How to pick the best CRM system for your practice

Five tips can help you adopt a system that saves time through automated workflow efficiencies

May 21, 2014 @ 12:22 pm

By Joyce Hanson

It's the rare adviser who finds adopting a new customer relationship management system thrilling.

Picking a new CRM takes time, the product choices are plentiful and the technology can be confusing. Worst of all, advisers believe, the time spent on all that CRM research and training is time that might be better spent on client management and prospecting.

Robert Fross, co-founder of adviser coaching firm Platinum Advisor Strategies, said he speaks at approximately 30 conferences a year and asks the adviser audience for a show of hands for who uses a CRM. Typically, he'll see just 20% of the advisers in the room raise a hand.

“It's shocking how many advisers don't have a CRM,” said Mr. Fross, an adviser who co-founded Fross & Fross Wealth Management.

But adopting a CRM system is worth the effort because of the time saved through workflow efficiencies, according to Robert Sofia, chief operating officer and co-founder of Platinum.

(See Robert Sofia as the featured adviser coach in InvestmentNews' “Practice Makeover” Season 1.)

“A CRM can open up so much time for advisers and help them become better prospectors,” Mr. Sofia said. “You put in the client's contact and account information, how often to contact them by phone and e-mail, and how often you need to follow up. Then it's all in the system, and all you have to do each day is open up your dashboard and go through your tasks.”

Acknowledging the virtues of adopting a CRM is just the start of choosing the right system for an advisory firm. Here are five best practices for picking a CRM.

1) Define what a CRM is.

Diane MacPhee, a professional coach and owner of DMAC Consulting Services, conducted an informal poll of about 100 of her adviser clients and asked them what CRM system they use. To her surprise, they said their No. 1 choice was Microsoft Outlook, followed by Junxure, Redtail and ProTracker.

“Outlook is not technically a CRM for the financial advisory community,” Ms. MacPhee said.

Typically, advisers complain about the complexity of CRM systems, and they're daunted by the technological hurdles required to incorporate them into their practices, she said. Yet they would do well to figure out how they function.

“The learning curve is substantial, and many would easily admit that they're scratching the surface and using only 10% or 20% of the capability of the program,” Ms. MacPhee said.

But understanding how a CRM works can be of tremendous value, she added.

“The CRM helps capture who does what by when. That's simple but profound. People talk and talk about accountability, and that is a manifestation of accountability,” Ms. MacPhee said.

2) Seek advice from peers.

Ask peers at conferences, broker-dealer meetings and other adviser gatherings about the CRM they've adopted, Mr. Sofia advises. Or, pose the question on LinkedIn.

“The perspective of another adviser who's transitioned from a CRM may be very different from what a CRM product provider will tell you when they're selling it to you,” he said.

The best peer advice is likely to come from firms of a similar type, Ms. MacPhee said.

“You want to find like-minded firms and ask, 'What do you like about your CRM and what don't you like about it?'” she said.

In addition, an advisory firm's budget, size and technology savviness must be considered.

A CRM can range from $50 a month to several thousand dollars, Mr. Sofia said.

“You have to decide what's affordable for you. You could get sold on the benefits of a really robust CRM, but you might not need all those features,” he said.

3) Get a demonstration.

Advisers in search of a CRM should step back, review all the steps they execute with clients and consider how those steps should be monitored, Ms. MacPhee said. Once they've done that internal homework, they should get a demo — multiple demos, in fact — of products they're thinking about buying.

Watching a product demonstration and then taking a CRM out for a test ride is a key part of taking on a new system, and product providers are happy to give demos, Ms. MacPhee said.

While participating in a product demo, advisers should pay special attention to their automated features, Mr. Sofia said.

The automation advantages of a CRM are threefold, he noted. First, a well-chosen system lets advisers automate processes, which helps free up their time and find peace of mind. Second, it helps automate client communications and document client preferences while tracking risk tolerance and other matters of interest to regulators. And third, a CRM automates prospecting efforts so advisers can keep their pipeline full.

“I can't imagine how you function effectively without it,” Mr. Sofia said.

4) Know what integrates.

The point of CRM efficiency is that it helps ensure that a task only has to get done once, Ms. MacPhee noted.

“You have to be sure that your CRM integrates well with other products. Will it play nice with your other programs? If you type your data once into the CRM, that should be it,” she said.

In particular, watch for a CRM that integrates well with financial planning platforms and portfolio management and document management software, Ms. MacPhee recommended.

She urged technologically challenged advisers to seek outside help when looking to integrate, or to hire IT staff to do it.

And considering that the CRM often serves as the hub of an office, Mr. Sofia strongly recommended staff training.

“The adviser shouldn't be doing it themselves. They should have somebody set it up and then train them so they can be out there prospecting,” he said.

5) Consider the future.

Another great advantage of a CRM is that it lends strength to an adviser's succession planning efforts, according to Daniel D. Sands, managing principal at Silversage Advisors.

“Firms have more enterprise value when they are less dependent on the owner/adviser, and will typically command a higher multiple,” Mr. Sands wrote in an e-mail. “Adopting and embracing an industry-specific CRM system is a critical factor in not only the ongoing operations of an RIA, but creates the 'corporate memory' required to also help make a transition/succession plan more successful.”

With that in mind, Mr. Sofia said advisers should consider a tech upgrade and seek products that are most popular with other advisory firms so that a succession can run more smoothly.

“If you have Windows 95 and a flip phone, you may not be able to use half of what you're paying for in a CRM,” he said. “Make sure your other technology is aligned.”


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