Switching RIA Custodians? Consider Creating an RFP

RIAs approaching a merger or otherwise considering a change in RIA custodians face a difficult task: finding the provider that’s the best fit for their unique firm.

On the surface, every RIA custodian may seem to have similar offerings: RIA trading capabilities, performance reporting, CRM functionality. Only once advisors dive in deep can they identify which provider has the special sauce to meet their current and future needs.

That’s where the Request for Proposal (RFP) comes in.

What Goes into Your RIA Custodian RFP?

An RFP should span anything and everything that will help your business thrive. What’s important to one RIA isn’t necessarily important to another, so this RFP should touch on all the details that could impact your operations and your clients.

With that in mind, there are a few common sections that can appear in most RFPs, including:

• About the Custodian – core value proposition, average size and structure of RIAs, custodian ownership, available accounts, whether the provider has a retail channel.
• Service and Transitioning – approach to RIA transitions (including support and technology), service team experience and structure, service tiers (if any), process for RIAs to secure support.
• Trading – RIA trading technology, trading support, depth of trading functionality, upcoming expansions to trading offering.
• Technology – current state of the technology platform, available third-party integrations, technology roadmap, and overall approach to technology development.
• Cybersecurity – safeguards in place, security processes and procedures, support for RIAs, data protection and data sharing.
• Pricing and Fees – approach to pricing structure, fees, pricing adjustment over the course of the relationship (if any), pricing when compared to competing providers.
• References – RIAs that currently work with the provider who can offer insights into the technology, operations, and approach to service.

Diving into each of these sections and identifying all the key points that are important to your business can be critical.

Establishing a new relationship with a RIA custodian takes time and a full team effort. Ensuring your next provider checks all the right boxes for your business could help to save future headaches and may prevent your firm from needing to move again any time soon.

Four Tips when Building and Distributing Your RIA Custodian RFP

It can be hard for RIAs to determine what to actually include in their RFP: what’s important, what can be assumed, how much to dive in.

When building and distributing an RIA custodian RFP to prospective providers, advisors should keep these four points in mind:

1. Be specific – don’t leave any room for interpretation. Ask direct and clear questions so you can be confident that the answers address your concerns and touch on the points you really want to know.
2. Cover all the bases – don’t just consider what features impact advisors, dive into all the qualities that impact the whole RIA team (operations, client service, portfolio management, etc.).
3. Ask for the moon – the worst you’ll hear is “no.” Check in on the features and services you’d like to have access to in an ideal world, you may be surprised by what you hear (and may even influence the provider’s technology roadmap).
4. Leverage referrals – while it may seem like these references would be simple cheerleaders, there are ways to cut through the noise and get the real answers. Read our tips on how to have honest conversations with RIA custodian referrals.

Every custodial service provider is different and will approach these RFPs in different ways. By following these four steps, you can help to standardize responses and ensure you know how each provider would work with your firm.

RFPs Can Be Tricky, Need a Hand?

If you’re considering building out an RIA custodian RFP but aren’t quite sure where to begin, we should talk. We can dive into your unique business, your goals, and the kinds of points you should check in on before signing with your next provider.

TradePMR offers custodial service and technology to growth-minded RIAs nationwide. We’d be happy to chat through if our offering could be a good fit for your business. Even if we aren’t the right firm to usher your RIA into the future, we want to make sure your business, and your clients, are in the right hands moving forward.