Safeguard – and grow – your practice using CRM

CRM integration helps you protect your business and cultivate client relationships

by Matt Rupert
Vice President
Wealth Management Sales Supervision


The coronavirus pandemic has hastened the need for financial advisors to embrace fintech tools as client demand for online interactions has risen. At the same time, financial advisors face an increasingly complex regulatory environment, including the implementation of SEC Regulation Best Interest (Reg BI) on June 30, 2020, which set a new standard of conduct for broker/dealers.

Fully integrating a customer relationship management (CRM) program to document interactions with clients and prospects allows you to protect your practice in the event of a client complaint or regulatory scrutiny. It also offers you an opportunity to collect critical client data to better anticipate client needs and deliver a more personalized experience.

Growing financial advisor requirements with Reg BI
Beginning June 30 of last year, broker/dealers and their associated financial advisors are required to always act in the best interest of their clients when recommending securities under Reg BI. This new rule expanded the suitability standard under which brokers previously were required to conduct business. Basically, it states:

When making a recommendation of a securities transaction or investment strategy to a retail customer, a broker must act in the retail customer’s best interest without placing his or her interests ahead of the customer’s.

The new rule underscores the need for financial advisors to clearly document the rationale for making recommendations to clients for certain products or account types. It also requires that a relationship summary document – Form CRS (Customer Relationship Summary) – be provided to clients at certain points throughout the relationship. This document provides a summary of the nature of the relationship and includes details such as services and investments offered, product offering limitations, fees and potential conflicts of interest.

Managing risk by using CRM
Defining and demonstrating a client’s needs can sometimes be complicated. Given the new requirements under Reg BI, how can regulators determine if a product or account type recommended by a financial advisor is in the client’s best interest? Typically, they will look for documentation.

Using a CRM program allows you to manage and document your client interactions and recommendations digitally. Critical information to document includes:

  • Information showing that the account is being managed in line with the client’s financial situation and investment objectives. This information should be updated at least annually.

  • Criteria used to determine the account type for the client based on their needs.

  • Annual review of the client’s financial situation to determine if his or her situation or investment objectives have changed.

  • Materials used to prepare for client meetings, including account statements and observations, research or asset allocation analysis used to present a new product or account recommendation, and copies of reports to demonstrate analysis and management of the account.

  • Written summary of client meetings that includes a recap of the discussion and any materials or information presented at the meeting.

  • Any follow-up actions taken after the meeting.

The silver lining
When people think about CRM, the first thing that comes to mind is the contact information it contains for both clients and prospects. But CRM – when used fully – can be much more than a digital address book. It can serve as the business hub for managing all your interactions with clients while also allowing you to deepen and grow relationships.

Reg BI and the associated Form CRS offer opportunities to sit down with clients and reassure them that their interests are the top consideration when a financial recommendation is made. They also support a goals-based planning approach to ensure a client’s short- and long-term objectives are identified and addressed. And it offers you a chance to share the value you provide clients to help them reach their goals.

Documenting information about client interactions using CRM also allows you to consistently collect client data that can then be used to better understand client needs and create more personalized financial and investment plans. For example, the data can be used to deliver more relevant content to clients on a regular basis. It also allows you to better anticipate client needs and uncover new opportunities to add value and grow and strengthen your relationship.

Investing the time to properly implement CRM and make it part of your standard process for documenting client interactions and recommendations will benefit you and your clients over time. While it doesn’t guarantee that you will avoid regulatory scrutiny or a client complaint, it will make it easier to respond to any issues that arise and can make it easier to demonstrate that you were acting in a client’s best interest.

To learn more about how you can get the most out of an effective CRM, call a Momentum Independent Network representative today at 833.4HILLTOP (833.444.5586).

The paper/commentary was prepared by Momentum Independent Network (MIN). It is intended for informational purposes only and does not constitute legal or investment advice. The statements within constitute the views of MIN as of the date of the document and may differ from the views of other divisions/departments of affiliate Hilltop Securities Inc. In addition, the views are subject to change without notice.

Momentum Independent Network Inc. is a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. MIN and HilltopSecurities are wholly owned subsidiaries of Hilltop Holdings, Inc. (NYSE: HTH) located at 1201 Elm Street, Suite 3500, Dallas, Texas 75270, (214) 859-1800, 833-4HILLTOP. Member FINRA/SIPC

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