What is the point of an expensive CRM system?
Practice Management & Sales & Marketing for Professional Services & Strategic Issues

What is the point of an expensive CRM system?

January 19, 2018

by Tony Vidler  CFP logo   CLU logo  ChFC logo


An adviser who plans on being in the business for another couple of decades asked what the point is in paying for an expensive and fancy CRM system.

Honest.  He did ask that.

He has a list of clients in Outlook and has the clients home addresses, phone numbers, and sometimes email addresses – “what more do you need, right?”


This highlights that there are many elements to running a successful business that some financial advisers simply do not understand.  They may be (usually are!) great technicians and good salespeople….but are they good business people?  Clearly not…


The power of having detailed information, and knowing your client well – without having to rely on the fallible human mind alone – would seem to be a good argument in itself to me.  Regulators like that too, which in itself may just be a compelling reason for a great CRM system.


The business argument for the value of a great CRM system to the business owner lies in the concept of “information being valuable today, and also creating future capital value“.


Most of the real value in an adviser’s business lies in the lifetime value of the trusted relationships.  It is the future opportunity which presents the greatest value usually.  Clients tend to do business with advisers they trust, and who know them well, and who are looking to help the clients achieve their objectives.  The more you know about their objectives, their situation, their likes and dislikes….the more valuable the adviser is to the client.  And the more valuable the client is to the adviser.


So while the client may well be valuable commercially in today’s terms (that is; they are profitable to provide service to), they represent even greater future value if that relationship can be maintained or strengthened.


The peculiar thing is that advisers know this, yet often ignore it.  They spend a significant part of their resources on getting new clients even while knowing that the future earnings are far more valuable than short term earnings potential.  Consequently there is a tendency across the industry for spending on advertising and lead generation tactics rather than investing in future revenue streams.


That is, they don’t value the opportunity that sits inside their own business as much as they value the opportunity that they perceive exists elsewhere because they only think they know their own client base.


Even many of the advisers who invest in good data management and have a very capable CRM system use it only to manage their workflow with a client when a piece of advice is being provided.  So even many proficient and diligent professionals are not maximising the opportunity that good data management presents.

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Certainly the CRM system can help manage workflow, which creates efficiency and reduces business risk as it enhances the probability of providing fully compliant advice processes.


Typically though advisory businesses are poor at collecting all valuable data while they are managing the advice process.  Sure they capture data in forms, and then scan and keep the forms electronically in the CRM record – but those documents are usually not searchable content and the key information that will help you understand the clients needs and objectives is not captured in a useful method.


While it is good that information is collected and stored, it is rarely understood in any meaningful sense, and its worth is therefore negligible in terms of assessing future opportunities, or building deeper relationships with clients and unlocking other revenue opportunities.


There is no doubt that a good CRM system containing pertinent information about clients can help improve your client service or support functions.  There is no doubt that it can improve your marketing efforts.  There is no doubt either that increased service levels with people who trust you provides better business opportunities over time.


For career professionals a good CRM system which is being well utilised and capturing all the pertinent data that can strengthen your advice process AND the client relationship becomes the true reservoir of future value that will underpin the value of your firm.


To get the most out of it though you have to be clear about two key areas:

1.  what the purpose of the CRM system is for your business

2.  what your advice, service and marketing processes are (or ideally will be), and how the CRM system can improve all three areas.


If you are clear in your thinking in these areas then you have a very high chance of business success, and maximizing future business value.


(“Importance of Clarity” graph courtesy of   Stanton Allen http://www.stantonallen.com/crm.html)


You might also be interested in this related article:
Personalise or Perish
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Comments (5)

  • Do you have any good suggestions of a good crm for advisers?

    • Hi Kevin

      great question. The majority of CRM systems I come across do the job ok – in fact will do the job better than the advisers think, but the advisers are not really using the full capacity of the systems. Having said that, pretty much all have some serious shortcomings from a practice management or a marketing platform perspective. The most successful systems I’ve seen in terms of practical application for managing clients and running a good business have been built out of a basic infrastructure (e.g. Salesforce) and then heavily personalised. The problem with that is largely integration of other client bases, or the sale of the practice with the bespoke system, later on with the bespoke CRM system. I have been looking at off the shelf CRM systems for a few years and generally find them to fall short of my expectations, largely because the vendors build for a common denominator, which introduces compromise and therefore limits my ability to use them as practice management tools. They tend to be good for client data management and managing workflow, but often not much beyond that. To be fair though, for most advisers that is all they want, so the vendors are meeting market expectations I suppose. I am looking into a system out of Australia at the moment which is still in Beta, but which looks very promising indeed. If it turns out to be the real deal that I’ve been looking for, I will certainly let people know about it.

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