Redtail upends subscription model as inflation, competition take hold

Redtail Technology, an industry leader in client relationship management (CRM) software, is changing the way it charges customers this week.

The company announced early last month that it will be switching from a flat fee of $99 a month for up to 15 people to a per-user fee starting at $45 a month, placing its pricing structure more in line with competitors.

Redtail, acquired last year by Orion Advisor Technology, ranks as the most popular CRM program among advisors, according to a recent Advisor Software Survey conducted by T3 and Inside Information. 

"Redtail has worked incredibly well for me and is a super value at $50-$60/month for my office all those years," said David Bize, a financial advisor at First Allied in Oklahoma City who switched to Redtail 13 years ago. "An increase is not surprising, especially since Orion wants to recoup its investment, but with any price increase, there will be competitors."

In 2023, the platform held half of the total CRM market share, followed by Wealthbox with 15%. Still, Redtail has lost 21% of its market share since its high of 62% in 2020. In that same time, Wealthbox's share of the CRM market more than doubled. 

"The introduction of Redtail Plans reflects our commitment to continued investment in the tech experience and the need to streamline the pricing structure to account for additional features and functionality," Orion President Brian McLaughlin said in a statement. "Our pricing remains highly competitive, and the shift to a per-user model benefits customers while aligning with the industry standard. "

Joel Bruckenstein, President of T3 Technology and author of the firm's software survey report, said the subscription switch is unsurprising given the current inflationary environment. 

"If they want to continue to invest in the product, a price increase is necessary," he said.

Last month, Orion announced that it is integrating its client portal with the Redtail CRM. According to the Redtail Plan page, premium CRM subscribers can also access Redtail Imaging, the company's electronic document storage solution, and Redtail Speak, its communication tool for advisors and clients.

Still, some advisors say that Redtail has not provided enough feature updates to justify the subscription change. 

"There has not been a significant feature update to Redtail CRM in years," a user in the r/CFP subreddit said on news of the subscription change. "In 2022, they only had two minor tweaks, one of which was an Orion integration fix."

Noah Damsky, principal of Marina Wealth Advisors in Los Angeles, said Redtail's CRM software lacks the reliability and customizability that other competitors offer, but thinks the subscription switch makes good business sense.

"The business was ripe for M&A as the industry uses a per-headcount model and Redtail probably has a significant number of low per-headcount costs that will be increased right away," Damsky said. "After Orion's purchase, they probably realize they have a sticky Redtail user base and low per-headcount revenue, so they're changing it to what's in line with the industry, which will make them more money."

T3 found that 13% of Redtail users surveyed are considering a switch to Wealthbox or Salesforce Financial Services Cloud, two of its biggest competitors. By contrast, 8% of Wealthbox users are considering a move to Redtail or Salesforce.

While Wealthbox's subscription model already operates on a per-user basis, partnerships through organizations like the XY Planning Network offer some advisors significant discounts.

"Redtail wasn't appealing to me at the old pricing when I could buy Wealthbox discounted for $12/month," said Ron Strobel, an XYPN member and founder of Retire Sensibly in Meridian, Idaho.

It is unclear exactly how the pricing change will affect advisory firms, but Bruckenstein said he does not foresee smaller or larger firms being significantly impacted by the switch.