Tracking The Great Financial Advisor Migration—And Implications for Your CRM

Dan Miller, Key Accounts Sales Executive for Discovery, is always good enough to update us on the developments in his world of financial intermediaries databases—which the smartest investment management firms use to augment their “organically grown” customer relationship management (CRM) systems. We checked in with him Tuesday after yet another Investment News article about financial advisor migration.

All marketers, not just those responsible for digital work, need to focus on this industry phenomenon. (See our related post How Aggressive Are You Willing to Be to Help with Customer Data?)

Losing touch with part of your database is like mis-placing a building, an employee or any other corporate asset. It’s a risk all investment managers are dealing with now as financial advisors change firms at what Discovery expects to be an unprecedented pace.

The risk is minimized for Discovery clients because every firm and every advisor record in the Discovery database has a unique identifier, enabling records to be updated when an advisor moves from one firm to another.

“We’re seeing much more interest in the last six months to get CRMs cleaned up, and my sense is because Marketing is getting involved. In fact, we’ve been increasing our data stewardship services, looking at our clients’ data, matching up what they have, doing de-dupes. We’re seeing much more interest in that," said Miller.

Still, there is a potential for delay in updating the records. “If a rep moves today and we picked up the data from that part of the country yesterday it may take us a while to get all the way back around the circle,” acknowledged Miller. "But my team works hard—consider that we have 535,000 reps in the registered representative product—to make sure the information is accurate.”

Advisors in motion have consequences firmwide, as they can impact an investment manager’s channel support, territory assignments, wholesaler compensation.

All of this movement couldn’t come at a worse time for marketers. At many firms, Marketing is finally being given the ball and asked to demonstrate what can be done to engage and nurture advisor relationships online. Stale contact information will diminish the efficacy of these efforts and could threaten email reputations at organizations where bounce management is lacking.

(And don’t overlook the implications for all who trade in contact information. Are you purchasing email lists or buying print advertising to reach advisors? It stands to reason that you’ll be buying fewer good addresses.)

For a picture of the industry in motion, look at two reports Discovery publishes.

As shown, more than 3,100 reps changed broker-dealers in January 2009, with more than 40% of the movement from wirehouses.

According to Discovery, almost seven out of 10 advisors moved to other wirehouse firms.

Miller couldn’t hazard a guess on what part of these moves were the result of individual decisions and what part the result of business consolidations. “The dust is still settling,” he said, “we just don’t have a clear picture on that yet.”

The January data is generally in line with last year’s pace. “January is when bonuses are paid out so we wouldn’t expect a hike in the activity then,” said Miller. But he expects advisor moves in the first quarter of this year to "spike," exceeding the number of reps who moved in the first quarter of last year (17,000).

Since noting increased activity last year, Discovery has been publishing a Break Away Broker Report, which reports on the numbers of reps who have moved from a broker/dealer firm to a Registered Investment Adviser (RIA) in the last month.

Marketers will want to take particular interest in the growing RIA database. RIAs are typically the least well known channel and the most difficult for a wholesaling force to service.

And yet, last week, TD Ameritrade Institutional reported that 60% of surveyed (RIAs) reported an increase in clients, many of whom are coming from broker/dealers and wirehouses.

Your CRM, of course, is the best place to keep track of what your enterprise--not just Sales--knows and continues to learn about your customers and prospects. If you haven't focused on it lately, now would be the right time to call a meeting.