FINRA Compliant CRM For Financial Advisors

Client relationships rank among a financial advisor’s greatest assets, along with curiosity, trustworthiness, a passion for finance, and resourcefulness. To earn and maintain trust, advisors need to be responsive, proactive, and engaged. Investing in a modern FINRA compliant CRM application is crucial for wealth managers looking to grow their practice and their client roster.

The digital age has generated many opportunities for investment consultants. Technology provides advantages like streamlining information storage, collaboration, and communication. Yet success requires client focus and commitment, which leaves little time to set up and optimize technology like CRM.

Need proof?

The Financial Advisor’s Association of Canada (ADVOCIS) is a licensing, advocacy, and regulatory organization with over 17,000 voluntary members across its forty Canadian chapters. In early 2021, they surveyed their members on what daily activities they felt were inadequately addressed by technology in their office.

The top technology gaps respondents mentioned were:

In-force business management of their clients’ money matters – 52%
New accounts and client onboarding – 51%
CRM and client notes – 49%
Reporting and client presentations – 45%
Client engagement – 40%

Can you guess the most significant obstacle that advisors cited as the obstacle which was preventing them from implementing available solutions? “Lack of awareness of solutions in the marketplace,” reported 67% of those surveyed. The other obstacles were the time required to learn new software (59%), lack of technical support (38%), and resources (37%).

Proven Solutions and Consulting for Financial and Wealth Management Advisors

Many in the technology consulting and support industry might find it surprising that so many financial advisors wouldn’t be aware of the solutions to address the customer-centric activities listed above. Yet if you consider the depth of research, client interaction volume, regulatory scrutiny, and information gathering financial advisors have to manage, it isn’t that unthinkable.

Modern cloud-based FINRA compliant CRM applications enable experts across the financial services industry to update their client profiles, keep secure records about their financial goals and holdings, and facilitate client onboarding. In addition, they are less complex than many on-premises solutions which financial advisors may have used in their “past lives” as institutional advisors with big banks.

These CRMs can automate processes like never before, such as triggering and sending compliance reminders and disclosure statements to clients, financial institutions, and the appropriate oversight agency. Automation can enable wealth managers and investment advisors to stay focused on managing their clients while keeping up with financial markets.

Digital transformation in financial services has evolved so that cloud-based CRM applications can automate workflows such as routing important documents for digital signatures. In addition, software upgrades, feature enhancements, and application optimization for speed and availability are often automated or managed by the application vendors.

Sensitive Client Data Requires Strict Cyber-Hygiene

In 2020, Advocis’ Technology Taskforce released a Data Security report, finding that the rapid pace of regulatory compliance requirements and technology innovation is a pervasive challenge.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) oversees the financial advice and planning industry and banks, insurance companies, and money services businesses. In the United States, the Financial Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC) provide similar oversight to financial advisors and institutions.

Common concerns about data security and regulatory compliance included:

Complex regulatory and requirements from FINTRAC, FINRA, and the SEC for Anti-Money Laundering efforts and Know Your Customer (KYC) mandates
Payment card security requirements
PIPEDA data privacy
Phishing, malware, and ransomware attack vectors
Endpoint devices and SaaS-based application security measures like Multi-Factor Authentication

The millions of clients in Canada and the United States who entrust their financial advisors for guidance about their financial holdings have high expectations. They expect their advisor to understand the safeguards which keep their information secure. This means advisors need to implement and use secure, highly-available FINRA compliant CRM applications which meet the strict regulatory requirements governing the financial services industry.

Advances in Cloud and SaaS Data Security

Less than ten years ago, many financial services companies opposed migrating their data due to the pervasive threats from cyber attacks on the sensitive, valuable data they were (and remain) responsible for managing. Yet SaaS and cloud vendors like Salesforce, SugarCRM, and Zendesk quickly and significantly increased their security posture, practices, and safeguards. They enable financial services advisors to configure their applications to mirror how they work in the physical world without compromising security.

The popularity of FINRA compliant CRM applications in the financial services industry compelled CRM platform vendors like those listed above to implement the controls, features, and measures required to meet regulatory standards. Additional layers of authentication support fortify UserIDs and passwords, such as authentication with mobile applications like Microsoft and Google Authenticator or codes sent via instant messaging or email to the credentials holder.

Other data protection and encryption advances since the advent of cloud CRM applications include:

SSL certificates and other bank-level encryption standards at the browser level,
Multiple layers of encryption, intrusion prevention, malware protection, and data loss prevention in vendor data centers
Support of security measures like VPNs and user-based permissions
Comprehensive security and availability reporting and transparency

SaaS and cloud vendors increased their security safeguards to protect customer data, ensure their customers retain full data ownership rights, and can comply with regulatory standards from government entities like the SEC, FINTRAC, and FINRA.

Summary and Next Steps

As a financial, wealth, or investments manager or advisor, you likely contract with your clients on a monthly basis. Faye’s CRM success program, Axia offers CX & FINRA compliant CRM administration support, training, and guidance for your business. We constantly strive to ensure our clients can focus on their customers, and not preoccupy themselves with the day-to-day “care and feeding” of their CX & CRM platforms. Get in touch with one of our experts to learn more about Axia and how it can help your business!

Frequently Asked Questions

What is a FINRA compliant CRM?

A FINRA compliant CRM is a customer relationship management (CRM) system specifically designed to meet the Financial Industry Regulatory Authority’s (FINRA) strict regulations and compliance requirements. It helps financial advisors and firms maintain compliance by automating workflows, enforcing audit trails, and protecting sensitive client information with advanced encryption methods and secure data storage.

How does CRM regulatory compliance benefit financial advisors?

CRM regulatory compliance ensures that financial advisors follow industry regulations, including FINRA compliance requirements, protecting client data through data security measures like access controls, data encryption, and continuous improvement of data handling processes. This compliance also helps avoid non compliance penalties and streamlines business operations.

Why is data security important in a FINRA compliant CRM?

Data security protects customer data and sensitive client information from data breaches and unauthorized access. A FINRA compliant CRM uses secure storage, data backup, and advanced encryption methods to safeguard information, ensuring compliance with regulatory bodies and relevant regulations such as the General Data Protection Regulation and the California Consumer Privacy Act.

What regulatory bodies oversee CRM regulatory compliance in financial services?

The main regulatory bodies include FINRA (Financial Industry Regulatory Authority), the Securities and Exchange Commission (SEC), and other regulatory bodies in regions such as Canada’s FINTRAC. These organizations enforce compliance standards and compliance requirements for financial institutions, brokerage firms, and financial advisors.

How does a FINRA compliant CRM help maintain compliance with FINRA regulations?

By providing features such as workflow automation, compliance management, audit trails, and consent management, a FINRA compliant CRM helps firms stay ahead of evolving compliance requirements. It also facilitates integration capabilities with existing financial tools, improving operational efficiency while ensuring all data handling processes adhere to industry regulations.

Can a FINRA compliant CRM protect customer data during financial transactions?

Yes. A compliant CRM uses secure data storage and data encryption to protect customer information during financial transactions. This helps prevent data breaches and ensures secure storage of stored data and sensitive data throughout the client lifecycle.

What features should I look for in CRM systems to ensure security and compliance?

Key features include access control, user adoption support, audit trails, compliance tools, task management, and streamline processes like automating routine tasks. Look for CRMs offering seamless integration and data minimization to reduce risk and ensure consistency.

How do CRM solutions improve client relationships in the financial industry?

By centralizing client relationship management and contact management, these systems allow financial advisors to monitor client interactions and provide personalized service. This builds trust, enhances customer relationships, and supports compliance with data regulations.

By Luke Richmond, Director of Global Professional Services

Luke Richmond holds extensive experience in business analysis, consulting, change management, and project management across CRM and ERP implementations. With a proven track record supporting complex software initiatives, he combines his technical expertise with a people-first approach to deliver impactful results.