CRM of the crop
Client relationship management software has become a necessary tool for most advisers in today's TCF environment. But choosing the right one can be a confusing process. Geordie Clarke reports
Specialised front and back office software can shave hours off an adviser's working week, doing in minutes what once involved a cumbersome and time consuming array of forms, files and phone calls.
Known as client relationship management (CRM) software, these programs were originally designed to save time by automating most day to day tasks. But now there is an even better reason to use them. Under the FSA's treating customers fairly (TCF) regulations, advisers must now be able to produce, on demand, records of their management information to the regulator by the end of this year. This could prove a tedious task for firms that still store their client records in filing cabinets, some advisers say.
Yet despite the benefits that CRMs offer, many advisers still go without them, market research shows. When the people behind upstart IFA software provider True Potential set out to launch their product earlier this year, they surveyed more than 1,300 firms (leaving out networks and large firms) to find out what kind of software the typical adviser was using.
The research showed that 43% of advisers were not using any specific technology to handle their client details, often sticking to spreadsheets and paper files for new business. Their findings also showed that just 24% of the firms surveyed submitted their commission statements electronically, with 76% still choosing to perform this manually.
Under tighter TCF regulations a large number of IFAs could be looking to find a CRM solution for their firms. However, with more than a dozen options on the market, picking the right one can be tricky because there is no single way to define what this software needs to do for advisers. Some software providers focus entirely on small firms, while others target the mass market and attempt to serve firms of every size. Some are modular and can be added to as needs arise, while others include everything under the sun whether it is needed or not.
Combined front and back office
In basic terms, a CRM is a database that allows advisers to engage with their clients. They were born during the personal computer boom of the early 1980s as simple back office programs that made advisers' lives easier by storing vital information and performing a few useful functions. But as time progressed and demand for more functions mounted, the software began to tackle more front office tasks, such as quotations and valuations. Ian McKenna, director of the Financial Technology Research Centre (FTRC), says that front and back office systems today are now one and the same, held under the banner of a CRM.
A typical system will consist of several tools that allow an adviser to take control of an area of business. Most are based on Microsoft Access or SQL databases that hold client information and allow advisers to do factfinds, write reports, calculate investment and tax situations, and check for funding shortfalls. CRMs also help to keep track of new business and organise correspondence, often being integrated with Microsoft Office and Outlook.The software also allows advisers to review client portfolios and ensure that they are compliant with regulations. Many now also offer the ability to reconcile commissions electronically.