The changing landscape of CRM for Wealth Managers


By Bernard Lunn

On Tuesday, our Research Note focused on how both incumbent Financial Institutions and Fintech upstarts are increasingly being judged on the same metric – CAC/LTV. On Wednesday, our Research Note focused on how Salesforce is moving into this vertical market. Today we look at the other players focused on this big market opportunity.

Vertical market entry is difficult. These markets have unique challenges. For example, if you sell CRM related solutions into Wealth Management, you need to address these 5 challenges:

# 1: Using Social & Mobile to increase sales productivity

Before starting Daily Fintech, I built and managed many sales teams and used this experience to review some of the challengers in the Salestech market for ReadWrite.  At the time I was deep into writing my book – Mindshare to Marketshare – about how the Internet has changed the art and science of sales & marketing.

It was clear to anybody involved with CRM over the years that there had been too much emphasis on helping sales managers to control sales people so that sales people can control customers. In a world where customers are in control and self-educate using online sources, the old control oriented tools and techniques were due for a major revision. It was time to empower sales people to influence customers (rather than control them) and a new generation of CRM systems arose to meet this challenge such as:




We also see specialist niche plays addressing specific pain points such as:

Little Bird, which is focused on how to use social media to influence the influencers (which is an appropriate description of one part of the sales job in the digital age that we describe in Mindshare to Marketshare). Disclosure: Little Bird was founded by a friend of mine from ReadWrite days called Marshall Kirkpatrick).

MAPPS-Video, which is focused on customer acquisition and retention of wealth management customers whose attention drops dramatically when looking at content on smartphones, with a tool for creating 60-90 second video infographics. Disclosure: MAPPS-Video is a client of Daily Fintech Advisers.

This Challenge is not unique to Wealth Management and the big CRM players are not asleep at the switch on this issue. They all recognize this shift and are making appropriate moves. Some acquisition activity is likely.

# 2: Addressing the “mandatory qualification” of regulation

Qualification is job # 1 for sales people. The regulatory dimension is a form of “mandatory qualification”. Normal qualification simply says, “don’t waste your time on this prospect, your odds are low”. Mandatory qualification says, “don’t waste your time on this prospect, you are not allowed to sell this product to this customer because of regulation”. Even worse, how you sell is also mandated by regulation and all your interactions will be tracked and if you make one false move you don’t just lose the sale you put your employer in danger of a fine from regulators and reputation damage.

Daily Fintech has previously reviewed two ventures that address the regulatory challenge of CRM in Wealth Management:

  • RecordSure (reviewed by Rick Huckstep) focuses on challenge of mis-selling. This Research Note focuses on the niche of Pension Managers selling to individuals managing their Pensions, but the technology is clearly applicable to any market where regulators are involved in the interaction between sales person and customer.

This Challenge is not totally unique to Wealth Management; other regulated markets also face this Challenge. However it is tougher in Wealth Management than any other market. You don’t get to play in this market until you have cracked this one.

# 3: Winning more share of pot

In consumer markets, we talk about “share of wallet”. In Wealth Management, the customers have too much money to fit in a wallet, so we talk about “share of pot”.

Core systems historically had an account-centric approach. This fit a model where an account held all the customer’s assets. That is not the reality today. Investors divide their pot among multiple managers and custodians. That forces a move towards a customer-centric model. CRM systems are obviously customer-centric, but this creates an integration challenge if the core system is account centric.

Upgrading core systems from account-centric to customer-centric has been going on for decades, yet many firms have still not made the switch which takes years and costs many $ millions in direct and indirect costs.

In the emerging Fintech world, these account-centric core systems may be forced to open up via APIs through regulation (such as PSD2). Aggregation platforms such as Yodlee allow customers to view their holdings on a holistic 360 degree view, using whatever service they choose. (Interestingly, Yodlee was a partner of Salesforce at the launch of their Wealth Management initiative). This is unleashing a whole new wave of innovation that is disrupting the existing Wealth Management value chain with two effects:

  • More Churn leading to lower Life Time Value, forcing focus on lower CAC (which you address with CRM type systems).
  • More focus on managing relationships (using CRM like tools) and cross-selling. Cross selling can be done using digital self service tools (maybe for Millenials) and via human advisers with access to these systems (maybe for Baby Boomers).

# 4: Distribution Channels

Wealth Management is a complex value chain with advisers and fund managers and the landscape and regulations are different in different markets. Some uniformity is being mandated within Europe due to MIFID2, but UK and Switzerland have a differentiated position and America has a totally different market structure, as does Asia. As the market is global and the regulatory effort is intense, we can expect these market structures to change in the coming years.

This poses a huge challenge for sales and marketing. How do you incentivize channels? How do you avoid channel conflict? How do you ensure that internal teams are not in conflict with channels? These complex questions require a lot of technology support (as well as strategic thinking, because all these market structures and value chains are changing thanks to digitization and regulation).

# 5: Data Driven Selling & Privacy

All top jobs are becoming Chief Data Officers. Big data, data science, machine intelligence and artificial intelligence…the labels may change but the fundamentals are clear. The long touted goal of 1-1 customer centricity becomes feasible thanks to data. At which point, companies start to hit the regulatory hurdle around privacy. We see a big difference between external market data aggregation and internal customer data aggregation. External data aggregation is usually OK, but there are grey areas when you use this to triangulate to customer data.

A major focus of data science in CRM has been to tackle the notoriously difficult art and science of revenue forecasting.

Another major focus is arming the adviser with suitable talking points. This does need some internal data for relevancy but that can be as simple as “customer is interested in China, so create talking points about market trends in China”.

Two startups focused on this talking points challenge are:

First Rain

Relate IQ (renamed SalesForceIQ since being acquired by Salesforce)

(The aforementioned Little Bird and MAPPS-Video also address this in different ways).

This Challenge not unique to Wealth Management, but is particularly acute in this market.


The Specialist Incumbents

Many specialist firms focus exclusively on CRM for Wealth Management. Our market thesis is that over time these specialists will partner with and be acquired by the big CRM players.

Back in June 2013, Investment News pegged the market share as follows (as reported in RIAINABOX)

“In 2013, according to Investment News, among firms utilizing CRM systems, the top 5 most popular providers were:

  • Redtail (39.5%)
  • Junxure (19.2%)
  • Grendel Online (3.7%)”

These specialists understand all the 5 challenges we defined above – and others – because they have been natives in this market for a long time. It will be interesting to see what happens when the new CRM entrants come into the Wealth Management space. The two big CRM players with significant market share in Wealth Management are:

  • Salesforce (9.8%)
  • Microsoft Dynamics (4.5%)

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech.



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