Institutions Advance on the Partnership Curve

This entry is part 5 of 5 in the series CRM Key Insights

by Mark Nahlovsky

In my last post we looked at the total cost of ownership when it comes to a CRM with the conclusion that licensing costs are just one component.  Smaller and mid-sized advisory practices seeking to embark on a CRM journey on their own receive varying degrees of sticker-shock at each phase.  Over the past decade, institutions that serve advisors (custodians, broker-dealers, etc.) have developed programs to help defray these costs and more recently to help advisors harness the full benefit a CRM has to offer.  The following are just a few examples of how institutions have “partnered” with advisors when it comes to CRM:

  • Access to leading CRM products at reduced prices (i.e., discounts)
  • Pre-built integration points (data, functionality, etc.) between leading CRM systems and themselves
  • Training and support programs (tailored training curriculum, etc.)
  • Practice development content, configurations, and support (embedded processes & templates, break-out sessions, etc.)

LRcopyPartnershipCurve

As the challenges advisors face as business owners increase, their expectations of their institutional partners will continue to rise as well.  My opinion is that discounts and basic data integration will become an expectation and not a differentiator in the eyes of advisors.  What advisors are really looking for is guidance on selecting the best CRM to solve their present needs and assistance in achieving their long-term goals and objectives.  Once the best CRM is selected and installed within the advisory practice, advisors will expect their institutional partners to provide a roadmap to fully leveraging it in the form of processes, templates, and training programs tailored to their exact needs.

The good news for advisors, is that leading institutions and CRM vendors are investing heavily in helping you run a better business!  Advisors that are about to embark on a new or revamped CRM journey should check with their partners about is available to them as they do not need to do this on their own.

What a CRM Really Costs

This entry is part 4 of 5 in the series CRM Key Insights

by Mark Nahlovsky

The last four topics in this series focused on what a CRM can do – now it’s time to get to the heart of matters and take a look at what a CRM program costs.  Before I begin, I want to clearly point out that I purposely referred to this as a program because when you talk about cost you should take a look at more than just the software!

Cost of Ownership – Out-of-Pocket Expenses:

The line items we suggest advisors account for both in year one and subsequent years are outlined below:

Year One Out-of-Pocket:

  • New hardware or software (most cloud-based solutions have eliminated this)
  • License Fees (some are per user while others are charged on a per organization basis)
  • Set-up / Initial Configuration
  • Data Conversion
  • Initial Training

Year One Internal:

  • “How to” Support on the Basic Functionality
  • On-going Data Clean-up
  • “How should we do it now” Conversations on the Advanced Functionality

On-Going Out-of-Pocket:

  • License Fees
  • Advanced Configuration
  • Updates/Upgrades/Add-ons

On-Going Internal:

  • On-boarding New Employees and Advisors (this is how we do it here)
  • Continued “How should we do it now” Conversations on the Advanced Functionality

Saving a few dollars – a few key questions to ask:

With the total cost of ownership ranging from hundreds of dollars to tens of thousands per year, knowing where you can save a little money can help a lot.  A few basic questions you and your vendors can address are as follows:

  • How many people will need to use the system – does everyone require a license?
  • What will each user do in the system and how frequently – do lower-cost license options exist for “light” users?
  • How extensive does the initial data conversion and training need to be – can we do anything to defray this cost?

Cost of Ownership – Internal and On-Going Costs:

In all subsequent years your total cost of ownership will vary depending on your needs and what you are willing to invest.  Here is a list of the most common variable costs you are likely to encounter over the life of your CRM.

  • Training – will depend on who you tap for training, how often you do it, and the format.
  • Support – could be contracted, could be purchased ad hoc, could be done in-house
  • Customization – as your business grows and changes your system will likely need to evolve as well. Depending on the skills of your internal team and the flexibility of your system, some customization can be done in-house, other times it may be necessary to get assistance from the CRM vendor or another outside partner.
  • Updates/Upgrades – The CRM system you choose today will continue to evolve over time. This may result in occasional updates and or upgrades to the system.  Some will occur on a periodic basis and will require not action, others could be simple downloads covered in the fees you already pay, while others may be optional and require an additional payment.
  • Add-ons – Many of today’s systems have a variety of add on functionality or programs that can be added to your existing CRM platform. These may have costs associated with purchase, implementation, and use and may or may not require the use of a third-party firm.

More in-depth discussion of CRM pricing can be found in our recent CRM Software Key Insights Report.

It is one of the factors impacting institutional partner involvement in CRM offerings, and their increasing attention to CRM will be the topic of my next post.

Welcome to Your Technology Hub

This entry is part 3 of 5 in the series CRM Key Insights

by Mark Nahlovsky

Now that we have covered types of CRM programs and their Essential and Advanced functionality in my last two posts, it’s time to start tying the pieces together.  Welcome to CRM – your new technology hub!

In any business increasing efficiency is a continual challenge.  No matter how much we are able to get done in a day, there always seems to be more that we should do and fewer resources to do it with.  Through continued investment in integration points with other systems and tools, CRM solutions have emerged as the primary technology hub for advisory practices.

What you need to know about integration

Although integration between CRM and other advisory and productivity tools continues to expand, the depth of integration between tools varies greatly.  In other words, not all integrations are equal and advisors need to look beyond a listing of partners on a vendor’s website to understand what the benefits (or lack thereof) will be.

At ActiFi we rate the depth of an integration on a 5-point scale, as the level increases so does the seamless feel of the integration between programs.  The table below provides descriptions and examples of this 5-point integration scale.

1 Password token is used to provide a seamless sign-on experience from one application to another. The experience is not as smooth as it could be as the user may need to continuously re-authenticate.
2 Single sign-on exists eliminating the need to “log into” both applications. The experience is seamless, but the applications function independent of one another. Alternatively, no single sign-on exists, but some data is shared between applications so users can avoid re-typing information (e.g., client data passed to Financial Planning tool).
3 Single sign-on exists in the context of a particular record (e.g., client or account) and detailed data is shared between applications.  Alternatively, no single sign-on exists, but detailed data is shared between applications so the user can avoid using two systems (e.g., Portfolio Management data available in CRM).
4 Deep integration exists between two systems with single sign-on, data sharing and seamless functional interoperability.  The end user is able to perform functions in both systems with little to no disruption in their business process.
5 Cross application workflow automation exists.  Using the workflow functionality of the CRM a user can automate tasks across multiple applications.

In our CRM Software Key Insights Report we discuss the emergence of ecosystems of solutions, advances in existing integrations, and the tension between expected and realized business value. Understanding this content and leveraging the ActiFi integration scale above, will allow you to set your expectations of what integration will mean to your practice appropriately. Visit www.actifi.com/CRMselection to download your copy of our report.

In my next post, we’ll face the topic of cost.

Breaking Down CRM Functionality

This entry is part 2 of 5 in the series CRM Key Insights

by Mark Nahlovsky

CRM programs have been in existence for decades with the emergence of electronic rolodexes in the 80’s and flexible databases you could literally buy off the shelf in the 90’s.  With the advent of cloud-computing, the number of options and extent of functionality has grown rapidly.  In my last post we covered three different types of CRM solutions.  Now we’ll get into the details of functionality.

To help advisors better understand what they really need to buy, we’ve tried to simplify functionality into two broad categories of Essential and Advanced.  When we work with advisors on an individual basis, the number of categories and the exact definition of each will change to meet their unique needs, but this is always our starting point.

Here is a breakdown of each:

Essential Functionality – The following are functions that must be there for the software to even be considered by an advisor:

Contact Management: The management of contact information, history tracking, managing relationships, and reporting on this data.  Also the ability to extend the system to meet a practice’s unique needs.

360° Client Management: Access to client financial information, alignment of teams to clients, and management of segmentation and service models.  Reporting on this data is included.

Activity Management: The creation, assignment, delegation, and escalation of tasks, calendar management, and reporting on this data.  Integration with productivity tools such as email and telephony is also included.

How well each solution performs the functions listed above varies.  Any CRM that does not offer these essential functions is not considered a viable option by ActiFi.

Advanced Functionality – Advisors that have their core client data organized and clean and are managing day-to-day activity in their CRM are in a position to reap the benefits of advanced functionality as described below:

Templates, Checklists, and Workflows: Management of email, mail, and task template text, plus the creation and execution of checklists and automated processes.

Sales Management: Management of leads, prospects, and opportunities from both a sales execution and management perspective.

Mass Communication: The execution and tracking of campaigns/events and the distribution of mass emails.

With an agreed upon business process and a commitment to leverage the CRM as the platform to execute it, the functions listed above can turn your people-dependent practice into a systematized business.

Why you should care?

The biggest mistake I see advisors make when evaluating CRM programs is to become enamored with advanced functionality that they are in no position to use.  There is nothing wrong with daydreaming on the showroom floor, but if your existing client data is contained in spreadsheets, Outlook, and people’s brains, you need to start at square one and make sure you know how you are going to go from chaos to organization and then from organization to repeatable systematization.  If your organization’s idea of business workflow is shooting emails back-and-forth or yelling over the cube walls, then you need to focus on the blocking-and-tackling that is CRM activity management.

My advice is always to start with the essential functionality that your staff will use 80% of the time and only then dive into the advanced.  Along with showing you the full potential of their solution, a good CRM vendor will also slow things down so you can understand the best way to get started – even though it is not the most exciting thing to do.

We’ve just scratched the surface of each of these considerations.  For more in-depth coverage and a look at the vendors we’ve evaluated, visit www.actifi.com/CRMselection.

In my next post we’ll take a look at how leading CRM vendors integrate with other advisory tools in an effort to become your technology hub.

What Kind of CRM Do You Need?

This entry is part 1 of 5 in the series CRM Key Insights

by Mark Nahlovsky

CRM as Platform, Tool, or Module?

Because technology continues to be a hot button topic for advisors, it the launch point for our recently launched Advisor Success Series, which begins with an in-depth look at Client Relationship Management programs (CRM).    The acronym “CRM” can mean many different things depending on one’s role within an organization and the size, structure, and focus of the organization itself.  When it comes to CRM for financial advisory practices and firms, we have simplified the options into three broad categories described as follows:

  1. CRM as Tool:  Advisor-specific CRM solutions that integrate with a multitude of advisory software (Portfolio Management, Financial Planning, etc.) and are maintained by a firm that “gets” financial advisors.  The primary benefit of this category is in the expedited “time to value” an advisory firm can achieve.
  2. CRM as Integrated Module:  Advisor-specific CRM with embedded portfolio management and/or data aggregation capabilities.  These solutions can integrate with other advisory software, but their strength is in the integrated experience they provide through a common database.
  3. CRM as Enterprise Platform:  Enterprise CRM solutions that can be configured to the exact needs of an advisory firm or that have been configured for advisors by a consulting firm or overlay partner.  Advisory firms that have been successful with this option rarely if ever need to say “no” to a business request – where there is a will there is a way!

 

Why should you care?

The cost difference between the options listed above can range from a few hundred dollars per year to tens of thousands of dollars per year depending on what you need.  When you factor in the amount of “care and feeding” a more flexible platform may require, the cost differential only grows larger.

CRM success isn’t about paying more to get a better system, there are great solutions at every price point.  It is about choosing the solution that best meets your needs and fits within your budgetary appetite. 

The first step I always tell advisors to take when figuring out where to start the CRM selection process is to ask themselves whether they are bringing in CRM as…

A tool to complete certain tasks, if the answer is yes, then learning more about what functionality is available is the next logical step and what matters is whether or not it can do what you want it to do now and in the foreseeable future.  Anything beyond that is not worth the additional investment.

A module integrated with another program, if so, then your investigation should center on the programs that you use or plan to use and ensuring compatibility.  Understanding the user experience is a critical investigation point in the CRM as a module approach.

A platform to run their entire business, now the next question is just how unique your business model really is and how much flexibility do you need.  As you can probably guess, the more unique your needs, the more flexibility you will require and the more likely it is that you really do require an enterprise platform.

The good news is that you’re travelling down a path that others have gone down before.  You can learn from your peers, leverage a myriad of industry resources, and leverage firms like mine to go down this journey with your eyes wide open.

My next post will provide insight into breaking down CRM functionality.

ActiFi announces new Advisor Success Series

We are excited to announce the launch of the Advisor Success Series, an innovative series of programs designed to help financial advisors run exceptional businesses.  The Series will consist of reports, webinars, and online tools and resources developed through quantitative research, trend analysis, and best practices garnered from working with the nation’s top advisory practices and the institutions that serve them. Learn more at www.ActiFi.com/AdvisorSuccess.

The Series starts with a look at Core Advisor Technologies as that continues to be a hot topic for advisors.   Through research and hands-on access to the leading tools, we have observed first-hand the benefits enhanced functionality and pre-built integrations are providing advisors. There has never been a better time for advisors to take a fresh look at the technology solutions being built just for them.

Within the Technology section, the first program is CRM Selection, focusing on key insights and major trends impacting the leading financial advisory CRM solutions. A free Education Option is available along with a Personalized Option that adds access to our innovative online CRM Selection Tool http://www.actifi.com/CRMSelection. Advisors may be able to access the program at a free or reduced rate through participating financial institutions who offer customized versions of the program to their advisors.

Our goal at ActiFi is to help advisors run more efficient, effective, and profitable businesses. And, just as importantly, to provide financial institutions access to our unique and industry-leading solutions so their internal teams can help their advisors.

Why [Software] Technology Fails to Deliver Results- Part II

This entry is part 2 of 2 in the series Why Software Fails

by Spenser Segal

Even firms who have gotten past the initial software implementation and implemented some written processes around its use can wind up feeling like their software failed.  Usually, in our experience, because they were uncertain about how or unwilling to build their processes into the technology directly.

Level 3 Utilization — using workflow to manage tasks.  This level of utilization is where the rubber really begins to meet the road and is the point at which your software investment is moving beyond serving as a glorified rolodex or spreadsheet.  This is where the written processes you worked diligently to verify and document begin to show up inside of your software solution rather than next to it.  By doing so you begin to gain a shared version of the truth and the ability to report on it.  Not reaching this point means you are missing out on the ability to assign tasks in a standardized manner within the system and gain true visibility on status and adherence to your process.  Reaching this level is where the software begins to provide a true window to the business results you were sold on and a definitive step away from the danger zone of lackluster results being pinned as a failure of the software.

Level 4 Utilization — automating groups of processes in one application.  If you’ve made it to this point, Automating within business software, you are leveraging the power of the program to remove work from humans and gaining more speed in completing routine tasks and processes thereby giving time back to your team which they can then spend on high value activities like bringing in new clients or proactively reaching out to existing clients.  Achieving this level of utilization drives even more consistency into the processes you’ve developed and reduces opportunity for error.  The greatest risk of software failure at this point is in not having or acquiring the expertise to build in automation or allowing employees to continue using the old way of operating.  Doing things right the first time on implementation will translate to long term savings.  Getting leadership on-board to drive utilization from the start is critical.

Level 5 Utilization — automating groups of processes across multiple applications.  Odds are slim by this point that you are complaining about any failure of the software you selected.  Most companies that achieve at least level 4 utilization will see substantial benefit and improving business results.  Level 5 is the point at which multiple systems begin working together to amplify the benefits achieved in level 4.  Faster completion, less time wasted on repetitive tasks, fewer opportunities for human error are now enjoyed at an even greater clip.  Every hour of effort you put into increasing system utilization, systematizing processes, and building automation will pay big dividends in efficiency and ultimately the profitability of your practice.  The greatest risk for software failure at this point would be selection of a program that is not designed to communicate with other systems.

Software today is designed more and more to be configurable and integrate with other systems.  In the wealth management space, software vendors are constantly improving the quality and depth of the integrations they have with each other.  And while it may require some investment to get there, the payoff in terms of success vs failure to achieve the gleaming business results you were looking for is unquestionable.

If your team is calling your recent software investment a failure, maybe it’s time to look at the implementation and the user acceptance path that followed.  Chances are pretty good that the software isn’t what failed.

Why [Software] Technology Fails to Deliver Results- Part I

This entry is part 1 of 2 in the series Why Software Fails

by Spenser Segal

The investment was big, at least in terms of what you would typically spend as an organization.  The results, well they never materialized.  Now it’s time to find out why the software you so carefully selected failed to deliver the game changing business results you expected.  Hold on tight, this might not be the ride you were expecting.

Selection of “the right” software is the first step on the road to creating the business results you desire.  We’ve seen far too many firms mistakenly believe that simply selecting the “best” software will solve their business issues and increase productivity.  The truth is that there are many good software solutions available for advisory practices, programs for Client Relationship Management (CRM), Portfolio Management, Document Management and Financial Planning.  The key to success with all of them lies in adoption and usage.

In a recent series of blog posts for ThinkAdvisor.com we explored a 5-Step Process to Utilize Your Existing Technology.  The series explained how advisors can more effectively use and get greater return on the tools in which they’ve already invested time and money.  What we didn’t cover in depth there is how failure to advance through these levels of utilization can ultimately result in an apparent failure of the software and falling short of your business goals.

What we’ve seen in our experience working with hundreds of advisors and advisory leaders throughout the years, is this; the number one reason for software failure is not a failure of the software but rather a failure to lead, implement and fully utilize the software.

Level 1 Utilization — when it’s all in your head, is the default starting point for many practices.  They have figured out how to get in and use some of the features, but there is not a well-designed, written process on the optimal use of the tools.  If an organization fails to move beyond this level of usage, it will most certainly result in an apparent failure of the software.  Without a well-documented process, effective training, and guidelines for use, users will be unlikely to understand the true capabilities of the system and struggle to make it part of their day-to-day routine.  This usually results in the tools being underutilized in an inconsistent manner and not delivering the business value the advisor desires.

Level 2 Utilization — writing it down/using checklists is an excellent next step which can drive a marked increase in usage.  The reason for this is the habits is can help form for the users. Defining and gaining agreement on your processes, sets the stage for successful progression, and may in fact be the most difficult part of the journey.  Left unaddressed, it often manifests as a failure of the software when indeed it is a failure of the organization to manage consistent usage and accountability.  An undefined process leads to confusion, inefficiency and ultimately an inability to effectively grow your practice.

Any organization that invests in software technology to move their business forward and then wallows at one of these levels in terms of usage will likely label the software as a failure.  The hard truth is that it isn’t the software that failed at all, but rather the will and/or ability of leaders and users to truly adopt the software into their daily routines.

These are frequently the situations that ActiFi is brought into, so if it sounds all too familiar rest assured you are not alone.  There is always an opportunity to turn the ship and begin navigating toward a successful implementation.  In the next post in this series, we’ll look at utilization levels 3-5.

Choosing Software That Works for Your Advisory Firm—Part 7: The Keys to Success

This entry is part 7 of 7 in the series Choosing Software That Works for Your Advisory Firm

by Spenser Segal

In the previous six posts in this series on the process for choosing and implementing the right technology for your advisory firm, we provided you with a detailed step-by-step process when doing so. On the surface, it may seem a bit daunting to accomplish all of the tasks we suggested.  However, it is not necessary to do every step at once in a linear fashion. In fact, you will most likely find yourself coming back to elements that you skipped in order to achieve the business results that you are committed to. Although this might seem a bit inefficient, sometimes you don’t know what you don’t know and thus, you may need to skip specific tasks until you have more information that is learned accomplishing a different one.

Focus on Executing and Monitoring Your Business Results

It’s okay if you don’t follow the five steps exactly.  Each firm has certain natural strengths and activities that it does well in the normal course of running its business. These activities will align with some of the specific steps and can be completed in the course of managing the business. For example, if you already conduct an effective weekly staff meeting where you review strategic initiatives and client projects that are under way, you may not need to do anything incremental for your software project. From an “execute” step, you can use your existing meetings to review the software implementation project and discuss key accomplishments, next steps, etc.  Continue reading

Choosing Software That Works for Your Advisory Firm—Part 6: Ensuring New Technology Meets Your Business Goals

This entry is part 6 of 7 in the series Choosing Software That Works for Your Advisory Firm

by Spenser Segal

In my last post, the sixth in a series on the process for choosing and implementing the right technology for your advisory firm, we talked about execution and ensuring that the correct resources in both time and money were allocated to ensure success.

Now that we have a successful initial software implementation, it is time to focus on ensuring that the business results that we anticipated are being realized.

One critical step is having a clear process and defined metrics to measure the progress towards the business goal. For example, if you implemented a systematic rebalancing tool that is designed to free up time for your advisors to meet with more clients, we would first decide what metric we want to measure, for example, number of client meetings per week. Once we’ve established what we want to measure, we can determine what the results were pre-software implementation, set a goal for what we would like them to be (e.g., increase by 20%), and then we can measure progress on a weekly basis toward our goal.  Continue reading