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SMAs, Hedge Funds, Private Banks Turning to CRM


In the past few years, a series of converging trends have combined to place hedge funds, separately managed accounts and private banks under greater pressure than ever before. First, firms whose clients include high- and ultra-high-net-worth individuals face a never-ending battle to hold innovative, well-financed competitors at bay. At the same time, internal management continually seeks techniques to boost the productivity of relationship managers while struggling to implement sophisticated, faster trading and processing systems.

Increasingly demanding clients expect personalized service, enhanced risk management, near-instantaneous trade execution, and more transparency than ever before. Finally, the recent series of global economic crises guarantees that all financial institutions will be subject to more regulations and scrutiny than they have for decades.

Targeted relationship management software is one proven technique to tremendously enhance productivity across dozens of industries. Hedge funds, separately managed accounts and private banking are no exception. However, not all CRM is designed the same. For wealthy clientele, this automation must be explicitly tailored to meet their unique needs.

Furthermore, these types of applications are best supplied by an external vendor for a number of compelling reasons, foremost of which is that a packaged offering from a vendor with the perspective of dealing with multiple clients and industrise provides more capabilities at a better cost than can be delivered by the internal IT department

It's not surprising that high- and ultra-high-net-worth individuals have elevated service expectations from hedge funds, SMAs and private banks. Thankfully, relationship management automation promises to transform their experiences and lead to much higher levels of satisfaction. By recording and managing customer preferences, these packages help relationship managers proactively suggest products while anticipating and answering questions. Customers are particularly impressed with the comprehensive, well-designed reports supplied by these solutions, including: Asset performance, cash flow, trading activities, market analysis and proposals for new investments.

Building on sophisticated CRM, wealth managers are launching dedicated websites that present account information, provide access to historical reports, enable secure e-mail with their relationship managers, and grant access to targeted events. In due course, these solutions are likely to evolve into a client self-service platform as well and improve both service quality, scope and client loyalty.

One unfortunate casualty of the recent financial crisis has been the vastly lower amount of trust now placed by customers in their financial organizations. By providing detailed, timely portfolio management information, relationship management software can go a long way toward repairing this damage by demonstrating that only authorized transactions are being performed using products that meet the client's risk appetite.

By increasing customer satisfaction and satisfying their concerns, relationship management software can play a large role in negating competitive pressure and retaining clients.

In addition to keeping customers happy, relationship management packages can greatly streamline internal operations. As we described earlier, wealth managers are under significant pressure to foster relationship manager productivity, without compromising the outstanding service rich clients expect. Advisors and bankers that have already implemented these types of solutions have found their managers are now able to successfully support 200 to 300 clients, instead of the customary 20 to 50, all with heightened customer satisfaction.

As far as more effective order processing is concerned, many of these procedures are still performed by middle- and back-office staff, yet the relationship manager must be able validate and monitor these orders in real-time without resorting to manual intervention.

Specialized software applications make this visibility possible, while also furnishing detailed, accurate risk indicators to help bankers make more informed, risk-aware decisions.

In addition, with regulations continuing to expand, the auditing processes found in these applications will help demonstrate compliance, including measuring the education levels of customers to prevent offering them inappropriate products.

While the capabilities delivered by high-end CRM are important, it's not possible to deliver them without the footing provided by a robust, high-performance technology platform. Fortunately, modern database infrastructure is now able to take advantage of the speed of in-memory processing to increase throughput and reduce latency while preserving information integrity.

Should an in-memory information storage option be implemented, it must stay completely transparent to the application logic, so that no code changes are necessary. This infrastructure must also push data updates to external tools such as business intelligence products.

Because asset managers will continue facing arduous competitive, profitability, and regulatory pressures, tailored CRM powered by a high-performance database is a key customer service tool.