What to look for when pricing a CRM

Sophisticated advisers may need lots of bells and whistles, but those just starting out can get by with a bare-bones version

Aug 26, 2014 @ 12:40 pm

By Joyce Hanson

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Salesforce.com sells among the most popular and best-selling customer relationship management software in the financial advice industry, according to research company Gartner Inc.

But Salesforce.com's top-of-the line fully integrated sales and service CRM platform can set advisers back $300 a month per user, a price at least some advisers — especially those just starting out — may deem too steep.

Not too long ago, most advisers were happy to use Excel spreadsheets and Microsoft Outlook to manage their client contacts rather than shell out money for CRM software. But now, as CRMs become the heart of digital marketing and customer service initiatives, more advisers are willing to pay for these systems.

But as the question of whether advisers should invest in a CRM becomes settled, another question remains: How much should they pay?

The easy answer is anywhere from a free trial and as little as $10 per user per month for simple online products such as Less Annoying CRM to as much as $300 for Salesforce's top-of-the-line platform.

The complicated answer to how much to spend is “it depends,” based on whether an advisory practice is new or established, has one or many people using the CRM and offers relatively straightforward or sophisticated wealth management services to clients.

“Younger advisers think more about the costs. They're starting up and are considering the costs of compliance, marketing, rent and phones,” said Susan Glover, president of Susan Glover & Associates, a technology and operations consultant for advisory firms. “Some of the younger ones aren't certain beyond the Rolodex qualities of what they need in a CRM.”

For more established practices, Ms. Glover added, CRMs now come bundled with integrated products such as document management and email archiving, or they come unbundled. But either way, advisers should understand their workflow processes and pipeline tracking before investing in a CRM, she said.

Alan Moore, the 27-year-old founder of Serenity Financial Consulting, based in Milwaukee and Bozeman, Mont., has thought a lot about CRMs lately because he is now in the process of migrating his client data from his old system, Solve 360, to CRM startup Wealthbox.

Because his practice is new and he's trying to keep his costs low, Mr. Moore picked Wealthbox not only because it integrates with Google Apps and the MoneyGuidePro financial planning and BlueLeaf data aggregation systems, but because the price was attractive. Wealthbox costs $29 a month for a single team member and since Mr. Moore's is a solo practice, every dollar counts, he said.

“Anybody who's used a CRM knows how frustrating they are. And if you can find a really flexible CRM like Salesforce, it's a money pit,” Mr. Moore said. “There comes a day when you graduate when you need a Junxure or a Tamarac CRM, and that's great, but you pay for them. When you're a solo practitioner, you're paying for a ton of features you're not going to use.”

Greg Friedman, president and chief executive of Junxure, pointed out that his software's desktop version costs only $41 per month per user and the introductory price for the new Junxure Cloud is just $59 per month.

Still, he said, having started his own advisory business, Private Ocean Wealth Management, based in San Rafael, Calif., he can understand why an adviser would want to keep CRM costs low when starting out.

“It makes a great deal of sense to use the free tools coming out of the gate because you need to spend most of your time developing business. If you're feeding a database, you're not building a business, so a basic CRM off the shelf can be great. You can do email blasts and take notes. It's the basics,” Mr. Friedman said.

But there is a tipping point when an advisory practice grows more complex, takes on employees and clients start to need more, he added.

Brian McLaughlin, chief executive of Redtail Technology, which offers one of the most popular CRMs for advisers, said when time comes, advisers should consider training and customer service as a part of the cost when migrating to a new CRM.

“Cost is important, but it's not the most key thing to consider. It's also about customer service. If I were starting off as a young adviser, I would look for something that was industry focused so I could leverage it. You should pick a CRM that will grow with your business,” Mr. McLaughlin said.

He added that Redtail is priced per database, at $65 per month, and not per user.

“That's the cost of one nice restaurant meal, and it covers all your CRM needs for a month,” he said.

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