One hundred fifty Charles Schwab advisors must find a new client relationship manager (CRM) by July 31.
That’s when the San Francisco-based custodian plans to pull the plug on its customized version of the Salesforce CRM that comes built in with its pre-packaged suite of tools for advisors. Schwab has already ceased new sales of the bundled software. Instead, all Schwab advisors will now choose from a number of CRM providers, including Salesforce, when building out their own workstations.
Brian Shenson, Schwab’s vice president of advisory technology solutions, said that although Schwab put a lot of energy and investment into the integration of Salesforce, the motivation to unbundle it was two-fold.
“The marketplace presents many capable and well-adopted solutions for advisors looking for workstations,” Shenson said. Equally important, he said, “we wanted to re-invest ... the talent and energy that was focused on bundled technology and put all of that attention on open-architecture.”
Schwab’s advisor platform, OpenView Gateway, works with a large number of technology companies, including CRM providers, and lets advisors stitch together their own workflows across different vendors based on the demands of their own business. Until now, advisors could also opt for OpenView Integrated Portfolio, a software bundle that included a proprietary version of the Salesforce software made for Schwab.
By going to the unbundled, open architecture model, Schwab removes its obligation to continue updating and providing support for its own software and gives advisors still enjoying other proprietary technology the option to switch to a CRM designed more specifically for wealth management, such as Junxure, Salentica and, later this year, Redtail. Advisors can still use Salesforce on OpenView Gateway, but the company will now have to compete on equal footing with other vendors for every Schwab advisor.
When Salesforce reported earnings on Feb. 24, the cloud computing giant, also based in San Francisco, touted its relationship with Schwab. Keith Block, the vice chairman, president and COO of Salesforce, said, “Now Charles Schwab, another great brand, is an exciting new relationship in the quarter. They will be using Salesforce for their entire CRM platform.”
A Salesforce spokesperson said, “Schwab continues to be a great partner of Salesforce.”
Shenson said any idea that the relationship between the companies has changed is a myth, and Schwab remains committed to supporting Salesforce integration with OpenView Gateway, used by some 400 advisors. He also noted that as the incumbent software, Salesforce is at an advantage to retain advisors.
“If a client wants to stay with the solutions in the bundle, we have a great transition path for them,” Shenson said.
The move by Schwab also comes on the heels of Salesforce’s introduction of Financial Services Cloud, a CRM designed for financial advisors and the first product from Salesforce designed for a specific industry. The company plans to sell the software directly to advisors. Financial Services Cloud cannot yet integrate with Schwab’s OpenView platform.
Timothy Welsh, the president of wealth management consulting firm Nexus Strategy, said the process of finding a new CRM will be a challenge for the advisors affected by the decision. Even moving to Saleforce’s unbundled version on the OpenView Gateway would require learning a new system with different functionality than the integrated version; for those advisors that want a different option, there isn’t a lot of time to make a decision. Vetting vendors, purchasing the software, implementing it and learning how to use it within their own suite of tools will take more time than most independent advisors have.
“[Depending] on how much data you have in there, it could take up to a year,” Welsh said. Welsh is working with some advisors making the transition and fears the July 31 deadline to convert CRMs is an impossible goal. “That is not enough lead time to force a migration.”
“If you’re running a business as an advisor, you don’t spend (money) on an extra person who (changes) CRMs all day long… They have to invest a lot in their client information and data, and (client) trust,” Welsh continued. “How could this be positive news to anybody?”
It’s good news for the smaller CRM providers that now have a chance to demonstrate their value to new accounts. Redtail CEO Brian McLaughlin says the announcement proves that turnkey solutions are not the best fit for the independent advisor industry.
“We definitely are well experienced in how to handle conversions from Salesforce,” McLaughlin said, pointing out that Redtail has an entire team dedicated to training advisors and bringing them onto their platform. He said advisors will find Redtail has more possibilities to integrate with a greater variety of other advisor software, and tailors data more to an advisor’s needs. The company is currently in a pilot program with Schwab’s OpenView Gateway and expects to go public as an option on the platform this year.
“We welcome [advisors] with open arms,” McLaughlin said.
Shenson acknowledged that changing CRMs is no insignificant change for advisors and that Schwab will help with data migration to minimize the disruption. Advisors also have access to discount rates with integrated tech companies.
He added that though Schwab will continue to focus on open architecture, advisors wouldn’t see a disruption in their tools for client reporting, billing or portfolio management.
“I think we’ve always been open architecture, since day one,” Shenson said. “We also saw, at the time, an opportunity to deliver a pre-packaged solution." Now, he said, the firm recognizes there is not as much value in a pre-packaged solution.
Schwab isn’t alone in this realization. TD’s Veo platform integrates with more than 100 third-party vendors, and Fidelity is using its eMoney Advisor purchase as a gateway to integration in its Total Advisor Platform program.
It’s a move that makes sense for these firms, allowing them to focus on the custodial business instead of the software development and retail business.
