Financial advisors need to expand their use of customer relationship management technology to improve their practices, according to a new survey from financial services research firm Aite Group.
Of the 380 financial advisors surveyed for the 2011 report, almost 25% of the respondents said they are not currently using a customer relationship management, or CRM, system, and did not think it was useful for their business.
But Aite's report concludes that financial advisors should use CRM systems to better manage increased client activity. The technologies can allow for better management of client data, including sharing, access from multiple sites and managing activities beyond services and sales.
The CRM systems have matured from the 1990s to early 2000s, Aite said, while the development of cloud computing allows for even small independent firms to use some kind of CRM system.
In its report, Aite focused on seven CRM systems for the wealth management industry. Of those vendors, NexJ was dominant among large wealth management firms for its ability to integrate data and functions. Juncture and Redtail are tailored to small wealth management firms. Other products include Microsoft Dynamics, which can be customized to suit a firm; Pareto Platform, a more customized version of Microsoft Dynamics that embeds best practice information; Pivotal CRM, which manages wealth management sales and services data; and Salesforce for Wealth Management, currently the most popular cloud CRM product in the industry.
Through the survey, Aite found that brokers with a fully disclosed broker firm were most likely to have a CRM application available, or about 82% of those respondents. Of the wirehouse brokers, 76% said they were likely to have access to CRM technology, followed by 64% of self-clearing brokers and 61% of independent registered investment advisors. Firms not using CRM technology products typically rely on desktop contact management tools, Microsoft Outlook or Microsoft Office, according to the report.
Spending on CRM products should increase, Aite concludes in its study, as North American wealth management firms will increase spending by 8% over the next five years. Spending will rise to $620 million in 2014, Aite estimates, up from $460 million in 2010.