RIA Compliance and Practice Management Blog

A Guide to RIA CRM Software for Investment Adviser Firms of all Sizes

Posted by RIA in a Box

Jun 10, 2014 9:30:39 AM

We recently wrote and continue to believe that there is not a more powerful tool for a registered investment adviser (RIA) firm than a fully integrated and utilized customer relationship management (CRM) software system. As of late, we've received a number of questions related to how to choose and install the proper investment adviser CRM system. Thus, using data from our recent 2014 RIA Systems and Operations Survey along with other industry observations, we wanted to provide some guidance when it comes to selecting the right CRM software tool for your advisory firm.

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According to our recent survey, approximately 57% of emerging ($50 million or less in assets under management) RIA firms have a CRM system compared to approximately 73% of established ($50 million or more in assets under management) firms. However, those numbers can be quite a bit misleading as many investment advisers consider Microsoft Outlook to be a CRM system. While Microsoft Outlook serves as an excellent email management tool, it should not be mistaken for a professional CRM solution. When we travel around the country hosting various local adviser events and do informal surveying, we unofficially find that a more accurate figure for CRM usage by RIA firms is probably in the 25-30% neighborhood. Thus, the investment adviser industry as a whole still has a lot of work to do as it relates to customer relationship management system adoption.

Again, we can not emphasize enough how important a customer relationship management system is to the success of an investment advisory firm. When you look across the industry at the fastest growing and most profitable firms, one unmistakable theme emerges: they all have a heavily adopted and well integrated CRM system. However, simply purchasing some software is unfortunately not enough. Whether you're a solo adviser just starting out or a well-established 30 person firm, there must be an absolute commitment to adopt the system. Properly setting up a customer relationship management system is a tedious yet invaluable exercise as the upfront investment will yield huge future dividends. And unfortunately, the larger your firm and the longer you've been operating, the more challenging the implementation will be. Thus, when consulting with new RIA firms, we strongly advise them to choose and install a CRM software system from day one.

There are a number of established and newer entrants which provide customer relationship management CRM software to RIA firms. Over the last few years, the entire RIA CRM marketplace has moved almost exclusively to be cloud-based. Check out this Wikipedia link for an overview on cloud-based systemsWe like to divide the vendors into two groups: 1) systems specifically designed for financial advisors and 2) more general, industry-agnostic systems.

CRM software that was designed specifically for financial advisors includes:

  1. Redtail: According to our survey, Redtail is the most widely adopted system for emerging firms with a market share of close to 15% of emerging RIA firms. Redtail was designed from day one as a cloud-based system and has done a terrific job of establishing integrations with a number of other investment adviser software vendors. It's also priced very affordably at $65 per firm per month which includes up to 15 users. Thus, a firm with 3 users would be looking at a per user cost of just over $20/month.
  2. Junxure: A well regarded system for established RIA firms, Junxure has recently released a new cloud-based version. The system was designed from the beginning to serve investment advisory firms as the founder, Greg Friedman, is an adviser himself. Junxure Cloud has a 3 user minimum and costs $75 per user/month.
  3. Grendel Online: Another established cloud-based player who has long served in the investment adviser market, Grendel retails at $50 per user/month.
  4. Wealthbox: A brand new cloud-based system that was designed with a social focus. There are presently only a handful of integrations but that number will likely increase over time. The per user cost is $29/month.

When it comes to CRM software that was not specifically designed for, but is being utilized by investment advisers, some popular solutions include:

  1. Salesforce: According to our survey, Salesforce is the most widely adopted system for established firms with a market share of just over 15% of established firms. The professional version retails at $65 per user/month while the enterprise version retails at $125 per user/month. We see most larger RIA firms using the enterprise version. Salesforce is a cloud-based, fully customizable system that offers incredible integration capability via its application programming interface (API) and AppExchange. However, firms that go with Salesforce need to have the proper internal or external expertise to ensure that they have a successful implementation.
  2. Microsoft Dynamics: Microsoft Dynamics comes in both cloud-based and on-premise versions. The professional edition starts at $65 per user/month and the enterprise edition starts at $200 per user/month. As to be expected, Microsoft Dynamics integrates nicely with Microsoft Outlook.
  3. Sugar CRM: A well respected player among many industries, it's still a relative upstart trying to challenge Salesforce and Microsoft Dynamics with its cloud-based system. Prices range from $35-$150 per user/month.
  4. Zoho: An easy to customize system, Zoho's cloud-based system generally retails for $20-35 per user/month for RIA firms. It's a highly flexible system but can be a little rough around the edges at times. Yet, some emerging investment advisory firms have found this to be a cost-effective solution.

Investment News also conducts an annual RIA technology survey. In 2013, according to Investment News, among firms utilizing CRM systems, the top 5 most popular providers were:

  1. Redtail (39.5%)
  2. Junxure (19.2%)
  3. Salesforce (9.8%)
  4. Microsoft Dynamics (4.5%)
  5. Grendel Online (3.7%)

As RIA compliance consultants, we are happy to further discuss how to utilize your firm's CRM system as a component of your RIA firm's compliance management solution. In our observations, investment advisers that successfully implement a customer relationship management system tend to not only be faster-growing but also much more efficient and organized as it relates to compliance.

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Topics: RIA Operations, RIA Compliance, RIA Technology

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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