Navigating the CRM labyrinth

It's obvious from my recent conversations with advisers that customer relationship management software still causes plenty of confusion

It’s obvious from my recent conversations with advisers that customer relationship management software still causes plenty of confusion.

Not only are there many existing products from which to choose, advisers also face the decision of whether to wait for what’s coming down the road — The Charles Schwab Corp. and TD Ameritrade Institutional are working on technology initiatives with CRM systems as a key component.

One thing I tell readers who contact me is to approach this decision methodically, in detailed steps that will make the process of selecting a CRM system much less intimidating.

To start, I suggest that all advisers arm themselves upfront with two handy resources.

First, grab a copy of the FPA-ActiFi Adviser Technology Reports: CRM Edition, which was published last year.

Also check out Your Silver Bullet LLC. It’s an alliance of third-party technology providers that have paid dues to build a website and assist advisers in determining the right combination of software applications for them.

While it might sound counterintuitive, don’t select a CRM product based solely on how well it maintains your customer information. I track 22 CRM products and I can safely say that all of them perform this function fairly well.

In my opinion, the most important question advisers should ask themselves is how well other advisory software would integrate with a particular CRM solution they are looking to purchase.

Integration is key, because most advisory firms are going to attempt to make their CRM system the core around which the firm’s other applications and processes revolve.

It’s for this reason that it’s important to start with the other technology applications you rely on most before you select a CRM solution (or if you happen to be replacing some legacy CRM software).

OTHER SOFTWARE

For many advisers, financial planning or portfolio management software represents the core of their work. Since I track 14 and 16 of these applications, respectively, matching each up with a compatible CRM application results in a daunting number of possible combinations.

To keep things simple, let’s say you use MoneyGuidePro, the very popular financial planning software.

Its parent company, PIE Technologies Inc., has built integrations with many other advisory software providers, including six dedicated CRM applications.

Many of the other providers of popular financial planning systems have done the same thing, including Emerging Information Systems Inc., which offers NaviPlan and Profiles.

Once you have narrowed down the number of providers that you are looking at, it is time to examine the actual level of integration that they provide.

For the sake of efficiency, seek a set of applications that can seamlessly share data and that bring in data from custodians and other providers automatically, rather than having to perform multistep downloads of files.

OTHER FACTORS

Next, let’s weigh some other key factors starting with your firm’s size and plans for future growth.

For example, a solo practitioner or a firm with two or three advisers that intends to stay small has different needs than a larger firm or one that plans to scale up in the near future.

Small firms should focus on web-based CRM systems because they don’t need the headaches associated with maintaining an IT department.

Again, let’s focus on one example.

A popular web-based CRM choice that strikes a balance between advisory customization, integrations and cost is Redtail Technology Inc.

Redtail’s pricing is simple: $65 a month for up to 15 users or $130 a month for 30 users. The company also offers as add-ons a full document management system and e-mail archiving that meets compliance rules of the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc.

Redtail also provides assistance in transferring your data out of legacy systems.

For midsize firms, or smaller ones that see themselves on a steep growth trajectory (those with several advisers and at least $300 million in assets under management), it is important to look at additional features and bring in other CRM vendors as well.

Larger firms should consider the work flow features available in a CRM application.

Work flow features, as the name suggests, help ensure that all your employees are carrying out business processes in the same way and in the same order.

Take some common processes, such as tracking the sending of a welcome letter to prospects, then tracking them through a financial assessment, scheduling a client orientation, establishing an investment strategy, opening accounts, monitoring account transfers and initiating investment processes such as the buying and selling of securities.

Popular CRM packages with strong work flow features that can be customized include Redtail, ProTracker (from ProTracker Software Inc.) and Junxure (from CRM Software Inc.).

This is by no means an exhaustive list, but it is a start.

Next week’s column will detail how the technology initiatives under way at Schwab and TD Ameritrade will influence your thinking about CRM solutions. I will also introduce into the mix some outliers — Tamarac Advisor X platform for example — that might make perfect sense for certain firms.