First, congratulations, because a CRM can potentially be the ideal operating platform for family office operations. Although CRM systems, with their focus on sales, are not traditionally a part of the family office technology stack, the right CRM can drive real benefits in efficiency, family member experience, and reporting by helping to organize, automate, and communicate.

CRM systems are designed to organize large amounts of related information in a digital format. This should be the first priority for a family office CRM; centralizing information on family members, outside professionals, legal entities, investments, assets, bill payments, documents, deal opportunities, and more in one electronic container.

Once you have assembled this digital information foundation within a CRM, it can then be used to automate common processes in workflows that share information electronically rather than passing around spreadsheets or PDFs.

Finally, a byproduct of consolidated digital information and processes is better communication, both internally and with family members.

Your decision, however, is not without risk. The wrong CRM system can end up being just a very expensive electronic rolodex—barely used and not a contributor to your operating efficiency or the family member experience.

What defines the right CRM for a family office?
The following critical points will assure your CRM will be used and add value:

• Make sure it is built specifically for UNHW management, not for financial advisors or brokers. Three aspects of its architecture are critical in this regard. First, it has to be built from the ground up to handle multi-generational, multi-family relationships. Second, it has to be designed with legal entity management at the forefront. It needs to be able to handle trust, LLCs, foundations, endowments, and the like as more than just add-on features. Third, it needs to handle the typical UHNW portfolio; in addition to liquid portfolios it needs to be able to track and manage alternative assets such as hedge or private equity funds along with real property such as real estate, art, planes, collectibles, oil and mineral interests, etc
• Enable family office-specific workflows, not just recording contact information and activity. You can drive real efficiency by using a CRM to automate entity onboarding, tracking tax return prep, managing payments or tasks related to real estate or other real property, tracking charitable contributions or gifts, reviewing and approving distributions or other bill payments and disbursements, producing crummey letters, and other repetitive tasks. Note that most of these processes are not common to the needs of retail financial advisors, so are not common features of wealth management CRMs.
• Integrate document management. While your CRM doesn’t have to provide document management itself, you should be able to access all your documents from within the CRM—and make them available on a secured and permissioned basis to family members and outside professionals.
• Integrate financial information. Whether coming from a portfolio management system or direct from custodians or banks, daily balances, positions, and transactions for accounts and funds should be available within your CRM to drive efficiency and reporting.
• Allow complex ownership profiles and minority interests. You should be able to establish and access ownership interests in all your entities, assets, and funds, no matter how complex the hierarchical ownership structure might be.
• Enable reporting and interaction with your family members. Once all the information above is available in your CRM in electronic form, a presentation layer attached to the CRM makes sense, including the ability for family members to make interactive requests or edits. The presentation aspect can be done directly from the CRM or through integration with third-party portal providers.
• Provide extensibility to additional third-party apps. There will inevitably be additional functionality you want to add; the optimal CRM will have a well-developed set of partners or app store with connected apps.
• Easy and cost-effective customization, configuration, and support. You should not be stuck doing business and using information in an inflexible format provided by the CRM vendor or consultant. The system should be able to accommodate your unique needs and individualized aspects of otherwise common processes.

Hitting as many of the points above as possible will ensure that your CRM is a highly productive tool for your family office. Meanwhile, there are some bells and whistles that you should avoid trying to cram into your CRM, including accounting, portfolio management, financial planning, risk analytics, or rebalancing. There is specialized software available for these functions that perform much better than any CRM.

Don’t forget to consider implementation.
The next important point in your family office CRM evaluation is to be realistic in estimating implementation, configuration, support, and admin time and costs. If you are starting from scratch with Salesforce or Microsoft Dynamics, consultants to build out the system initially and create financial integrations are expensive. As you begin using it, you are going to want to make changes or create new processes or reports based on your experience. It would not be cost effective to have full-time internal administrators to do this and provide support, so you are back to expensive consultants. If you are using a predesigned CRM, make sure you understand how this type of support and ongoing customization is provided and charged for; some CRM providers’ business models rely on substantial hourly fees for these services.

These implementation and ongoing support fees can be more than your subscription or licensing fees for the actual CRM software and can vary widely among providers, so it is important to include realistic estimates in your CRM cost comparisons—do not compare just based on annual subscription fees and initial implementation estimates.

Build vs. Buy?
It is also important to consider the time required to build and implement an effective CRM system. If you are considering building your own with a consultant’s help, there are very few consultants that have deep domain expertise with family offices. You will have to spend time educating them on your processes and data, while they teach you about the CRM capabilities. They will then have to build out all those data objects and processes from scratch. Then, they will have to work out the bugs with you. That all takes time. Not to mention identifying the sources of data for the system and performing data hygiene before loading.

That’s a lot to consider. But it is a high-stakes decision that, done correctly, can provide substantial benefits—but done poorly, will not be used and an expensive mistake.

Given that, what are the realistic options? You could get Salesforce or Dynamics and build it out yourself. Taking this route, full consideration should be given not only to the initial implementation costs, but the ongoing support and customization costs and the time that will be required to bring consultants up to speed on family office data and operations.

Alternatively, you could choose a wealth manager CRM. If you go this route, be aware that they are built primarily for financial advisors and features should be evaluated relative to the bullet points above. If you like the feature set, remember to consider the options available for customization, configuration, and ongoing support and the related costs.

There are point solutions now available, purpose built to blend the best features of CRMs with the complex and unique needs of family offices, trust companies, and highend RIAs. Before choosing the popular name-brands, carefully consider the impact of tailoring a one-size-fits-all solution to unique needs of your business.

A little planning here will pay dividends for years to come.

This article is originally from our US Wealth Technology Landscape Report 2021. Access the full report here.