DMNews readers are familiar with customer relationship management (CRM) software and the various reasons for its use in direct marketing. David Ciccone, SVP at Merrill Lynch, has a maxim that succinctly describes the reason direct marketing and financial industry professionals need CRM software: “It’s simple: Know your client and what you told them.” This applies not just to database managers, of course, but to anyone with clients.
In our litigious age, knowing your clients and what you’ve told them is not simply a matter of business etiquette. Let’s take the liberty of lightly amending Mr. Ciccone’s quote: “Know your client and what you told them because no one, but no one, wants to face arbitration.”
Without the right systems in place, a phone call that hasn’t been logged or a conversation that hasn’t been documented could have serious legal consequences. In 2006, there were more than 3,000 arbitration cases related to breach of fiduciary duty in the United States alone, and as markets turn, these numbers are rising. Nearly 73% of these cases concerned issues such as unauthorized trading, failure to supervise, negligence, omission of fact, breach of fiduciary duty and unsuitability. Indeed, speaking to this growing trend and the requisite demand for legal services, many law firms dedicated solely to claims against stockbrokers have sprouted up.
That’s where CRM software comes into play. Arbitration issues are one of the main reasons to consider using CRM software, particularly for members of the financial services community. CRM software users who are concerned about potential liability would do well to look for software packages that include the following: an audit system, field-level security and missing information notification.
An audit (compliance) system allows users to track any and all field changes to each contact record by the user. It then monitors any field changes that occur in the database and records them in a separate database file.
Using field-level security features, administrators can restrict access by the user and his/her team and grant read-only access, or prevent access, to certain fields. As companies grow, this feature allows organizations to simply add users to teams and update access permission.
With a feature like missing information notification, you can easily track and update any missing information you have for each contact. This feature pulls relevant blank fields from the contact record for a quick view of fields that require data. The user can then fill in these fields and the contact record is automatically updated with this new information.
Think of good CRM software as something akin to a personal court stenographer. Essentially, the more complete and accurate records you have for your client, the stronger your case. And the more comprehensive and intuitive your CRM software is, the less likelihood you’ll have of facing arbitration in the first place.