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Mutual Fund CRM Going Mainstream

The use of customer relationship management (CRM) technology and systems in the fund industry continues to evolve. CRM applications have gone from virtual obscurity within the investment management industry to become standard among sales and marketing departments over the past several years.

Whether CRM is managed internally or outsourced, sometimes called CRM on-demand, it always combines sales, servicing and marketing functions and is centered around a database of information about the preferences, investment transactions and habits of clients, be they individual investors and outside selling partners such as broker/dealers, bank or insurance reps and retirement plan sponsors. The CRM database provides bountiful information on customers, such as their profiles. It can also determine who the most profitable customers are and even predict their behavior - information that is invaluable to internal and external wholesalers, sales reps, client service reps and sales managers.

The overall CRM mindset has shifted over the past few years from a mere technology implementation to a strategic business implementation, said Steve Miyao, CEO of kasina, a New York consulting firm. The focus is on better understanding the customer with an eye toward profitability. Whereas firms used to acquire CRM technology and then try to determine how to use it, now they are first assessing what they want to accomplish and then deciding how to acquire business intelligence to better segment and service their customers, he said. "It's no longer: What can this technology do for us?' Now it is: What do we want to do?'" he said.

"If somebody said to me, I have the best CRM system,' even if they gave it to me for free, I wouldn't take it," echoed Prasanna Dhore, EVP of Dreyfus Corp. of New York. "We have always tied [CRM technology] to a problem," he added.

In Dreyfus' case, CRM technology was installed a few years back to stem the flood of redemptions. Since then, redemptions at the firm have since fallen to, and been maintained at, around 7%, versus the industry average of 21% to 22%, he said.

The wreckage of failed CRM projects caused a huge mind shift, with companies now utilizing provider-hosted CRM systems rather than buying CRM software, said Greg Gianforte, CEO of CRM provider RightNow Technologies of Bozeman, Mont. "Hosting lowers the cost to customers by 80%, and hosted systems can deploy five times faster because customers don't have to worry about all of the plumbing and the plumbers," he said.

A 2004 Retrospective

For mutual fund manufacturers, 2004 was the year in which CRM salesforce automation began incorporating front-office capabilities, such as Morningstar fund ratings and literature orders, noted Rakesh Shetty, director at Siebel Systems, headquartered in San Mateo, Calif. Moreover, instead of just managing relationships with distributors, CRM systems can now identify top-ticket producers almost immediately, so that wholesalers can now quickly call them to say "thanks," he noted. The focus has migrated to determining how to more proactively leverage these capabilities.

Last year was also the year that compliance became the industry's biggest hot button. "CRM and compliance were often seen as separate issues," said Michael Pessetti, VP with SalesPage Technologies in Kalamazoo, Mich. Now the two have wed. In 2004 SalesPage added its "trade analyzer" function to its CRM product. It uses a rules-based engine to monitor for inappropriate transactions, he explained.

AccessData of Pittsburgh, whose SalesVision technology interfaces with CRM systems, has seen huge interest in its data aggregation functionality. The system intakes feeds from multiple sources and drills down to sub-accounting levels and through omnibus accounts to identify questionable trading, said Frank Polefrone, a company SVP. Providing such transparency of omnibus account trading patterns, had been a roadblock for CRM providers. "Firms are sorting through the issues of regulatory compliance to make sure they have tools in place to monitor the activities of accounts and distributors," he added.

For the year ahead, the focus is shifting to "making sure a firm is marketing the right products to the right client and to making sure the right incentive is in place for their marketing programs, all while staying in sync with regulatory requirements," Siebel's Shetty added. In addition, asset management firms are looking to bring institutional clients, including the 401(k) plan consultant network, as well as their private client/wealth management/trust customers into the CRM technology loop.

Banks and insurance companies that have successfully utilized CRM in their core businesses are now looking at ways to include asset management and retirement plan servicing, Shetty explained.

Moreover, mobile communication solutions, such as multi-function Blackberry handheld systems, are quickly making laptop-lugging a thing of the past, SalesPage's Pessetti said. While not every company has forsaken the laptop, the trend toward utilizing lighter devices is obvious, he said.

But challenges remain, including the proliferation of M&A activity, which has increased competition, and meant massive data integration projects for CRM providers who win the battle to supply the resulting merged company, Pessetti added.