Wealth Management is a large enough market to attract CRM providers, so why are wealth managers still struggling with CRM? Here is an excerpt from financial-planning consultant Dave Grant’s blog post:
I’ve tried to make my new RIA as heavily reliant on cloud technology as possible. Anything that I could push into a cloud technology solution I have. However, I’m still wrestling with one of my basic needs: a CRM system.
It seems Dave spent years trying various specialized CRM systems for RIAs, before implementing Salesforce, but he still doesn't have what he needs. Folks like Dave are in the business of managing people's money, not implementing CRM. They shouldn't be wrestling with anything CRM-related. If anyone should be wrestling with anything, it should be the CRM provider, not the RIA.
Sadly, that's not the case. Go to any industry blog and you’ll see plenty of stories of RIAs or independent advisors, who are sucked into becoming CRM mechanics. Cloud technology has provided more options but it hasn't yet solved the problem. RIAs keep paying CRM providers and consultants, in addition to spending their own time fixing the mess, and the torture continues.
The crux of the problem
The CRM needs of most RIAs and independent broker dealers are well understood. There may be some variations, depending on factors such as their size, focus (institutional/retail, types of products), or relationships (with broker-dealers, custodians, or wirehouses). There’s also added complexity due to the integration required into different custodial platforms, financial planning, or portfolio accounting systems. But none of this is rocket science for any vendor focused on making RIAs successful.
That’s the heart of the problem — most CRM providers or consultants are focused on selling to RIAs, not necessarily focused on RIA success. Their interests are not fully aligned with interests of the wealth management customers they serve.
Let's take the CRM providers. A majority of them serving this market are legacy on-premises software providers who collect the big checks for their software upfront, after which they have little incentive to worry about customer adoption issues. Over the years, these CRM providers have talked customers into believing that their success (or adoption) is somewhat unrelated to the software manufacturers and best addressed by consultants. RIAs pay for the software and the CRM provider is off the hook. Enter the systems integrator, who is tasked with understanding the customer's business and then mapping it to the CRM software. The RIA staff and the consultant work together, hoping to build a Rolls Royce, but often end up with a Yugo. Worse, many continue to throw additional money at the problem.
Recently, a few of the legacy providers have started selling cloud-based CRM. However, focusing on customer success is not in their DNA and they continue to operate like on-premises vendors, outsourcing customer success to others.
Then there are the big cloud providers like Salesforce, Microsoft (Dynamics), and SugarCRM. The challenge is that they are horizontal cloud providers -- they approach every industry with a one-size-fits-all solution. Their focus is too broad to address any RIA-specific issues. The onus for success is passed back to the RIA, paired with a consultant.
But what about consultants? Aren't they supposed to be focused on making RIAs successful?
In reality, most of the consultants who work with RIAs aren’t really consultants -- they are systems integrators (SIs) who earn money customizing a system and charging clients by the hour. The more time they spend customizing the system, the more money they make. That means the wider the gap between the RIA's needs and the CRM system, the happier the SI. Now, SIs definitely have their uses. However, they would be the last people interested in an out-of-the-box CRM that fits RIA needs.
In some cases, custodians and independent broker dealers, who are more aligned with advisor success, provide technology that includes CRM. However, custodians and broker-dealers are not in the CRM business, so they are again dependent on CRM providers and consultants to deliver the goods.
So, what is the answer?
There is new breed of vendor that is decidedly different -- the vertical cloud CRM provider. Vertical cloud providers are not systems integrators or services firms, but pureplay SaaS CRM providers. They don’t charge by the hour. They usually offer a monthly-usage, fee-based, pay-as-you-go pricing model. They invest heavily in customer success because their survival depends on how well they serve their customers, which is where their interests are neatly aligned with the RIAs.
For the torture to end, however, the RIAs also own a couple of important action items:
First, recognizing the obvious: that fixing CRM isn’t their mission. They are in the business of money management. It’s the CRM vendor’s job to provide the CRM to support that business. If the CRM doesn’t work, and the vendor isn’t motivated to solve their CRM issues without getting the RIA to pay, the RIA is dealing with the wrong vendor and needs to find the right vendor.
Second, finding a CRM vendor whose interests are aligned with their own -- a.k.a. a vertical cloud CRM provider. Most CRM vendors nowadays label themselves as cloud providers, making it difficult to separate the real from the fake. Here are some simple qualifying questions: Does the CRM provider also offer an on-premises version of its solution? Does the CRM solution require paying for professional services? If the answer to any of these questions is yes, the RIAs can safely stay away from those vendors, if they want to escape CRM torture.