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Switching RIA Custodians? 5 Key Traits to Evaluate and Ensure Your Expectations Match Reality

Dec 12, 2022 12:27:36 PM

Get the Custodial Assessment Guide to Help Streamline Your Search.

Evaluating prospective RIA custodians can be tricky. Whether an RIA is approaching a custodian merger, or is otherwise considering a change in providers, there are a ton of points to evaluate before signing on.

How can you be sure that the RIA custodian is offering everything your RIA needs? How can you be confident that their technology, service, and resources will support your growing firm?

It comes down to knowing what qualities to evaluate, and what questions to ask.

What to Evaluate

When evaluating prospective RIA custodians, there are a few key points to focus on before starting a relationship:

  1. Resources – does the provider offer the technology and service to support your business? Is the provider’s service tiered (with only the largest RIAs able to leverage high-touch support), or are they committed to offering every RIA white-glove, hands-on support?
  2. Team – does the provider’s team focus 100% on serving RIAs like you, or do they split their time serving different types of advisory firms? Does your prospective custodial provider pursue investors via a retail channel (a potential conflict of interest if the provider’s team competes with your RIA to attract clients)?
  3. Questions – when you have a question, will you know which department and support team member to contact for an answer? Further, will you get an answer in a timely manner that fully addresses your concerns?
  4. Technology – was the provider’s technology designed with the RIA model front-and-center? Does the technology continue to expand to address advisor feedback and evolving needs?
  5. Flexibility – does the provider have flexibility in their approach to pricing? Or will you be met with a cookie-cutter pricing rate sheet that may not fit the needs of your business?

Level-setting on these five points and making sure that any prospective provider will offer the service, technology, and support that your RIA needs can save you from making what could be a big mistake.

Don’t believe us? Hear Brian Bischoff’s story, an RIA that decided to sign on with a big-name custodian, only to find that they couldn’t meet the needs of his growing RIA.


Questions to Ask

In your meetings with prospective providers, they may give you the lip service that they have white-glove support, advanced technology, and an experienced team to fit your needs. But how can you cut through the noise, and see if that’s really the case?

We recommend taking these questions with you to any meetings with prospective providers:

By asking these questions, you can help ensure you’re getting the real answers from any prospective providers, not just hearing what they want you to hear.


RIA Custodian RFP – Opportunity to Dive in Deeper

Conversations with a provider’s team can shed a lot of light into the five key traits identified above but won’t be able to cover all of your questions.

For more in-depth items (like cybersecurity protocols, technology features, and available account types), RIAs should consider developing an RFP. An RIA custodian RFP is a great tool to dive into the nitty gritty – all the details of a provider’s offering that could impact how your RIA operates and serves clients.

The great news about RFPs – once you create one, it can go to any RIA custodians you’re considering. Even if you’re planning to make a move as part of a custodian merger, you should consider sharing your RFP with other providers. You may be surprised to find that a different RIA custodian could be a better fit for your business once you look beyond the surface.

Thinking of Making a Switch?

If you’re considering a change in RIA custodians, we should talk.

We can dive into your unique business, and if TradePMR’s RIA support and flexible technology could be the right fit for your firm.



Editor’s note: This post was originally published in April 2022 and has been subsequently updated.

Written by TradePMR