The Good, the Bad, and the Ugly of CRM for Financial & Insurance Advisors (And Should You Use One?)

Recently, I was listening in on one of our sales guys doing cold calls. When asked what Finaeo does, he would often try to explain how we are a digital assistant and sales coach – we help you better manage your day and build processes based on best practices. At Finaeo, we have worked hard at differentiating ourselves from traditional CRMs. Our vision is to be the platform that helps transform insurance & financial advisors into bionic advisors. We are to a CRM what a smart phone is to cell phones – yeah, you can still talk and text, but there’s a whole lot more.

However, over and over again, advisors have asked us how we differ from CRMs, and what value Finaeo has above and beyond the standard CRM. Now, we have a sales script, and know how to deal successfully with that question. But what I find fascinating is that when we ask people if they like their CRM, the majority give a pretty dispirited “meh.” It’s a tool, they think it may have value, but often they’re not too pleased with it and can’t prove it truly does. And to me, that’s worth dissecting. That is, I think there is definitely a good conversation worth having about the pros and cons of CRMs.

As such, this week, I’d like to discuss customer relationship management (CRM) systems. If you’re an insurance or financial advisor, you’ve undoubtedly come across some of the more common CRMs in the industry, such as Salesforce, Goldmine, ACT, Maximizer, or Redtail. These are your legacy CRMs – generally clunky and outdated, they still serve a purpose. I’ve broken this blog post up into three sections:

  1. The Good
  2. The Bad
  3. The Ugly

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The Good

So, let’s first turn our attention to the positive aspects of CRMs. There are three worth discussing:

  1. CRMs help you stay organized
  2. CRMs give you a visual way to track your pipeline
  3. CRMs offer a birds-eye view of the sales aspect of your business

Turning first to organization, CRMs allow you to organize data around clients and opportunities / deals. Properly using these systems can help you keep track of your clients, storing notes, documents, and product information. Around clients, this means you always have one spot to find pertinent notes and info about your client. If you keep this updated and well organized, you no longer have to fear the client who decides to drop into the office on ten minutes of notice. Nor do you have to worry about forgetting what products your client bought with you half a year ago, or her spouse’s name. 

Likewise, CRMs give you a visual way to track your pipeline and understand which opportunities currently exist. You’ll know how many deals you have in the prospecting stage, how many deals have had a needs analysis done, how many are in the final follow-up stage, and how many have closed. As simple as this may seem, it helps ensure that  you don’t leave deals hanging. As we discussed in a recent blog on ways to sabotage a client relationship, forgetting follow-ups is immensely damaging to a relationship. A visual representation of your deals can show you exactly where everything is and help remind you of what you need to do to close. 

Finally, CRMs offer a bird’s-eye view on the sales aspect of your business. They do this through analytics. A well-maintained CRM can give you a smorgasbord of information and insights around your sales process. For example, many CRMs are able to give you demographic information about which clients you’ve sold most reliably to. Aly, our CEO at Finaeo, told me a story of how it took him two years to find out what his best demographic was. For his first two years as an advisor, he was sure that his ideal demographic were men between 25 and 45. He felt like he spoke their language and got along well. However, when the bank he worked at finally released an analytics reports which broke down the profile of his best customers, he was shocked to discover it was women over 50! Had he known that, he would have marketed himself very differently and targeted this demographic primarily. Likewise, good CRMs can show you your conversion percentages between stages, letting you more predictably understand what a deal is a prospect is worth to you at each stage of the pipeline, and see where  you are losing people. Plus,  if you’re managing juniors, it lets you understand what their strengths and weaknesses are. One junior may be incredible at bringing people from prospects into a needs analysis meeting, but terrible at closing from there, while another may be amazing at closing from needs analysis, but awful at getting people to agree to meet in the first place. Even if they are generating the same amount of business, these two will need very different coaching strategies.

Overall then, there are some notable benefits to CRMs that should be thought over when deciding if it is the right choice for you. With that being said, let us turn towards the bad.

The Bad

Data Entry for CRMs is Time-Consuming

So, in the good section, I talked about the value of a CRM. However, the key here is that to achieve this value, you must keep your CRM up to date. And this is an unfortunately time-consuming, burdensome process. In one study that tracked how salespeople used their time, it was found that they wasted 2.2 hours per week on maintaining client data. That is, every week, they spent over two hours just updating records to their CRM. Now, this wasn’t directed at financial advisors, but, anecdotally, this doesn’t seem far off the mark for advisors using CRMs either. There are plenty of better ways I’d rather spend over two hours per week. And this is a sentiment that I believe most of you share – updating your CRM is a tedious process, one that often ends up accidentally being left until the end of the week. And there’s nothing like trying to remember details from Monday morning meetings to input into your notes come Friday afternoon!

This means that the uptake cost of using the software is large. Not only do you have to convince people to enter enough data to make the CRM useful, but you must convince them to do so in a timely manner. Just as problematically, it often takes months of data entry before a CRM starts showing its value. If you want to maintain good notes on a client for when you meet with him again in 3-6 months, you’re not seeing the value of your work for up to half a year! During this time, insurance and financial advisors are being asked to spend hours per week inputting data and incorporating it into their behavioral processes. This is a tricky proposition. As such, there is often a serious paucity of intrinsic motivation for front-line advisors to actually use CRMs. The time-sink is just too much.

CRMs are Built for Management, Not the Frontline

This brings us to our second issue with CRMs – the lack of quick returns creates strong friction between management and the front-line employees. If you have a junior, I don’t have to tell you how valuable understanding his or her pipeline and clients is. You may believe that it will help you grow your business, but if your junior doesn’t extract value from using it, good luck getting her to use it properly.

And this is common across the board. I recall a conversation I had with a junior at a large firm around the subject of CRMs. He told me that management at his firm desperately was trying to get advisors, such as himself, to fill in the appropriate data. They had paid hundreds of thousands of dollars to integrate a CRM platform into their process, but the hitch was that none of the juniors were filling it out appropriately. And without data, the system was useless. At first, management tried to mandate usage, but this didn’t work. Advisors would begrudgingly fill out the bare minimum needed right before the deadline – the data being provided was garbage at best. Next, management attempted an incentivization scheme. They created vacation rewards for the advisors who were updating their CRMs regularly and with useful data. This worked for a short period, but it was not a long-term solution. Ultimately, the junior advisor I talked to told me that he saw the CRM as a time-sink. A free trip was nice, but the hours he spent updating it could be better spent on building his book and earning more money down the line. He honestly did not see the value in using a CRM and believed it was just another headache pushed upon him from on up high. As such, he was updating it as per the mandate, but putting in the minimal amount of information and effort possible to do so.

CRMs Are Complex and Not Vertical Specific

Tying into the lack of value for front-line professionals in financial services is that CRMs are simply not vertical specific. Almost every CRM on the market is built around a more general sales processes. This means that some very basic process-based nuances are lost. For example, if you are selling insurance, you probably want a place to store information about the product and the premium. But if you use an off-the-shelf CRM, you’re unlikely to be able to do so in a simplistic fashion. Likewise, setting a renewal reminder is incredibly important for a group benefits advisor, but of significantly less value to a salesperson selling enterprise SaaS software. So those industry-specific value-adds that could convert you to an ardent CRM believer are simply missing. 

Some larger firms get around this by hiring customization specialists, but this is an incredibly pricey proposition. Properly customizing software to be more vertical specific can cost in the tens to hundreds of thousands of dollars. If you’re a small or mid-sized firm, this is an incredibly expensive proposition. Plus, CRMs tend to be complex and difficult to use, and become more so with added customization. Repeatedly, advisors talked to me about the difficulty in training new juniors to use a CRM properly. This complexity is due to enormous feature creep with minimal thought for design. More customization tends to mean more data fields, and soon enough advisors are being asked to fill in two dozen different pieces of information for every meeting they have. In fact, a SalesLoft survey found 43% of salespeople used less than half the features of their CRMs, and 72% of them would trade in all this functionality for an easier-to-use CRM.

Without vertical specificity, then, adopting a CRM into your processes as a financial advisor becomes both expensive and complicated. And you will absolutely lose your mind after you spend a small fortune on integration and watch your front-line staff still refuse to use it!

CRMs Are Not Built for Mobile

A final problem with CRMs today is that they simply are not built for mobile. Now, that’s not to say they don’t have a mobile offering. Most of them do. Unfortunately, they tend to be poorly designed, ugly, and offer a terrible user experience. This is not surprising – the vast majority of popular CRMs were developed well before smart phone technology was a thing. And when mobile got popular, they tried to port over a non-mobile experience onto a mobile phone – the clunkiness speaks for itself.

Now, this becomes excessively problematic when you realize that the industry is shifting. If you’re in insurance, you’re likely already used to going to a prospect’s house, office, or favorite coffeeshop. But even financial planners are starting to realize that the days of clients coming to you are fast coming to an end. Instead, you’re going to need to adopt a much more mobile approach. And this means that if you want to use a CRM, it needs to be as mobile as you are. Financial advisors can no longer be chained to their desks by back-office software.

The Ugly: Someone Forgot the “Customer” in CRM

Finally, let’s turn towards the UGLY of CRMs. For financial and insurance advisors, the ugliest part of using a CRM is that CRMs are not about building long-lasting relationships. When building customer relationship management tools, companies seem to have forgotten the customer in it. Fundamentally, CRMs are about closing the deal, not building strong relationships. This creates two fundamental problems:

  1. CRMs are not built with client transparency in mind
  2. CRMs are not designed to deal with the client after the close

Turning to client transparency first, we are entering a world where transparency has become more and more important. I’ve spoken at length about how people nowadays value transparency in and of itself from their service providers. But this memo has seemingly been lost on CRMs. While these systems help you store information about your clients and opportunities, they at no point help you provide more openness with your clients. After all, if it’s about the sale and not nurturing the relationship, why should you worry about transparency with your soon-to-be clients? You shouldn’t! But without transparency, you are not engaging with the client in as many ways as you should be. A transparent system allows for a more reciprocal relationship. On your end, it means providing the client with easily accessible information about her policies and investments. It means ensuring that your client always has a direct line of access to you, can ask questions easily, and can be part of the collaborative process together with you. It also means that your client always knows what you’re doing for her, and what those services cost. On the client’s end, it means he or she is more likely to offer you valuable personal information. The client will be more open with you, as you will have built your relationship on a foundation of trust. 

Secondly, CRMs are predicated around selling and, therefore, don’t focus on client success after the deal has closed. That is, CRMs tend not to worry about what happens to the client or relationship after the product is sold. It is only worried about the sales pipeline. But as a financial or insurance advisor, your income stream is often built around renewals, AUM, and upselling opportunities. All of these are based around maintaining strong relationships after the first product has been sold. A system that helps you get to yes, but doesn’t help you minimize churn, is not a worthwhile system. At best, it’s useless after the close. At worst, it’ll misalign your priorities so you stop focusing on your retention, seduced instead by all the opportunities in the pipeline you should close. A proper system for financial advisors, be they wealth managers, insurance advisors, financial planners, or some permutation, would worry about customer success at least as much as it worried about the initial opportunity. Failing to do so is catastrophic for your churn and will cost you a fortune in the long run (check out the spreadsheet linked in this blog to see what churn will do to your margins)!

Overall then, the ugly of CRMs is that they misalign you on where the true value with your clients exists.


Challenge for financial professionalsIf you are using a CRM, think about why. What is the value you get from the system? Do you use it the way it’s supposed to be used, or have you created your own shortcuts, tricks, and proprietary use cases to help keep things aligned? If you don’t use a CRM, what are you missing? Do you have a different way to stay organized and prepared? What are your tactics and would getting a CRM help you increase your productivity? Let me know!