.

A Digital Signature enables contracts like life

insurance and mortgages to be legally entered into via the

Internet. The Electronic Signatures in Global and National

Commerce Act was signed into law in June 2000. This law

states that the traditional law of signatures applies to e-

commerce, just as it does to conventional, paper-based

commerce.

The end

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