How The Cloud Helps Smaller Practices To Soar

By Cyril Tuohy InsuranceNewsNet

Advisors want to grow their businesses, this much is clear. The question is how? With technology, of course.

Yes, but what technology?

Are we talking about software related to portfolio management, financial planning, document management, customer relationship management (CRM) or email management conducted through Microsoft’s ubiquitous Outlook application.

Where do advisors go for help? The question isn’t whether enough options exist. Often, the challenge is that there are too many options.

Remember, also, that the vast majority of retail advisors work out of their homes or a small office with three, perhaps four people. There’s no in-house software expert, no help desk and little in the way of an information-technology budget.

A decade ago, advisors had to buy software and load it into a computer using a compact disc.

That model is — thankfully — on the wane. These days, applications and data reside on the cloud. It’s cheaper, safer and requires no software development; more efficient, in short.

But where does that leave a retail financial advisor, one who manages assets of $10 million or less?

Many advisors consider the customer relationship management (CRM) system their core application around which other applications – email archiving, Voice Over Internet Protocol phone systems, accounting and expense management, and benefits and payroll administration.

Advisors who have trouble getting their CRM system right are at risk of losing their clients. Advisors who lose aren’t going to be in business much longer no matter how advanced the advisory shop’s other software systems.

For advisors looking to make CRM systems the hub of their network, recent advances in technology have made these systems more affordable for small to midsize advisory firms, according to a white paper published by RIA in a Box, a consultancy geared to helping advisors launch their own registered investment advisory (RIA).

Redtail and Junxure remain the industry’s most established providers of cloud-based CRM platforms for financial advisors, “and are continuously adding integrations with advisory-specific software solutions,” the RIA in a Box report said.

Stan Lochrie, CEO of Etesian Wealth Advisors in Spokane, Wash., said implementation of Microsoft’s Dynamic CRM platform has allowed his team to execute four times the amount of work in the same timeframe.

From 2003 to 2010, the cost of staff time per client at Des Moines, Iowa-based financial advisor Foster Group, fell 20 percent, from $1,897 to $1,520 after the company revamped its CRM system, chief operating officer Travis J. Rychnovsky said.

Foster Group’s cost of staff time per $1 million of assets under management fell 31 percent, from $2,332 to $1,610, he said.

Marin Financial Advisors, a five-person advisory in Larkspur, Calif., is said to have doubled its assets under management at the cost of one extra employee after implementing a new portfolio rebalancing application.

Marin Financial was expected to implement more applications from Envestnet Tamarac, including a CRM system.

The Etesian and Marin implementations are outlined in a 2013 research report by the consultancy Aite Group. The report was sponsored by the software vendor Envestnet Tamarac.

Cloud-based portfolio management applications are available from AssetBook, Black Diamond, Orion Advisor Services and Morningstar Office.

Advisors who successfully implement a CRM system report long-term savings, more scalable growth and better service, the RIA in a Box report on operational best practices said.

Software integration remains the Promised Land for many advisors, yet integration among RIAs remains “tepid at best,” the Aite report said.

Aite Group’s report titled “RIA Productivity and Profitability: Integration Pays” found that more than 30 percent of all RIAs lack integration of software systems, and that only 7 percent claim to have a “deep and meaningful level of integration.”

Even if advisors aren’t in the market for a new CRM system, though, other technologies have progressed over the past several years. Advisors can profit from such applications even if they don’t operate a modern CRM platform.

Voice over Internet Protocol (VoIP), which tracks how much time advisors spend speaking with clients over the phone, has improved markedly in recent years, and account and expensive management from Intuit’s QuickBooks line is available in cloud-based versions, the RIA in a Box report also said.

Advisors preparing for an audit might consider applications from vendors such as Smarsh, which offers compliant email archiving, encryption and websites for RIAs, and meeting and scheduling applications that go by the name of Doodle and Skedge.me.

Barring that, there’s always Microsoft’s Outlook scheduling application, which the company has recently made available on the cloud along with its other Office applications.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].