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Why Wealth Manager CRM Satisfaction Is Plummeting

The software companies aren’t necessarily to blame.

Two years ago, Doug Fritz, founder and CEO of F2 Strategy, a technology consultant to wealth management firms, asked 40 prominent companies how they would rate the effectiveness of their client relationship management (CRM) system on a scale of one to 10. The average rating was low. This year, F2 asked 70 wealth management firms the same question and the average rating fell even further.

“Two years ago, it was ‘Oh my gosh, that’s a pretty low number.’ And so we asked [about] it again, thinking ‘well people would have invested in their technology and this would clearly have improved,’ and it did not, it actually went down,” Fritz said.

F2 calculated the results of its CRM survey using a net promoter score (NPS) calculation so that scores for each company can be measured and benchmarked against others. Scores between zero and six are considered negative, seven to eight are neutral, and a nine or 10 are positive ratings. The scores are then weighted to show the consensus. In 2020, wealth management CRMs scored -26 and in 2022 the score fell to -46. “Wealth management firms collectively express deep dissatisfaction with their CRMs,” according to an F2 report about the findings.

Survey participants shared a few reasons for their dissatisfaction with their CRMs: “The CRM was overhyped at the time of sale and has yet to deliver on expectations; advisors all want to use it differently; CRMs don’t age well as firms grow and change; and firms underinvest in the CRM which leads to a disappointing performance versus its potential.”

Fritz said that many advisory firms felt angry and frustrated with their CRM as Covid-19 forced advisors to work remotely, change how they communicated with clients, and leaned more heavily on the software they use. “That pain has been significant,” Fritz said. 

However, wealth management firms are partly to blame for their dissatisfaction. 

David Mehlhorn, director of sales at Redtail, a popular CRM amongst independent RIAs, told RIA Intel that there is often a disconnect between people’s expectations and the work that is involved to get the most out of a CRM. Fritz agrees and said that companies don’t spend enough time understanding their needs before choosing which software best suits them. Many issues stem from how well a CRM and a business have adapted to each other, not with the software itself, the consultant added.

“They just assume that the CRM is already connected to the custodian, or is already connected to their planning tool, or is already connected to the advisor workflow, or the operations workflow and compliance workflow. It’s all just already built into it and it almost always is not,” Fritz said.

There is a correlation between improved workflows and CRM satisfaction, according to F2’s report.

Companies should care how satisfied their advisors are with a CRM. The majority, or 55.6 percent, of advisors ranked their CRM as their most important software (the next highest was their financial planning software at 26.46 percent), according to the latest T3 and Inside Information advisor software survey that polled 5,100 advisors.

John Rourke, co-founder and CEO of Wealthbox, a CRM firm launched in 2014 that recently raised a $31 million Series B round of funding and has close to 14,000 users, cautioned against blaming end-users for poor adoption or use of the software. It should work “beautifully and almost be invisible,” he said. 

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“I do believe that advisors need to be nudged to [develop better workflows], but the software industry, the wealthtech industry, needs to be cautious about blaming them if they don't because you have to have quality product design,” Rourke said. “If [the CRMs] are hard to use, that's going to be a problem.”

Amir Noor, an advisor and the director of financial planning at United Financial Planning Group, a Hauppauge, New York-based RIA with $230 million in assets under management, said his firm dropped Salesforce in favor of the Wealthbox CRM this past summer. The firm used Salesforce for five years but the company’s general dissatisfaction with the CRM caused him to start looking for another option.

“Nothing was particularly user-friendly. It was really hard to find stuff and we weren't really using it as a CRM, like a true CRM. We were using it as a glorified Excel sheet. We couldn't run reports. We couldn't do analytics. It was hard to move the data around and do anything reasonable with it. And it was getting more, and more, and more expensive,” Noor said.

In one instance, when Noor wanted to create a report to analyze, Salesforce sent him a link to a 40-page document instructing him how to build the feature. But only someone with Salesforce development experience would be able to do it, he said. To hire a professional to create a functional workflow would have cost his firm an additional $8,000.

“If you are a gigantic firm, like a Fidelity or Charles Schwab, or a big firm, you can throw 10, 20, 30 grand at customizing Salesforce to be exactly how you want it based on your internal workflows,” Noor said. “If you're a small mom and pop shop, number one, you don't want to throw that much capital at customizing something. Number two, your workflows probably aren't that unique.”

Three-fourths of the wealth management firms F2 surveyed used Salesforce, although Fritz said there was no correlation between certain CRMs and their satisfaction ratings.

Firms dissatisfied with their service and considering a new CRM should first build a solid foundation and plan, according to Redtail’s Mehlhorn.

“Often for customers who have been using a different CRM who make a switch, there’s years of baggage and bad data so there’s an expectation that those things will all be resolved immediately when in reality it takes an investment of time to clean up the data and getting the team on the same page,” he said. “Have an idea for what terminology you want to use and what workflows will be beneficial.”

Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.

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