subject: Crm For Wealth Management : Approaching Total Practice Management ( Part 1 ) [print this page] INTRODUCTION INTRODUCTION
Compared with the customer relationship management (CRM) solutions of the 1990s and early 2000s available worldwide, todays Web-accessible, service-oriented CRM solutions enable firms to integrate more of their client data (e.g., financial data and documents), access this information from more devices/locations, share this information with more colleagues and divisions, and use this information to manage and automate critical practice activities beyond sales and services. While many large and small wealth management firms are starting to take advantage of these newer solutions, a significant number continue to manage client contacts and activities through Microsoft Outlook/Office or basic desktop contact management tools. Aite Groups 2011 survey of 380 financial advisors revealed that almost a quarter of survey participants either do not have a CRM solution or do not find the solution applicable to their business. Figure 1 shows a breakdown of CRM availability metrics by type of financial advisor.
CRM Solution Availability by Wealth Management Industry Sub-Segment
Among firms with CRM solutions, many have yet to realize its intended return on investment in the form of time savings or revenue growth. Large and midsize wealth management firms, in particular, have faced two primary challenges with CRM solution investments:
Low user adoption:
Solutions are often viewed as too cumbersome by advisors, who are often required to fill out myriad fields with every client activity record for the purpose of providing management with greater transparency into advisor productivity.
In addition, many advisors have resisted relinquishing control over their client lists and information; advisors tend to view clients as theirs and not the property of their firm, and they want to ensure that they can take their clients with them if they leave.
Narrow use of the solution:
While firms may intend to purchase a CRM solution for more than contact management, most firms remain on their journey toward achieving significant process automation with their CRM solution, particularly due to the technical and personnel challenges involved with standardizing the way hundreds or thousands of individuals perform the process.
Despite the challenges to CRM adoption mentioned above, Aite Group believes that many CRM solutions have used lessons learned from the past decade to re-work their solutions. Solutions today are easier to use, and include sales and service best-practice functionality that end users (or administrators) can more easily configure on their own to fit their firms, or internal groups, unique practices. In addition to greater ease of use and end-user functionality, solutions today include workflow tools that allow advisors and firms to gain greater control of their processes. Finally, solutions are cheaper today than in the past thanks to the advent of Software as a Service (SaaS), which allows advisors to access the functionality they need from their browser without purchasing and maintaining hardware and software assets.
We believe that an increasing number of advisors and wealth management firms will take a fresh look at CRM solutions, once viewed as too expensive or complex, in their search for a solution that will help advisors better manage client processes.
CRM MARKET OVERVIEW
NORTH AMERICAN INVESTMENT DRIVERS
CRM vendors included in this report reported strong revenue growth in 2010 and anticipate continued robust growth for 2011. Based on an aggregation of vendors actual and estimated revenue, we estimate that CRM-driven revenue rose by almost 20% between 2009 and 2010 for the vendors covered in this report. Aite Groups recent primary research in the bank wealth management space validates that this market is active and growing. More than 40% of 19 top 100 North American banks interviewed in Q4 2010 had either just finished a CRM implementation, were about to embark on such a project, or were considering investing in a new CRM solution for their brokerage firm or mass-affluent organization. Many banks are looking to leverage Web-based solutions to enable cross-department collaboration while avoiding costly implementations and maintenance fees. For example, a wealth management team might consist of a commercial banker, a private banker, and a financial advisor; they would all need to access one calendar and set of client information. Enabling this type of cross-department collaboration through an internal system would be technically challenging and costly.
Table A highlights in more detail some of the primary CRM investment drivers from a group of customers that are looking to achieve more than contact and calendar management. Many of the firms look to their CRM solution to do the following:
Provide a unified view of customer information
Drive consistent adoption of sales and service best practices across the sales force, and
Automate business processes or workflows
Table A: Key CRM Investment DriversVendor Customers Firm Type Solution Since Dominant Reason for Selection
Small broker/dealer Pareto Platform 2010 Manage client service activities
Large bank Dynamics 2010 Enable new advisory process
Wirehouse NexJ 2009 Customer data integration to get to holistic view
RIA Junxure 2007 Compliance workflow management
RIA Redtail 2007 Manage client service activities
RIA Salesforce.com 2006 Flexibility to adopt to custom firm processes
Independent broker/dealer Tamarac 2002 Portal to portfolio and client information
Large credit union Pivotal CRM 1999 Manage client experience and workflow at point of contact*
HOSTED VERSUS ON-PREMISE
The vendors profiled in this report deploy their solutions through the following methods:
SaaS-only deployments: Redtail CRM and Salesforce for Wealth Management only offer solutions that reside off-site and can be accessed from any Web browser. Salesforce.coms application and infrastructure is more flexible than Redtails as it offers five different packages priced on a per-user basis, whereas Redtail offers one solution priced per database (up to 15 users per database). Please see Table H for more pricing information.
Hybrid deployments: Pivotal CRM, NexJ, Microsoft Dynamics, Pareto Platform, and, soon, Junxure (2012) offer two deployment options: one hosted and Web-based and the other on-premise. To date, all Pareto Platform customers have a hosted solution. NexJ, by contrast, has only deployed its solution at customer sites. Larger firms continue to prefer on-site deployment options as they have the technology staff internally to maintain the application and manage customer data security risks.
Microsoft Dynamics offers the unique ability to allow customers to adopt different deployment options across the firm and change deployment options at any time. For example, a new Dynamics client has elected to start with Dynamics Online and then transition to an on-premise solution once they obtain the budget to invest in the necessary infrastructure/integrations.
While Junxure will launch its Web-based SaaS solution in 2012, several customers have already implemented Junxure in a hosted environment by working with managed solutions providers, including Amazon Elastic Compute Cloud and GoGrid.
Hosted vs. On-Premise Deployments (As of Year-End 2010)
VENDOR COMPARISON
MICROSOFT OUTLOOK INTEGRATION
Given Microsoft Outlooks dominant share of the corporate client email market, integration with Microsoft Outlook has become a critical requirement of CRM solutions. All of the solutions included in this report will be able to append Microsoft Outlook emails and calendar events to a client record in the CRM solution. Two of the solutions (Redtail and Junxure) will do this automatically upon recognizing an email. With Salesforce.coms new Outlook plug-in, Salesforce.com provides users with the ability to choose whether emails are automatically sent to Salesforce.com or manually synched through a send to Salesforce.com button (advisors may only want to send selected emails to the client record rather than every interaction). Dynamics and Pareto Platform send responses to emails that have been tagged for synchronization automatically to the CRM system.
Most solutions will also capture emails from other programs, such as Gmail. Redtail also offers email hosting and archiving from Zimbra.
DOCUMENTS
Other key client data to add to the record are documents (financial plans, investment policy statements, client reports, etc.). Many of the vendors profiled integrate with SharePoint and allow CRM users to upload documents and manage them directly from their CRM solution. Redtail has its own imaging solution that is WORM-compliant1 which is the electronic data storage method required by FINRA for paperless offices.
INFORMATION ANALYSIS & SEARCH
CLIENT RELATIONSHIP MODELING
In wealth management, clients are viewed as part of larger relationships. Relationships are not only familial, but also professional, or based on association memberships. Understanding these relationships and keeping track of them allows advisors to deliver more customized financial planning, build rapport with the client/household, and helps advisors identify business development opportunities. Solutions that include out-of-the-box relationship modeling and analysis capabilities can help advisors gain deeper insights into their relationships more quickly.
Pivotal CRM and NexJ provide similar relationship modeling capabilities, allowing advisors to create different types of relationships (family, employee, consultant, etc.). In addition, the relationship hierarchies are displayed visually based on a file tree, which helps advisors quickly understand their clients relationship (see Figure 8). Information at each level of the relationship is visible and can be rolled up at different levels. For example, in NexJ, the calendar is visible at the client level, household level, employer level, etc. In addition, the solution rolls-up financial account values at different levels of the relationship.
IMPLEMENTING SALES & SERVICE BEST PRACTICES
PIPELINE MANAGEMENT
Most wealth management firms look to their CRM system to help with sales forecasting. Wealth management firms ask their advisors to update the status of their opportunities and indicate aspects about their opportunity such as estimated revenue or assets, probability of close, and estimated due date. All vendors covered in this report will allow advisors to update the status of an opportunity and indicate its probability of close. The reality is that most advisors (particularly employee advisors) do not want to spend the time entering in pipeline information. The common view among advisors is that this information may benefit their manager, but they do not see the value of investing the time for their own purpose. Vendors that allow advisors to create opportunities from multiple places within the CRM solution can help drive adoption of this important tool.
CLIENT SEGMENTATION
The ability to segment clients and manage activities/interactions by client segment is one of the most important functions of a CRM system. Advisors cannot afford to spend the same amount of time with every client. They need to decide who is going to receive more of their time and what the service experience will be for their high-value clients. All vendors provide advisors with the ability to segment their clients.
SERVICE MANAGEMENT
Several solutions have strong service management capabilities. NexJ, Pivotal CRM, Junxure and Dynamics include specific service management capabilities that allow advisors to define and schedule service activities. Pivotal CRM provides call plan templates that allow advisors or administrators to create an annual contact plan for a client tier. Advisors can apply the template to specific clients. These plans can also be sent to a manager for approval .
ADVISOR DASHBOARD
Given the plethora of information available through a CRM solution, advisors need help navigating through this data to allow them to get the information they need quickly.
Solutions include dashboards that elevate key business and client information to help advisors keep track of priority items and measure the progress they are making toward their business goals. Microsoft Dynamics, NexJ Contact for Finance, Pivotal CRM, and Salesforce.com allow end users to customize their dashboard components. Microsoft Dynamics and Salesforce.com include drag-and-drop functionality and the ability to view information graphically. NexJ will be offering this level of capability in a future release.
Dynamics also allows advisors to share their dashboards with managers or other colleagues. Salesforce.com allows firms/administrators to share up to 10 different dashboards (unlimited edition only) across users. Redtail and Junxure provide preconfigured dashboards that are not customizable by end users directly.
SEARCH
In addition to the advisor portal, search features are essential for getting custom views of client information to meet advisors specific needs. Advisors, or their home offices, will need to create custom client lists for marketing, cross-selling, or client service reasons.
Microsoft Dynamics, NexJ, Pivotal CRM and Salesforce for Wealth Management provide extensive search capabilities while Junxure and Redtail allow searches to consist of a maximum of 10 criteria. All solutions will allow advisors to create custom lists or views (Dynamics) that can easily be retrieved.
