Technology Tools for Today's High-Margin Practice

How Client-Centered Financial Advisors Can Cut Paperwork, Overhead, and Wasted Hours

David J. Drucker, Joel P. Bruckenstein

• Publisher: Bloomberg Press
• Year: 2012
• Print ISBN: 9781118434765
• eBook ISBN: 9781118480533
• Edition: 2
• Topic: Business
• Subtopic: Finance
• Index: Business

Revolutionize your financial advisory practice with the latest cutting-edge tools

Tired of spending more time with filing cabinets than with clients? Is overhead eating up your margins? In a new revised edition of the "bible" of practice management and technology for financial professionals, two leading financial planners, with some help from their friends*, deliver the knowledge advisors have been begging for. This book serves up a nontechnical trove of technology, clever workarounds, and procedural efficiencies tailored to help financial advisors in private practice move toward today's virtual office. The authors show you how to drastically reduce the paperwork in your office, slash overhead, and find anything you need in seconds using the latest software.

This revised edition includes new information on SaaS and cloud computing, software integrations, mobile devices/apps, social media tools, portfolio accounting and outsourcing, collaborative tools, digital signatures, workflow management, marketing technology and much more.

• Perfect for successful practices seeking greater efficiencies and healthier profit margins
• The authors are well-known financial advisors, each with more than 30 years of experience in financial services
• Addresses the evolution of the virtual office and its impact on advisory firms

If you're looking for new systems and efficiencies to transform and streamline your private practice, look no further than Technology Tools for Today's High-Margin Practice.

*Chapter 1 Selecting the Right CRM System, Davis D. Janowski

Chapter 2 The Future of Financial Planning Software, Bob Curtis

Chapter 3 The Future of Financial Planning Software and the New Client-Advisor Relationship, Linda Strachan

Chapter 4 Portfolio Management Software, Mike Kelly

Chapter 5 Achieving Growth and Profitability with Technology Integration, Jon Patullo

Chapter 6 How the World Wide Web Impacts the Financial Advisor, Bart Wisniowski

Chapter 7 Managing Your Online Presence, Marie Swift

Chapter 8 Client Portals and Collaboration, Bill Winterberg

Chapter 9 The Cloud, J. D. Bruce

Chapter 10 Digital Signature Technology, Dan Skiles

Chapter 11 Innovative Software and Technologies Implemented at One of the United States' Leading Advisory Firms, Louis P. Stanasolovich

Chapter 12 Virtual Staff Sparks Growth, Profitability, and Scalability, Jennifer Goldman

Chapter 13 ROI—The Holy Grail of the Technology Purchase Decision, Timothy D. Welsh

Chapter 14 Building an Efficient Workflow Management System, David L. Lawrence

Chapter 1

Selecting the Right CRM System

Davis D. Janowski

Technology Reporter at InvestmentNews

When it comes to technology, few decisions are going to be as far reaching or consequential to an advisor’s work life than choosing a CRM system. Whether you define it as client-, contact-, or the most commonly used customer relationship management (CRM), the software encompasses much more than the acronym might suggest.

Most advisors, and perhaps even more tellingly, two major custodians that support between them almost 10,000 advisors, are of the opinion that CRM has moved to center stage. In other words this crowd has made CRM technology the central hub around which all the rest of their technology revolves.

Historically, the hub of many types of financial services systems has been account management, and even to this day quite a few brokerages and broker-dealers continue to organize and manage their systems this way. Almost in parallel with the overall growth in the registered investment advisor industry we have seen a trend evolving in the CRM world. It began with registered investment advisors (RIA) firms bringing general CRM systems like GoldMine and Sage ACT! into their firms and trying to customize them as much as possible to the way they work. It quickly became apparent that these systems and others fell short on the features desired by advisors, features specific to their industry.

Fast forward to today.

Despite the relatively small size of the advisory industry there are more than two dozen CRM packages out there with some type of financial services slant. Sure they can all record your client notes, many can track and archive related e-mails and act as repositories for scanning and storing imaged documents. In fact, most of the available products can handle these mundane chores with aplomb. These features, however, are just the tip of the iceberg. And it is really the rest of the iceberg that will help you narrow your choices to something that best fits your needs.

With that in mind I am not going to provide you a review of each CRM package out there. One could write an entire book on the subject instead of a chapter, but, frankly the advisory industry remains small enough that this would not be worth the author’s while—it would remain far short of best-seller status. Rather, I will focus on the half-dozen leaders, the brightest lights in the CRM space and examine the trends that have some of those products—despite a small market share at present—growing rapidly.

Junxure and Redtail

Let’s start with the two most popular products in the space: Junxure from CRM Software Inc. and Redtail from the eponymously named Redtail Technologies Inc.

Two different advisory industry technology surveys have these two vendors leading the pack, though in reverse order. In a 2011 technology survey among advisors conducted by Financial Planning magazine, 32 percent of more than 3,000 respondents reported using Redtail, while Junxure was being used by 14 percent. My own publication, InvestmentNews, has begun to conduct its own annual survey, and in 2011, this survey found that Junxure was being used by 21.2 percent of just under 1,000 respondents, while Redtail provided CRM to 18.1 percent.

Junxure has been around for 15 years and was born from the minds of advisor and company president Greg Friedman and his developer-partner Ken Golding. About the time this book is published, a new product from CRM Software called Junxure Essentials should be available. In a nutshell, this product, a truly web-based software-as-a-service offering, is meant “to keep the Junxure DNA,” according to Mr. Friedman but is more lightweight and thereby more easily delivered over the Internet than the extremely feature-rich traditional Junxure.

Many RIA firms have, over the last few years, chosen to partner with third-party providers that host Junxure for them instead of running it themselves on their own premises. The main justification for this has been offloading the expense and tedium of maintaining the software and hardware themselves. That option has proved less than optimal in terms of speed for some advisors; the application simply runs better on a local server or personal computer and was never intended to be delivered over an Internet connection.

Essentials, then, is meant to be an offering that competes head-to-head with Redtail and other CRM systems that are delivered over the Internet. That should make it of interest to quite a few breakaway types or other smaller advisory firms interested in a fairly comprehensive product that has been built from the ground up for RIAs. And that last bit goes a long way toward explaining what has made Junxure so popular among RIAs.

It was built by an advisor with other advisors in mind. Therein is also my only hesitation for calling it the best CRM product out there for RIAs: It was created by “an” advisor.

Granted the firm has gotten a great deal of input over the years from its thousands of users and has very high retention rates but even so, no two RIA firms do things the same way and some firms have hankered for more flexibility and others a less expensive solution. Its cost is acceptable for most midsize firms, but smaller ones and solo practitioners tend to find it a bit expensive.

Junxure and the upcoming Essentials application are closely integrated with Microsoft Exchange and Microsoft Outlook. Rather than totally reinventing the wheel, CRM Software long ago decided to adopt and rely on Microsoft’s ubiquitous e-mail architecture as part of its own plumbing.

This is mostly a good thing given that so much of the rest of the business world continues to rely on Microsoft for this technology, too—meaning it is proven and not disappearing anytime soon. Of course, it also means that an advisory firm that wishes to get the most out of Junxure (or Essentials when it comes out) will have to run Outlook and Exchange, either its own local versions, or more likely, it will go through one of many third-party providers of this technology.

Redtail’s genesis as a web-based offering and one that has easy-to-integrate document management and compliance modules has also helped boost its popularity, especially as an option among independent broker-dealers and their registered representatives. In addition though, the price also happens to be right for small RIA firms and solo practitioners for whom Junxure tends to be overkill. While it is an oversimplification to call Redtail simple, it is far less complex and in many ways less comprehensive than Junxure, the evolution of which was meant to serve what are often larger, more complex firms with an often more diverse staff and multiple roles.

Redtail is also is fairly inexpensive and, refreshingly, publishes its pricing, which is based on databases (not per-user licenses). At the time of this writing one database that supports up to 15 users costs $65 per month. Its other products, including its own e-mail and e-mail archiving as well as document management, are priced separately but are listed on its website.

One reason I have heard given by those abandoning Redtail is that it lacks the ability to support much customization by individual advisory firms. In other words, advisors starting out find it comprehensive enough for their needs initially but as their firms grow or their business model changes or becomes more complex, Redtail is sometimes viewed as lacking the flexibility to accommodate this.

That said though, another big plus in favor of Redtail is its knack for integration. It has built-in account feeds through TD Ameritrade Institutional, making it somewhat of a no-brainer for advisors that already have the majority of assets at the custodian. And this penchant for integration is one way, though not a perfect one, for advisors to add functionality to their practices by adding point-specific applications for handling particular tasks.

That said, both Junxure and Redtail have excelled at delivering a great many integrations with other advisory technology providers to their customers. I will not waste space here listing them; a quick visit to their respective websites will display these as will YourSilverBullet.net (see the resources section at the end of the chapter).

So Who Are You?

It is very likely that many different types of financial advisors will be picking up a copy of this book, among them, registered investment advisors, be they wealth managers or holistic planners who also manage assets. Registered investment advisors have the most choice when it comes to selecting their technology, usually they have a blank slate.

But advisors should think of that slate more like one big piece of a larger puzzle. Perhaps the more apt analogy is to think of CRM as a central chunk of building blocks. If you were a kid in the 1970s or 1980s, chances are good that you are familiar with Lego’s plastic building blocks. At first, the blocks and kits were fairly rudimentary, but over the years they came to include far more specific scenarios and specialized pieces.

Today’s kids can find kits based on themes from fairy tales to spaceships; the array of pieces and types is astounding. While most Lego pieces from one kit fit together with pieces of another, non-Lego blocks usually do not. And that analogy should help to illustrate the second most important aspect of CRM selection—integration.

In addition to the dozens of CRM system choices available to advisors, there are many dozens of other types of applications. These include other core components that will make up an advisor’s platform such as financial planning, portfolio management and accounting, as well as document management. And depending on the type of practice you have or plan to build, it can include many others, such as estate planning, analytics packages, tax software, and the list goes on.

For RIAs, the selection of a CRM solution will be influenced by whether you are starting from scratch or are already established and are dumping one CRM system for something more modern or one that better fits your work. Another consideration is whether you want to transition from a locally installed system to one that is cloud-based. For RIAs, in particular, the cost of the CRM application itself—including both initial outlay for setup as well as ongoing licensing—is an important consideration.

Advisors leaving one system must also consider the costs associated with migrating their data from what they are using now into the new system, the amount of training that staff will require, and how compatible that new system will be with the other software you are already using.

Some advisors reading this book may be hourly planners or planners on annual retainer. Plenty of independent registered representatives affiliated with a broker-dealer might also be wandering through these pages seeking answers. Much as it is impossible to lump every advisor into one particular type of practice we cannot pin every firm to the same point in its lifespan either.

Some of you are going to be coming right out of a university program; others leaving a wire house; some work for an independent broker-dealer; still others might be leaving a broker-dealer and setting up shop as an RIA; and some may be mature, established RIAs in need of a modern CRM program.

Most advisors, especially those who have departed wire houses, should begin their search for the right CRM system based on who they expect their custodian or broker-dealer to be. At least, try to narrow this decision to a few choices—this will not only help you decide your business model but will assist you in making a more informed choice on the technology front, as well.

Some affiliated advisors and brokers have little choice in selecting their CRM system because either their broker-dealer or other provider requires they use the brokerage’s system or dictates a certain product or provides the advisor with a set of products from an approved list. Usually products on this list have been shown to easily integrate to a broker-dealer’s account management or books and records system.

For example, those who join independent broker-dealer Commonwealth Financial Network LLP do not have to worry about CRM or technology selection; the firm built its own and it was built from the ground up as a fully integrated system. That system is well-respected, and the firm spends liberally on its upkeep and development.

Quite a few broker-dealers provide Redtail as their CRM of choice or have it on their short list as a recommended product.

Salesforce, Salesforce, Salesforce

Other broker-dealers select particular systems to integrate with their back-office systems. One example is Advisor Group, the large independent-broker-dealer network that this year rolled out Salesforce.com to the more than 4,000 affiliated advisors at its three firms—FSC Securities Corp., Royal Alliance Associates Inc., and SagePoint Financial Inc.

Advisor Group worked with Salesforce to integrate the CRM system with its Vision2020 accounting platform and had plans, as of this writing, to integrate another popular bolt-on module from Salesforce’s App Exchange called Chatter. That application will power an internal social network for employees at the home office and all three of its firms and is another example of why Salesforce can be a compelling choice for larger, more distributed organizations.

The App Exchange has a lot of other potential components, too. One built specifically to help advisory firms create workflows is called ProcessComposer. That app was spun off from efforts at RIA firm Orchestrate LLC, which is owned by Foster Group Inc., a wealth management company with 800 clients and $1 billion in assets under management.

Orion Connect is another Salesforce App Exchange application that should be mentioned. Orion Advisor Services LLC, which is known for its high-end portfolio management and performance reporting, had requests for such an application from some of its large RIA customers.

Thanks to the open application programming interface from Salesforce, development was fairly quick and easy—a good illustration of why Salesforce is growing in popularity. While it appears that Salesforce is taking over the world of CRM, it is a good time to remind readers that the company will likely not hold the hand of smaller advisory firms in a manner they may be accustomed to.

There are a handful of consultancies and firms that have built overlays. Think of them as sort of a customized framework set down on top of Salesforce proper that attempts to make it into a tailored solution for advisors. A case in point is Concenter Services, a consultancy in Texas that does this very thing. Its overlay is called XLR8 (sounds like accelerate) and costs $75 per month per user (at the time of this writing), with all the customizations it claims an advisor would need right out o...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Introduction
• Chapter 1: Selecting the Right CRM System
• Chapter 2: The Future of Financial Planning Software
• Chapter 3: The Future of Financial Planning Software and the New Client-Advisor Relationship
• Chapter 4: Portfolio Management Software
• Chapter 5: Achieving Growth and Profitability with Technology Integration
• Chapter 6: How the World Wide Web Impacts the Financial Advisor
• Chapter 7: Managing Your Online Presence
• Chapter 8: Client Portals and Collaboration
• Chapter 9: The Cloud
• Chapter 10: Digital Signature Technology
• Chapter 11: Innovative Software and Technologies Implemented at One of the United States’ Leading Advisory Firms
• Chapter 12: Virtual Staff Sparks Growth, Profitability, and Scalability
• Chapter 13: ROI—The Holy Grail of the Technology Purchase Decision
• Chapter 14: Building an Efficient Workflow Management System
• Epilogue: Advisor Technology: Yesterday, Today, and Tomorrow
• About the Authors
• About the Contributors
• Index