The big challenges facing dealers this year will be pricing pressures and retaining existing clients, predicts TowerGroup Inc., the Needham, Mass.-based global financial services research and consulting firm, in its annual outlook.

The report, written by analyst Matt Bienfang, notes that “the industry and consumers alike are challenging the traditional pricing model for brokerage products and services. [Thus] understanding a client’s family relationships is critical to retaining assets that might otherwise leave through wealth transfer,” he says.

That means managing client data effectively. “In the next year, more firms will establish operational databases that will establish and maintain essential client profile data and linked relationships,” he concludes.

A key technology for tracking this client data is customer relationship management (or CRM) software, which is getting more attention from financial advisory firms. According to Stamford, Conn.-based research firm Gartner Inc. , adopting CRM tools will be one of the top 10 technology priorities for investment-management firms in the next two years.

Adoption of CRM tools is already well underway, particularly among firms that have recently entered the market and firms that are not hobbled by legacy systems. Take GMP Private Client Ltd. in Toronto, for example. It made Microsoft Corp. its CRM software supplier of choice when building its computing platform. The Redmond, Wash.-based software giant blends its Outlook e-mail and calendaring system with sales tools designed to allow users to track information about their customers. Steve Tutty, managing director of marketing at GMP, says the software allows advisors to track correspondence and target clients for marketing efforts.

Another firm using Microsoft CRM is Guardian Capital Advisors Inc. , which turned to the system when its previous vendor stopped using another CRM system.

Guardian notes in a case study that it has been able to “increase operating efficiencies and improve customer satisfaction.” That’s because staff at the private wealth-management firm can now access client information with a couple of mouse clicks and, as a result, serve clients more quickly. Staff members can also tailor their services to the needs of individual clients based on what they know about those clients.

But it’s not just retail firms that are adopting CRM. Institutional brokerages are also reaping the benefits and retail firms can learn from their experience. A recent convert to CRM is BluMont Capital Corp. , one of Canada’s fastest-growing hedge fund companies.

BluMont decided to adopt CRM because it needed to stay on top of its wholesaling activities. When a new financial advisor buys into one of the eight funds or structured notes on offer, the BluMont sales team wants to know about it right away for follow up contact. So it adopted Microsoft CRM.

BluMont also has turned to Toronto-based software-development firm Salentica Systems Inc. to help integrate CRM into its computing environment and build add-on modules designed for the financial services industry sales channel.

“We were trying to focus on customer service and get information to our wholesalers that was pertinent, timely and up to date, and give them an overall view of the client database,” says Dan Elder, vice president of technology and systems at BluMont in Toronto.

The challenge for BluMont — which has 45 employees and $750 million under management — was sharing timely information among the firm’s offices in Montreal, Vancouver and Calgary, as well as with sales reps in the Prairies. That includes advisors’ phone or e-mail requests for service and notes from interactions with advisors.

BluMont’s sales force competes with the mutual fund delivery channel and other hedge fund companies, which are growing in number. It means knocking on a lot of doors. The firm’s database has more than 30,000 advisors in it, ranging from advisors at the big bank-owned firms to small independent shops. “Everyone is considered a client until they tell us ‘no’,” Elder says.

But BluMont needed a better way to manage the contacts its sales force had on the Street; it was seeking what Elder calls a “360° view of the client.” That means seeing the full complement of activity around an advisor — everything from when he or she had been contacted to what was said to any required follow-up.

BluMont looked at a number of systems from software vendors, such as online CRM provider www.salesforce.com, Seibel Systems Inc. and X.eye Inc. “We ended up going with Microsoft,” Elder says. His firm was already using Microsoft software for its main computing platforms, so employees would have “a very short learning curve.”

@page_break@Also working in Microsoft’s favour, he says, was the fact that there were a lot of developers behind its CRM software — including Salentica.

Bill Rourke, president of Salentica, which helped Blumont, GMP and Guardian implement their CRM systems, says that as firms grow, the ability to track their contacts with clients or potential clients becomes more important.

“Everyone is overwhelmed by the amount of information out there,” Rourke says, adding that information has to be relevant and timely to be useful. That means linking the CRM system to the back-office order and management systems so data can be drawn from them and provided to the sales team in real time. That way, a firm is on top of developments and can provide better customer service.

As BluMont expands the names and activity in its client database, Elder says, “It becomes necessary to provide that real-time information.” It also allows sales managers to take a look at the company as a whole, including number of redemptions and new assets coming into the firm.

“BluMont wanted to understand what advisors are doing and be on top when things change or significant events happen,” Rourke says. “It wanted to know about it without having to go through large numbers of reports or masses of info.”

For example, if a new advisor buys into a fund, the sales force will know. “It can get in touch with the advisor and say, ‘Thank you very much for your order’,” Rourke says. “You want to be in touch with him or her very, very quickly.”

By the same token, if there is a large redemption, the information is relayed to the sales team, which can follow up with the advisor to find out why the investor is leaving the fund.

The team can also hone in on a large brokerage firm, identify each broker within a branch and see who has or hasn’t been contacted. When on the road, the sales force can access different levels of information through a secure connection.

Rourke says the key to successful CRM implementation is making it easy to use and deploy: “The feedback we get from all the people we talk to is: ‘I want it to be simple’.”

But simplicity and CRM doesn’t always go hand in hand. Many of the initial enterprise-wide systems were hard to integrate into a business and difficult to use, leaving many systems deployed by financial services firms underutilized.

Five years ago, Rourke says, “These were very comprehensive systems that could do everything and track all the information you could think of.” The problem is, he adds: “The average person using these things was not a super-technical person, whether an advisor or a wholesaler, and [the systems] became way too complicated.”

Now, CRM is more focused on the end-user and how that person can draw down information relevant to his or her job. “That’s what people are looking for — let’s keep it simple,” Rourke says.

Other things well-planned CRM systems allow firms to do include managing aspects of compliance, such as know-your-client documentation. By linking a CRM system to a document-management program, the firm can make KYC data readily available to advisors.

Salentica has also built add-ons to Microsoft CRM, including an expense-management module that allows BluMont to track expenses related to serving an advisor. There is also an event module used for conferences and road shows. Invitations can be sent to selected advisors in the database; their responses can be noted. They can even be sent to wireless devices such as BlackBerrys.

The challenge of CRM, says Rourke, is being able to integrate it into back-office systems as well as the data feeds that carry the real-time information firms want. But that is improving, thanks to open architecture and the use of Web services, which make it easier for financial services firms and their technology and data providers to tap securely into one another’s systems. Salentica, for example, has integrated CRM with data products from Thomson Financial.

Rourke says advisors can also leverage CRM to improve their businesses: “Microsoft CRM is something advisors can set up for their offices.” For example, he says, a group of advisors within a firm could easily deploy a CRM system that feeds the team with client contact information or leads. A small independent firm with one or two offices can also use CRM. And they can do it cost-effectively, he adds. It can be as simple to install as setting up Microsoft Word, and firms don’t need an IT person to manage it. However, it needs to run on a server, so someone in the advisor’s office would “need enough expertise to run a server,” he says.

In December, Microsoft launched an updated version of its CRM system, Microsoft Dynamics CRM 3.0, which is easier for small businesses to install and operate. The full-suite small-business version costs $588-$666 per user or $705-$800 per server.

For a team of two to three advisors who are sharing clients, Rourke says, “CRM is really important.” CRM systems level the playing field for independents, making it easier to compete with bank-owned firms with their large technology stables. “You can play with the big boys and spend less,” he says. IE