Approach to integrations, unwavering focus on RIAs, personalized pricing to facilitate success, and strong investments to promote firm growth.
For any financial advisor that follows the industry news, it seems as if there is a new M&A deal being announced daily. In fact, according to DeVoe & Company’s RIA Deal Book, Q1 2022 saw the second highest level of M&A activity among RIAs out of any quarter dating back to 2013. The only quarter that was higher than Q1 of 2022? Q4 of 2021.1
While we’re seeing unprecedented levels of inorganic growth among RIAs, that type of growth isn’t right for every firm.
While some advisors work to grow organically – adding new clients to increase AUM. Others may look to recruit advisors with existing books of business who can “tuck in” to a firm and bring clients, assets, and possibly work in tandem to grow the firm.
Whatever route an RIA wishes to take in its growth journey, it’s important that they work with third-party providers that can support that growth and give them the tools they need to scale their operations over time.
Not All Vendors Are Created Equal
When looking for an RIA custodian, advisors likely have their list of key features that are must-haves. Things like comprehensive RIA trading technology, strong organization of client information, and easy access to firm data.
On top of these points, RIAs should consider zoning in on other factors that may not be critical now but could play a role in the long-term trajectory of their firm.
Take the example of a firm looking to offer new tax services as they grow. Perhaps they’re considering hiring a tax expert to come in-house to expand the offering that the firm can deliver to existing clients (to potentially increase wallet share). That tax expert likely has some technologies that they’ve used for years and would like to bring into their new role.
If that firm’s custodial service provider limits how advisors can establish integrations with third-party providers, that could throw a real wrench in the works. Some providers, like TradePMR, take on an open approach to integrations.
TradePMR maintains deep API integrations with a number of industry-leading providers, and if the provider isn’t already integrated with a particular vendor, it can almost always set up a data feed integration. These types of integrations allow advisors to pull their firm’s custodial data into an outside platform to leverage that third-party provider’s capabilities.
While the technology offered by custodial service providers can be quite broad, it will never be able to do everything. RIAs should consider looking for providers that not only offer tools, but also flexibility so that they can use the technologies that make the most sense for them and their clients.
Focused on RIAs, 100% of the Time
RIAs are a unique breed, and often require tailored technologies and solutions to succeed.
Unfortunately, some RIA custodians serve more than just RIAs. These providers may serve a broad range of advisors. While this can be great for the provider’s growth, what impact does this open approach have on the RIAs working with that vendor?
Perhaps it means that the provider offers a wide variety of technologies to fit different types of advisors, with only bits and pieces making sense for RIAs. This can force advisors to waste their time sifting through a broad technology stack to find the parts that could benefit their firm. Or, maybe it means that the provider’s support team splits its time between serving RIAs and other types of advisors. This could lead to issues if the provider’s team doesn’t fully understand the challenges and opportunities facing RIAs.
Beyond serving other types of advisors, some RIA custodians also work directly with investors via a retail channel. This could create a potential conflict of interest for the provider. How can a vendor fully serve RIAs when a part of their focus is winning the business of investors? These are potentially the same investors that those RIAs are looking to serve!
TradePMR, on the other hand, is 100% focused on serving RIAs. That’s all the firm does – it delivers comprehensive technology and white-glove service exclusively designed to meet the unique needs of registered investment advisors, without the conflicts of interest we’ve described here.
Pricing to Facilitate Growth, Not Hinder It
Another key factor when finding the right RIA custodian is pricing.
When speaking with a provider, do they offer a one-size-fits-all rate sheet? Or, do they offer personalized pricing to fit the RIA’s unique needs?
At TradePMR, pricing always begins with a conversation. A deep dive into an RIA’s unique business – points like how they develop their portfolios, the types of clients they serve, their short and long-term growth plans.
The goal of these conversations is to develop a pricing proposal that meets the needs of the RIA, as well as TradePMR. An agreement that will enable the RIA to grow and scale, without that pricing inhibiting their success.
Investing in RIA Growth
RIA custodians that prioritize service may also offer other curated programs to support RIA growth. TradePMR, for example, offers an advisor the Growth Accelerator program through its clearing firm. The program connects advisors to resources and expertise to help enhance their practices.
This program combines professional development offerings with comprehensive practice management reviews, one-on-one coaching, and best practice education to provide advisors with tools and information in an effort to help accelerate their growth.
Even if a Growth Accelerator program isn’t the right fit for an RIA today, it may be a good offering to pursue in the future. We believe these programs are also a signal that a provider is invested in the success of each RIA and is willing to go the extra mile to facilitate that success.
Is Your RIA Custodian Supporting Your Growth?
If not, it may be time to look elsewhere. Finding an RIA custodial service provider that is invested in your firm today, and tomorrow, can be a key to long-term success.
Switching custodial service providers isn’t easy, but if you feel that you could be getting better service, better technology, and better pricing, we should talk. We can see if TradePMR could be the right fit for your RIA, and if we could help you to achieve your growth goals, whatever they may be.
1 DeVoe: 2022 Posts Busiest Q1 for RIA M&A Activity, Patrick Donachie, WealthManagement.com. Published April 21, 2022.
