Here's a Hint – You are not alone; almost everyone has the same questions.
Need to find a new custodian? I talk to hundreds of financial advisors each year – a majority of them are simply "window shopping," some are serious, many have already determined they are making a move – only a handful I speak to know when and where. For those RIAs, what makes them pull the trigger on selecting a new custodian? Through each conversation the advisor has with custodial and technology providers, the advisor learns a little and takes it back to their partners to discuss.
I also learn a little too.
Regardless if the advisors are established firms or thinking about breaking away to launch their own RIA, the questions and concerns remain the same:
- Is my technology going to be replaced by something that might not be as good?
- Will my current integrations continue to be supported?
- Because of my AUM size and growth history, will I experience long hold times when I call to ask questions?
- Do I want to stay with a custodian with a retail offering that directly competes with me for new clients?
These concerns are all valid, and to be truthful, it's hard to know the answer to any of these with 100% certainty. When evaluating your soon-to-be merged custodian, considering simply adding one to your roster or surveying the industry to identify a potential new custodian, there are specific points to keep in mind. Below are ten considerations that I believe should be prioritized when evaluating your current or prospective custodian to determine if they will be the right fit for your firm.
- Seasoned Transitions Team – Migrating your clients to a new custodial service provider sounds like a big task – and it is. Be confident that the company you're moving forward with has a track record of working hard to make the transition process as simple for your firm as possible. This can help to ensure all data is transitioned accurately and may mitigate the impact of the transition on your clients. Here’s a quick infographic on how this transition process could look.
- Account Support – As an advisor, getting your client accounts updated, opened, and closed with efficiency is essential. Experienced account teams who guide you from application completion to customer identification verification are something that every advisor deserves.
- Modern Onboarding – You work hard to attract new customers. I believe you should be sure to pick a company that offers a fully digital onboarding process, where you can seamlessly convert prospects into customers with just a few critical pieces of data. Additionally, I feel there should be a paperless process for these applications to automatically kick off necessary onboarding activities directly in one consolidated location. These automated processes, along with DocuSign1 integrations, may save you and your clients valuable time while striving to ensure all paperwork is fully and accurately completed.
- Ongoing Support – After your transition, your new custodial service provider should have a proven post-transition team that will serve as your day-to-day contact and helps answer any questions that may arise. It's critical that your team has ongoing support to help when issues pop up, and the more that support team knows about your business and its unique challenges, the better.
- Knowledgeable – I believe it is worthwhile to find a custodian whose team knows you on a first-name basis. While this may not seem like a big deal, and is certainly not the norm today, I feel it's a signal that the custodial service provider understands your business and are in a position to support your success like it's their own, putting you and your clients first.
- Communication – When you call in, do they use a call center? If so, you could be looking at long wait times, or you may be bounced around from person to person. I think it's important to try to find a company that picks up the phone when you call and offers one-on-one support all the time. This service level is becoming rare but finding it can help you keep focused on your customers and your business.
- Cashiering – Fund movement should be done quickly and accurately. Taking the time to ensure your custodial services provider prioritizes accurate cashiering can help facilitate long-term client retention. Is in-house check scanning an option? How long does it take to cut a check to your customers? All questions many advisors don't ask and regret not knowing later.
- Trading – A suitable trading desk should be there to help execute trades and guide you through complex options transactions, basket trades, and model trading. Additionally, they should work with you on strategy rebalancing, frequent trading questions, and assembling customized portfolios. I feel Trading capabilities from your custodial services provider should go beyond technology – it needs to incorporate support.
- Operations – Whether your firm is just getting started or needing a little extra help to close out a task, you will want to make sure the custodial service provider has a reliable operations team. This team should work with you hand-in-hand to provide ongoing assistance throughout your relationship.
- Due Diligence – You have heard the saying, "If it's meant to be, it's up to me." The same thing goes when considering making a change for you and your customers. Take the time to explore your options. Evaluate your custodian on these points and schedule a demo of the technology the company has to offer. In the long run, your time invested in your search may be well worth it.
If you take the time to go through these ten items and find that a custodian hits all these marks, then I feel you're in great shape. They probably understand your unique needs and have the infrastructure and talent to support your business. If not, it may be time to look elsewhere.
Still haven't found the right firm to support your custodial services and technology needs? We should talk.
For more than two decades, TradePMR has worked with growth-minded independently registered investment advisers (RIAs), helping to provide the innovative technology tools and support designed to transform their businesses. The privately held brokerage and custodian services provider (Member FINRA/SIPC), based in Gainesville, Fla., works to streamline fee-only investment advisors' operations through comprehensive custodial, operational, and trading support. For more information or to schedule a demo, contact Cris Frankel at firstname.lastname@example.org.
Click here to learn more about Cris.
1 DocuSign, Accessed March 25, 2021
DocuSign and TradePMR, Inc. are separate, unaffiliated companies. Securities offered through Trade-PMR, Inc., member FINRA/SIPC. Custodial services offered through First Clearing. First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. TradePMR and First Clearing are not affiliated. TradePMR does not offer investment, legal or tax advice.