Fintech Corner: How CRMs Play a Vital Role in RIA Compliance


By: Gerelyn Terzo 

Practifi chief commercial officer and co-founder Adrian Johnstone joined Dara Albright on a recent episode of DWealth Muse to discuss the role that CRMs play in the adoption of digital assets. In Part Two of that series, we will explore the role of compliance as it relates to CRMs, blockchain technology and cryptocurrencies. 

In Part One, we discussed the phenomenon of the Rolodex and how many advisory firms make the mistake of treating the CRM in the same way. On the one hand, compliance teams need the information that the CRM has to offer, but on the other, a dated CRM system fails to meet their standards. The same holds true for operations, where while the CRM serves as a workflow system and offers some tools for document management, it fails to provide any context around the client, which leaves the advisor at a disadvantage. 

Rather than fall into this trap, Practifi has reimagined the CRM to provide the functional areas of a firm a window into the relevant data. As Johnstone explained, these systems are not only telling you what happened, but they are also providing analysis and even starting to predict what’s coming next. Given the pace at which securities regulations are changing, this streamlined approach becomes especially valuable for compliance and sales teams.  

Friendly Regulators

Johnstone pointed to the rise of artificial intelligence and augmented intelligence, which creates new value on top of showing you the data that you’ve already seen. This is especially useful when it comes to evolving asset classes, and you must understand a client’s exposures from a regulatory lens, for example. 

“The systems really need to be surfacing that information up to the user rather than the old way of having to extract that data out into some type of business intelligence or analytics platform and try and dig through it. We need systems to augment the experience of using them,” explained Johnstone. 

One such emerging asset class is the blockchain and cryptocurrencies. And the rules for the industry are still being written. 

“The ink is not even close to dry,” said Johnstone. 

As the industry continues to evolve, RIAs will be watching and waiting to learn, first and foremost, if crypto becomes a mainstream asset class. If it does, they’ll need to know: 

  • Which rules will apply? 
  • How will those rules be enforced? 
  • What needs to be reported when clients have exposure to digital assets? 

At this point, these remain open questions. When the rules are clear, however, it could be too late to appease regulators. Instead, the time to have a system capable of holding that relevant data without a cumbersome integration process is now. That way the information is presented to the advisor and the burden of compliance is reduced. 

“How do we serve you the information that you need, so should you get a knock on the door from a friendly regulator, you’re in a position that you can just give them the answer,” explained Johnstone. 

The same thinking holds true for surprise audits so that advisory firms are aware not only of which clients are missing data to meet the AML requirements but also can identify which data, in particular, is missing. The right CRM takes the guesswork out of the equation.  

“In our case, it’s also then to be able to cure a workflow or task to get somebody who will get that information,” said Johnstone, adding that Practifi has slashed the document gathering time down by orders of magnitude for clients and continues to find ways to do more of the same.

Join us for our next installment of Fintech Corner with Practifi’s Adrian Johnstone, when we’ll explore cybersecurity for advisors and how COVID has impacted the relationship between advisors and tech.