When you think of growing your financial advisory business, there is what can seem to be an unending array of strategies and tactics. Google the phrase “growing your financial advisory business” and you’ll receive more than five million results, from articles to seminars to consultants for hire, all sharing great ideas. A common theme you’ll find in almost every business growth program is maximizing the use of technology. From leveraging social networks for finding new prospects to using software to create more professional client and prospect presentations, the right technology can help you work faster and smarter than you ever thought possible.
One of the most powerful business-building technologies introduced into financial advisory practices over the past decade is customer relationship management software, or CRM. While portfolio management, financial planning, document management and other technologies have certainly made being an advisor easier (or more complex, depending on how you look at it), those tools are generally used to improve the service provided to existing clients. CRM, on the other hand, can be an incredibly powerful tool for business and profit growth by increasing a practice’s efficiency, by automating marketing tasks, and by organizing a pipeline of new business.
However, in a spring 2011 survey conducted by ActiFi, a practice management software and solutions firm serving the financial services industry, the majority of advisors report that they are still not maximizing their CRM usage. Even though CRM systems have matured, with many systems built specifically for financial advisors, most firms are only scratching the surface when it comes to taking advantage of key features that are designed to help advisors grow their practices.
At ActiFi, our team has collectively worked with thousands of advisors. As it relates to technology, we usually see what we call the 98:1:1 technology selection ratio. When purchasing and implementing a technology solution within a practice, advisors typically spend 98% of their time and money selecting the technology. Yet they only spend 1% of their time and money improving processes to take advantage of the capabilities the technology offers and the other 1% on training to ensure the employee behavioral change necessary to use the new technology.
Spending the vast majority of resources on the purchase selection process may seem logical. In reality, however, this almost always results in implementation and adoption challenges. What is more effective is a resource budget balanced between the technology, business process improvement and training/behavioral change. It needs to be closer to a 33:33:33 ratio.
First Third—Selecting Your CRM Options
How do you select a CRM technology? Is your decision based on how many bells and whistles the technology has? Is it based on the cost? Or is it based on what other advisors are using? While those are all valid ways to identify CRM options, actually selecting what CRM is best for your firm needs to be a very thoughtful process, and personalized to your firm’s unique goals.
The ActiFi 2011 CRM survey found the following core functionalities that CRM solutions offer and that are most desired by financial advisory firms.
- Contact Management. Refers to your firm’s use of the CRM to capture and maintain prospect and client information such as addresses, phone numbers, spouses’ names, birthdates, etc.
- History. Refers to your firm’s use of the CRM to capture in one place all the details of prospect and client calls, emails, letters and meetings.
- Templates. Refers to your firm’s use of agendas, letters, checklists, follow-ups, reminders and other templates stored in the CRM and created systematically when needed for internal work or external client communication.
- Task Management. Refers to the ability to delegate and manage work by creating reminder tasks for you, creating tasks for others to perform by certain dates, and employees’ use of CRM task lists to manage their work. This also includes reporting to ensure that the team is staying on track with what they are supposed to accomplish.
- Sales Management/Pipeline Management. Refers to your firm’s use of the CRM for prospect tracking, sales stage tracking and reporting, allowing you to manage prospects and move them toward becoming clients.
- Dashboards. Refers to your firm’s use of the CRM to automatically create graphs and reports detailing key performance indicators for the firm, such as assets managed, clients served, client meetings held, fees generated, sales pipeline, etc.
- Integration. Refers to whether your firm’s CRM is integrated with the firm’s portfolio management, financial planning, document management or other applications.
- Workflow. Refers to the CRM’s capability to store embedded workflows that are manually kicked off or triggered by an event or task being created in the CRM. An example is when your receptionist schedules an “annual review meeting” with a client and the CRM automatically generates seven tasks for three staff members that need to be accomplished prior to the meeting.
Use this list as you think about your firm’s growth objectives and how CRM technology might help you accomplish your goals. Study these eight features and think about how your firm could benefit from any one. Then envision what your firm might look like if you had a CRM solution that accomplished your desired result. As you look at possible vendors, consider ranking them on these eight functionalities and their importance to your goals.
Second Third—Evaluating Your Business Objectives
All too often businesses make technology purchases based on the technology’s features. A key question you need to ask yourself is, do you actually need all of those features? If you have all of the fancy “bells and whistles,” will your people actually use them? Think about the software you have installed on your computer right now. How many of the features in Excel, PowerPoint, or even Outlook do you actually use? If you’re like most people, you probably use significantly less than 50%.
A better way to start your CRM evaluation is to identify what business objectives your firm is trying to achieve from the technology purchase. Make your goals very clear, write down your objectives and ensure that everyone in your firm agrees that they are important.
For example, are you looking to create efficiencies by having advisors delegate non-client facing tasks to others so your advisors can spend more time meeting with prospects and clients? Are you looking for a way to manage a prospect pipeline so you can better forecast revenue?
Be very specific with your goals. For example, if you want a method to automate agenda creation and tracking referral conversations, make sure that the strategic objective is very specific: “We want to ensure our agendas are consistent and client-centric while managing and tracking at least 10 referral conversations per month across the firm through our client meeting process yielding four new client referrals per month.”
The more specific you can be with your business objectives, the easier it will be to identify the CRM solution that best meets what you want to accomplish. Or said another way, once you know what you want to do, you can then find the solution offering the features that match your firm’s goals.
Next, prioritize your objectives based on the aforementioned eight CRM functionalities. Although most CRM solutions offer these eight functionalities, they certainly don’t offer all eight equally.
Determine what is most important to your firm and then use that as a guide when interviewing potential vendors. Ask vendors to show you specifically how they can accomplish your unique goals and your specific strategic objectives. Don’t allow vendors to “wow” you with fancy charts and screen animations. Instead, share your objectives, ask the vendor for specific examples on how their system has helped other advisors with similar objectives and ask for references.