Wealth managers and advisers will increasingly need to turn to client management software solutions as a result of an increasing focus on the part of the regulator on client service, one of the firms which stands to benefit from the shift to technology has claimed.
Firms are “missing a trick” by not implementing client relationship management (CRM) software that will satisfy the regulator and improve their client retention, according to Gary Linieres, chief executive at Wealth Dynamix.
The firm is responsible for creating bespoke CRM systems for the sector and has recently signed deals with Ruffer LLP, Brewin Dolphin and Charles Stanley.
Mr Linieres told FTAdviser that while the industry has embraced technology to build out accounting and portfolio management systems, only in the years post the financial crisis have firms started to apply the same rigorous, digital approach to client management.
“The regulator has really turned on financial services firms and said ‘you’re responsible for the way you are treating your clients and you need to treat them fairly’, with conduct in that relationship being absolutely critical.
“They’ve given that lip service for donkey’s years, but it’s really only in the last few years that they’ve pulled out the stick and actually hit people. That’s changed the behaviour of many wealth management firms in the market.”
CRM systems account for everything from initial conversations with potential clients to the process of signing all the final paperwork.
Mr Linieres explained: “That gives control over the whole process and evidence to the regulator that the business they’re doing is in line with their expectations around client suitability and treating customers fairly.”
He warned that the punishment for not complying with the Financial Conduct Authority’s rules on this issue can be very severe, with both investment managers and senior management made personally liable for conduct risk.
“It’s significant for the individuals and for the reputation of the firm, these relationships are built on trust, so getting a fine by the regulator is fundamentally damaging to the business.”
Mr Linieres stated that these systems have not been brought in by many firms principally because the investment managers did not want to use them, regarding their client relationships as their intellectual property.
“That’s exactly what the regulator is trying to change and it’s to the benefit of the firm to do that; so you’re seeing this perfect storm of regulation and firms trying to grab back the end client.”