At the MarketCounsel Summit event last week in Miami, senior executives from registered investment advisor (RIA) firms gathered with industry experts, consultants, and others to discuss the opportunities and challenges facing the RIA segment.
While expert speakers provided many useful insights, one offered up some very surprising industry statistics. That speaker was Joel Bruckenstein, president of Technology Tools for Today, who participated in a panel discussion on the state of technology adoption in the RIA world.
One of the technologies he focused on was customer relationship management (CRM) solutions. As was reported in InvestmentNews, Mr. Bruckenstein said that at present, over 22% of financial advisers aren’t using CRM tools to interact with clients and prospects, or to help them manage and analyze data.
“We know that about 20% of advisers are not using CRM, and another 20% think they are but are actually using something else,” he said. “And we hear that advisers are having trouble with things like work flow, which is not surprising.”
Mr. Bruckenstein may have been referring to data in Financial Planning’s annual technology survey. That study revealed that that among independent RIAs, 22.9% of them said that they don’t use any CRM system, and 19.3% of the advisors cited Microsoft Outlook as the CRM application.
Think about it. Fully 40% of advisors are not effectively leveraging CRM in their practices today. That’s true despite the fact that their new (younger) clients and prospects are ‘digital natives’, having grown up with technology as an integral part of their lives. Plus, their existing investors – Gen Xers and Baby Boomers – are more connected, mobile and social than ever, and are gravitating more toward omni-channel interaction every day.
Starting a RIA shop is an involved process, and for these financial types, tackling the IT piece on their own can be daunting.
On the other hand, CRM isn’t some exotic new software. It has been around for over 20 years. Most independent advisors likely experienced CRM systems at the wirehouses or other large firms they worked at before forging out on their own. So among RIAs, there has to be substantial familiarity with applications like Salesforce, Junxure, and Redtail.
Lastly, with so many competing solutions out there, RIAs can obtain a CRM solution at a very reasonable cost.
Given all these factors, it’s a real head-scratcher as to why so many independent advisors haven’t adopted an actual CRM system.
RIAs face real challenges in the market, including the need to communicate with more clients and prospects more frequently and in new ways. To overcome these challenges and capitalize on growth opportunities, RIAs need to provide superior client experiences. Because CRM systems can help them do so much more with client communications, they are simply a must-have for RIAs in today’s market. The sooner RIAs accept this reality and truly embrace CRM, the sooner they’ll be on track for rapid growth.
