Advisors Need CRM Now More Than Ever, Aite Group Finds

Too many still rely on Microsoft Outlook/Office and other tools, says report

Advisors need to up their game in a post-crisis environment in which clients have grown more risk-averse and seek more control over their investments, compared to pre-crisis years. To avoid losing clients, advisors must enhance the level of service they provide while ensuring their service model is profitable. Advisors need customer relationship management (CRM) technology more than ever to help them manage the increased number of client activities in the efficient and strategic way.

Those are the findings of a new report released Tuesday by Boston-based Aite Group, an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry.

Compared with CRM solutions of the 1990s and early 2000s, today’s Web-accessible and services-oriented CRM solutions enable firms of all sizes to manage and automate client service, sales, marketing and risk management processes through embedded best practices, workflow tools and integration with other wealth management applications, writes Sophie Schmitt, senior analyst with Aite Group and author of the report.

While many large and small wealth management firms are beginning to embrace these newer solutions, a significant number continue to manage client contacts and activities through Microsoft Outlook/Office and other tools.

Aite Group’s March 2011 advisor survey of 380 financial advisors revealed that almost a quarter of survey participants either do not have access to a CRM solution or do not find the solution applicable to their business; the report  expects the situation to change as financial advisors increasingly recognize the business value of today’s CRM solutions.

CRM vendors profiled in the report include CDC Software, Junxure, Microsoft, NexJ, Pareto Systems, Redtail Technology and Salesforce.com. Additionally, Aite Group named Microsoft Dynamics and NexJ as best-in-class providers in the large firm category and Pivotal CRM as best-in-class providers in the medium-sized firm category. Salesforce and Retail were named best-in-class in the small firm category.

Other findings in the report include:

  • CRM solutions today have improved compared to 10 years ago. Data is easier to find, analyze, share and access from any device.  The functionality is easier for end users to change, which allows firms to establish a stronger fit between process and enabling technology. In addition, new workflow capabilities provide firms with significant value, allowing them to manage and monitor all client-related processes from one application.
  • With the advent of cloud computing, solutions are now more cost-effective, which allows small wealth management firms to afford enterprise class CRM technology.
  • Given the confluence of factors driving CRM investments in the wealth management industry, Aite Group estimates that North American wealth management firms will grow spending by 8% over the next five years from approximately $460 million in 2010 to $620 million in 2014.
  • The two most important factors for wealth management firms to consider when selecting a CRM solution are its flexibility and its wealth management capabilities. Highly malleable solutions are not likely to have the most pre-integrated wealth management functionality and applications.
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