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Financial industry news and events for RIAs.

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An RIA Custodian Merger Nightmare: Could the Industry’s Future Mirror the Past?

Dec 28, 2022 10:07:26 AM

How TradePMR founder Robb Baldwin’s experience with an RIA custodian merger could help advisors prepare for 2023.

Thousands of RIAs across the country are preparing for an RIA custodian merger in 2023. While this moment may feel unprecedented, it is far from the first RIA custodian merger.

Advisors approaching this merger likely have a ton of questions: how long will it take? Will all historical client data be ported over? Will the merger lead to a drop in service levels?

RIA custodians may be hesitant to answer all these advisor questions. To understand what the future holds, it may help RIAs to look to the past.

Step Back to the 1990’s

The rise of the internet, the Chicago Bulls threepeat (twice), and Robb Baldwin undergoes an RIA custodian merger.

Robb was an RIA back in the 90s. Everything was going great until his RIA custodian was acquired by a larger provider.

Robb had a lot of questions ahead of the move, but was assured that the merger would be a non-event. He trusted the lip service from his provider, and it came back to bite him.

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Overnight, a number of Robb’s client accounts read zero. He quickly found that his newly merged provider wasn’t able to provide the support he needed and didn’t fully understand his business. It took him months to resolve the problems that arose during the merger, and even longer to rebuild client confidence in his RIA.

Eroding Client Confidence

At the core of an advisor-client relationship is a level of confidence. Confidence that the advisor will help the client to achieve their goals and will be there to support them every step of their financial journey.

What can disrupt that confidence? Uncertainty. That’s exactly what hit Robb’s business post-merger.

He was left with unanswered questions and limited information. That uncertainty can be a real burden for advisors and can erode the confidence the advisor has built with their clients.

When Robb underwent his RIA custodian merger, he assured his clients that it would be business-as-usual. And why wouldn’t he? That’s the message he was hearing from his provider.

When the post-merger chaos ensued, Robb was in a tricky situation. The hopes of a seamless move had fallen through, and he was stuck trying to pick up the pieces of his business, and his client relationships.

Moving with Purpose

Robb took the wait-and-see approach to his custodian’s merger back in the 90s, and it ultimately hurt his RIA.

In reflecting on the experience, Robb wishes he had taken the move into his own hands and done the due diligence to find the best provider to fit his firm’s needs.

While the wait-and-see approach to the merger could be the right fit for an advisor’s business, it can be hard to know for sure without the right due diligence.

RIAs heading towards a merger are approaching an inflection point for their businesses. These advisors should consider evaluating custodial alternatives – they may be surprised by what they learn.


Open to Seeing What’s Out There?

Changing custodial service providers is a big deal for an RIA. Making the move with confidence can not only help your team, but it can also help strengthen your client relationships.

If you’d be interested in learning if TradePMR could be the right fit for your firm, and how we could support your team through your transition, we should talk.


Written by TradePMR