Fintech Corner: How the CRM Is the First Step to RIA Digital Asset Adoption


By: Gerelyn Terzo 

RIAs oversee more than $97 trillion in AUM, and while that is an eye-popping amount, it could grow even larger if advisors started to attract more of the digital asset pie. Advisors are watching and waiting for the crypto floodgates to open, and they might be surprised to learn that the key to winning their share of digital assets may just be the customer relationship management system, or CRM.  

Institutional investors began to dip their toes into the digital asset waters in 2020.  This year that demand has only strengthened as the bitcoin price has touched on a fresh all-time high. Now financial advisors and RIAs are beginning to come off the sidelines on crypto, too. And while the enthusiasm among RIAs for an emerging asset class such as digital assets is inspiring, is it enough to move the needle from interest to actual adoption? 

If history is any teacher, then RIAs are going to have to first become comfortable with an asset class where one of the main features is volatility. Price swings are inherent with the bitcoin price, and bitcoin often drives the direction of the broader cryptocurrency market. As a result, comfort level is key. Part of that comfort involves the tools and resources that are available to RIAs to harness and navigate digital assets for clients. 

Not only is knowledge about how to harness the full effect of these tools vital, but without them, financial advisors are at a disadvantage. Considering that CRMs are at the heart of the advisor business, the customer relationship management system should also be at the forefront when it comes to digital assets. In fact, it may just be the key to open the spigots to mass adoption of digital assets for RIAs. 

Adrian Johnstone, chief commercial officer and co-founder of Practifi, a CRM solution for high-performing RIAs and wealth institutions, joined Dara Albright on a recent episode of DWealth Muse. They discussed how a CRM comes into play for financial advisors when it comes to digital assets. 

Tech Stack Talk 

When it comes to the tech stack, Johnstone describes advisors as falling into one of two camps: those who build it around the CRM and those who build it around the portfolio system itself. Those who fall in the latter camp are at risk of putting themselves at a disadvantage, considering that doing so wraps the business around the assets instead of the client relationship, Johnstone explained. Meanwhile, considering the complex nature of client needs that extend beyond assets, it would benefit advisors to be anchored to the client relationship. 

The CRM underpins the financial business, which, as Johnstone points out, is a people business. It is the advisor’s job to understand what makes those people tick, from their general interests to their investment interests to their current holdings, and then there must be context around all of it, which is the client themselves. That’s why Practifi puts a great deal of effort into making it easy for advisors to aggregate data to the client record from different tools across custodial, portfolio, risk and advice.

Centralizing data to the client record is how you deliver the experience that your client is expecting, Johnstone explained, otherwise, the client is likely to be left disappointed. While assets come and go, the one thing that advisors can count on is the client. That is why it is crucial to build systems around the client. Practifi already engages with institution-level firms and companies that interact with high-net-worth individuals and their assets, which go beyond just listed assets. 

“It’s not good enough to have information on just traditional assets such as stocks and bonds. You’ve got to be able to deal with alternative assets, like real estate, jets and boats, and as we’re touching on here, evolving asset classes like cryptocurrencies. You need to see across the whole landscape of the client,” explained Johnstone. 

Oftentimes, this could involve trusts, companies, foundations and other investment vehicles. Without the capability to combine all the data into a single focal point, the advisor will likely be left scrambling, let alone be able to add value, when that client calls about one of those positions. 

CRM vs. Rolodex 

One of the conundrums of emerging tech is a propensity among users to apply old habits to the new device or system. For instance, when TV first came out, it was considered “radio with pictures.” People have a hard time breaking out of old mindsets, and financial services is no different.  

For many RIAs, the CRM serves the purpose of what the Rolodex used to do on the desk. Now it’s just a digital version for the same kind of information, such as an email address or a phone number. But the CRM has so much more to offer, as evidenced by contemporary technologies such as Salesforce’s solution. Meanwhile, at Practifi, they take it a step further so that it’s the entire business management platform, Johnstone explained. 

“It’s not just about managing the relationship directly with the client, but it’s all of the relationships in a firm. It’s all of the tasks that need to occur, whether they are directly related to a client or indirectly related to a client, either about [the] growth of the firm or anything else,” he said. 

Basically, CRMs should support the entire business, and the tools therein should be put to much wider use, whether they’re designed for marketing, portfolio management, financial planning, etc. Practifi is also seeing evidence of these systems extending to identity management environments, retirement platforms, insurance information and beyond. The technologies present in CRMs also extend to asset valuation platforms, real estate and unlisted assets, all of which lend themselves to digital assets too.

“And every piece of information you can get, whether that’s compliance-oriented, or whether it’s marketing or growth or sales, all of those different sources can pull into the one core,” said Johnstone. 

This approach is much different from legacy systems where every department is siloed and dependent on their own systems. In fact, this old way of thinking is still a major problem that exists today, but not within Practifi. 

“And so certainly in Practifi we really went about making sure that all of the functional areas of a firm have a direct lens into that same core data. That way you get one place to report, one place to manage the business, one place for management to look at metrics of what’s going on,” said Johnstone. 

In Part 2 of this series with Practifi’s Adrian Johnstone, we will dive deeper into the role of compliance and more as it relates to CRMs, the blockchain and cryptocurrencies.