How to Relate 

• Staff Writer

CRM is the holy grail of the advisory business, and I am a CRM zealot. Yet many advisors have no inkling about CRM—what it is and what it does.

I have witnessed the benefits of a good customer relationship management (CRM) system. I have seen it transform my own business from disorganized to organized, provide direction to a staff of two dozen, and make people’s jobs more meaningful. I have seen it transform customer complaints into praises and, most important, help make profits grow.

Whether you’re a sole practitioner or an owner of a large advisory practice, if you are not using CRM software to track client contacts and organize workflow in your office, then you’re probably wasting money, mishandling client relationships, and missing an opportunity to grow your business and relationships with clients.

If you don’t know what CRM software is, then you need to find out what you are missing. If you do know what CRM is but just haven’t invested the time and money in your own system, then you need to make a decision about which system is right for you and get started. If you own CRM software but are only scratching the surface of its capabilities, then you need to stop being so lazy and create a system that your firm and its employees can use.

A CRM system is a database for all your client contacts. When you get a new client or prospect, you can input his name, phone number, and e-mail address into your CRM system. Taking it a step further, when you call or send a letter to a client, you can insert notes about the call and attach the letter to that contact’s entry in the database. But a good CRM system lets you go further. You can use it to assign people in your firm tasks for specific clients. You can use CRM software to automatically handle routine sequences in your office, such as opening a new client account, or to assign different people on your staff tasks they will be reminded to perform every time a client opens a new account. Moreover, using a CRM system that was designed specifically for financial advisors can help your firm more efficiently handle tasks in a financial planning business, such as tracking required minimum distributions, stock option values, cash positions, client contracts, and net worth statements.

According to online surveys of independent advisors and informal polls at conferences that I’ve done over the last couple of years, a majority of advisory firms use Outlook, patch together their own system, or do not use any CRM software. Of the tens of thousands of independent financial advisory firms, only about 600 are using the two systems built from scratch by advisors for advisors, Junxure and

ProTracker.

ProTracker and Junxure were both founded by planners who felt that there was no software available for them to manage their businesses properly. Both continue to run their planning practices in addition to their software ventures.

Warren Mackensen, who founded ProTracker in 1997, says 240 firms now use his software, while Greg Friedman, who founded his software firm in 2000, has about 350 advisory firms using his software. Both packages are comparably priced. ProTracker costs $1,300 for the first year; each additional license is $1,000. After the first year, support and licensing costs $300 annually per user. Junxure’s first-year cost is $995 for a single user and $250 for additional users; annual support and upgrades cost $500 for a single user and $250 for each additional one. If you switch to Junxure from any other CRM application, Junxure’s first-year license fee is discounted to $500.

While advisors often focus on the client contact management aspects of CRM systems, I believe an advisory firm gets the most benefit from the workflow systems that these programs facilitate. In fact, it is mind-boggling that more advisory firms are not using CRM systems designed exclusively for advisors, when you consider all that these programs can help an advisor do. Let’s go over some of that.

If your firm is like most small businesses, you have trouble retaining people. In fact, one of the reasons that many sole practitioners never grow their firms is because they cannot retain qualified professional staff. Personalities and compensation lead to conflicts. Plus, if a staffer is competent, it’s a challenge to entice her to stay and not go out on her own. CRM systems can help a firm owner conquer the problem of staff turnover.

Junxure and ProTracker let you turn your business processes into systematic steps executed by your staff members. You input the steps of handling a business process and assign individual staffers their tasks.

How CRM Handles Prospects

For instance, consider the steps you might take when a prospect calls your firm. A clerical person might be responsible for sending your marketing kit. A day or two after the kit has arrived, your client relations manager might be charged with following up with a phone call to the prospect to schedule an appointment. A firm principal might always be responsible for meeting with the prospect. After the meeting, your clerical staffer might be responsible for sending a thank-you note, and another firm principal might be charged with following up with a phone call.

This process, which must be repeated over and over, is critical to your firm’s success. Yet it is so easy for a staff member not to make the call or send the note, or for a principal to forget about the meeting. CRM software lets you input a multi-step process like this and remind each employee involved to fulfill given responsibilities. Handoffs of a client or a prospect are much less likely to be fumbled. And when someone does forget to do his part, you all can see it. The CRM automatically keeps a record every step of the way of who did what for whom.

So how does this help you overcome the challenge of staff retention? Junxure and ProTracker both let you reassign tasks to a new employee. So if your clerical person, Jim, quits your company, you can globally replace him with his substitute, John, in your CRM system. All of the reminders Jim was supposed to get instead will now go to John. And if John does not have all of the skills that Jim did, then you can use John for some processes and delegate to another staffer the other tasks once performed by Jim.

A Business, Not a Job

The ability to turn your firm’s processes into systematic steps enables an entrepreneur to grow his business. If you’ve ever read Michael Gerber’s small-business classics, E-Myth and E-Myth Revisited (HarperBusiness), then you know the difference between owning a business and owning a job. If you must do everything yourself to keep your business running, then you do not have a business. You have a job. And if you own an advisory business that cannot function profitably without you, then you also do not have business. You just have a job.

A CRM system lets a planner/entrepreneur commit her business processes to software, so that other people can execute them. It enables you to turn your way of doing financial planning, your way of designing portfolios, your way of handling clients, into action items that other staffers can handle. It offers the potential to free you from working in your business to working on your business.

In addition to systematizing workflow, Junxure and ProTracker can help you with daily client communications. They each take imports from portfolio management software, like Advent Axys, dbCAMS, and Schwab PortfolioCenter. So when a client calls you, you can click on his name and see a snapshot of his current balance. These programs make no effort to try to replace your PMS software, but they summarize key data you need from your PMS system in case a client calls with questions, and allow you to jot down notes about them directly into the client’s folder.

Both programs give you all kinds of ways to dissect your client database. You can connect a father to a son and stepson, for instance, or input contact information about other advisors and individuals connected to a client. And for everyone you input, you can have data about their birthday, anniversary, favorite hobbies, insurance policies, and estate planning vehicles, as well as your last meeting, phone call, and actions you took for the contact. You can also assign clients goals and track them to see if the clients fulfill them.

The programs also send e-mails and letters using your client database. So when you want to e-mail or mail an article to clients who are retired, for instance, you can easily define the group and then send them the article. It’s like creating a mail merge using Microsoft Word, but it is simpler because you’re using a wizard with your client database over and over.

Moreover, all your mailings to each individual client are traceable and viewable. This simplifies compliance enormously. Even when you do a mass mailing or e-mailing, you have a record of the correspondence that went to each client.

For compliance purposes, the sending and receiving of e-mail with these programs is not perfect. But they can provide a way of satisfying rules applying to registered investment advisors. Initially, ProTracker will read your Outlook “.pst” file containing all your contacts and import them into ProTracker. After that, anytime you get an e-mail from that contact, it can be imported into his folder in ProTracker. Every day or every week, you synchronize Outlook and ProTracker’s e-mail folder to bring new e-mail into ProTracker. Junxure works similarly but synchronization is not required; it automatically sees a client e-mail in Outlook and imports it.

A possible problem with ProTracker is that if you get an e-mail from a client who is not a contact in Outlook, then ProTracker will not import it. Or if your client gets a new e-mail address or is on vacation and using a different e-mail address, then ProTracker or Junxure would not recognize that as a client e-mail in need of being retained in a client’s folder. You’ll have to hit a button installed in your Outlook toolbar by ProTracker to associate that e-mail address with a particular client. These are imperfections that require human intervention.

Which Is Better?

When it comes to choosing between the two programs, the choice has become difficult. ProTracker lets you book appointments, a conference room, and handle staff scheduling for your entire staff without having to install Microsoft Exchange. ProTracker has also added a financial planning software feature that lets you know which clients’ IRAs are subject to required minimum distributions—that is, among the IRAs you manage for clients. Junxure is more focused on business processes and helping manage your staff. However, judging their functionality based on a 90-minute demo is unfair because both of these programs are so comprehensive.

In terms of usability, until now Junxure has had a lead. However, ProTracker’s new version, which we reviewed, will give it a lead. Mackensen has completely redesigned the user interface and says he will launch a new version in October. However, Mackensen has been promising the new version for months, and it was already long delayed.

Both programs are built on a Microsoft Access database. Access is a good database but it was not built for multi-user applications and it is not a server-based product. Access may perform more slowly than applications using a Microsoft SQL Server database. It can be less stable if you have a large database and multiple users query the database simultaneously.

For these reasons, both programs are moving to a Microsoft SQL database. Mackensen says the new version of his software, ProTracker Advantage, that will be released in October will feature a new user interface and all of the features described above. However, it will still be on an Access database. In January 2005, however, he will offer an SQL database version for larger firms; pricing has not yet been set. The user interface and functionality will be the same but the database will perform better for larger firms.

Meanwhile, Friedman is also going to roll out his new version in the first quarter of 2005. Friedman says his own firm will begin using the SQL version of Junxure in December and he expects to release it in early 2005. He is taking the opportunity to improve the program’s user interface as well.

The key to making these programs work in your firm is getting your staff to use them, or, if you are a sole practitioner, forcing yourself to use them. It’s not easy to change your ways or to get people on your staff to do things differently. If you are on your own, the only thing that will work is disciplining yourself––committing to change your behavior. If you have a staff, you may want to apply an incentive system to spur usage: Friedman says he makes available to his staff a bonus equal to 10% of their salaries. Only when an employee fills in the data regularly will he be eligible for a bonus.

About a dozen advisors attended the two web demos led by Mackensen and Friedman to show off their software, and they were split on which program they preferred. While I have not reviewed Act!, Goldmine, or other off-the-shelf programs, or products and consultants that customize the off-the-shelf products for advisors, I believe choosing ProTracker or Junxure would be better for most advisory firms.

“I use Act! but I’m wondering why,” says New York planner Michael Goodman, after seeing those demos. “Even after I spent significant dollars hiring a consultant to customize Act! fields, it does not have anywhere near the functionality of Junxure or ProTracker. Everyone says how cheap Act! is compared to these other programs but at the end of the day it costs a lot more once you customize it, and these programs will make your business more efficient.”