Dozens of new tech providers have entered the wealth management space in the past few years largely thanks to rapid developments in artificial intelligence that promise advisors greater workflow efficiencies and new client growth.
Just look at the clear, yet increasingly cluttered landscape in Michael Kitces’ fintech map which has grown by hundreds of tech firms in roughly six years. With so many different providers in the financial planning marketplace, advisors are beginning to question: Is it time to rethink their traditional customer relationship management (CRM) systems?
“CRM has been around since the ’70s, [and] to a lot of advisors, it has come to stand for ‘client record maintenance,’ not customer relationship management,” said Adrian Johnstone, CEO of Chicago-based Practifi, a CRM technology platform for advisory firms. “As a result, they don’t see it as something that unlocks value in the relationship.”
A recent survey of 66 RIAs, broker-dealers and wealth management firms conducted by F2 Strategy found that 43% said they were frustrated by the effectiveness of their CRM, largely due to issues with integrations and workflow. Separately, a new study by Financial Planning of 270 professionals in wealth management found that 40% said “modernizing our tech stack” was the No. 1 reason for their firm adopting new AI-based tools.
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“It’s a really interesting inflection point as we look at the generational change and the expectations that come with that, both from an investor standpoint but also an advisor standpoint,” Johnstone said. “We have a new generation of both clients and advisors coming into the frame, and that’s a great moment to reconsider the value proposition of each part of the technology stack.”
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But changing a CRM system is far more difficult than simply removing a smaller tech piece from the tech stack because it’s often deeply integrated into a firm’s operations. Advisors also acknowledge the interface of their CRM systems is not always user friendly.
“A lot of data lives in there, and it’s a lot of time to learn a CRM because sometimes they’re not as aesthetically pleasing,” said Jordan Hutchison, vice president of technology and operations at RFG Advisory. “We use Salesforce, and we’re always trying to tweak things to make it easier to maneuver and find your way around. But it’s a very big piece of technology and it’s a hard piece to learn. And then, if you’ve changed CRMs … you are putting a shock into their [the advisors’] day because they’re using it every day.”
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That’s also why widely known CRM system and wealthtech provider Orion Advisor Solutions has been trying to keep up with evolving advisor demands by launching AI-backed features, offering á la carte tech services and working toward a more open architecture structure so other providers can integrate with its CRM platform.
“We still play a consultative role because we still integrate with so many other vendors out there,” said Adam Palmer, vice president of strategic product development at Orion.
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Palmer argued that it does not have to be an all-or-nothing decision for advisory firms when it comes to their CRM systems.
“More times than not, there is a pricing package that will serve you best that would also integrate with some one-off technology that you have hitched your wagon to,” he said. “You can use both practices or both strategies … but still find elegant ways to integrate your solutions with either strategic choice.”
Johnstone advises firms to first take a step back and evaluate “the center of the platform” and whether simply upgrading the system, or adding more tech to the stack, will get the best value from it.
“I think of it in car terms: You’ve got people who are sitting there with a 1970s rust bucket and they’re wondering whether they should buy new wheels for it. That’s not going to make it a better car,” he said. With adding more tech to the old CRM, “now they have to continue to spend millions of dollars to keep maintaining that, to keep evolving, to keep pace with what it is that they were trying to achieve in the first place.”
