The connection between a registered impartial advisor and its custodian will be important to the agency’s success. Deciding on the appropriate custodian is without doubt one of the most essential choices RIAs will make through the lifecycle of their enterprise.
In my expertise working with RIAs, I’ve noticed that no two companies and custodians are alike. I’ve additionally encountered pissed off advisors who entered into new custodian relationships or switched companions to deal with dissatisfaction, solely to turn out to be pissed off once more as a result of they didn’t completely scrutinize their choices.
There are 5 essential elements RIAs ought to consider and contemplate to assist guarantee match with a custodian. Whether or not you’re beginning a brand new agency, considering a transfer or just reassessing an present relationship, these factors will assist information your determination.
Key Elements that Can Make or Break an RIA Custodian Relationship
Assets. Consider whether or not the supplier provides tiered service, the place solely the most important RIAs obtain high-touch assist, or if they’re dedicated to providing white-glove service to all companies, no matter dimension. This distinction might assist point out whether or not the custodian meets an advisor’s expectations for customized assist.
Staff. Contemplate the custodian’s major focus and experience to find out whether or not they serve various kinds of advisory companies or if they’re solely devoted to the RIA channel. This could possibly be essential: In the event that they pursue different traders through a retail channel, there’s a potential for a battle of curiosity.
Questions. Assessment the custodian’s service mannequin, together with their processes for routing requests to essentially the most applicable assets. This can assist your agency gauge the custodian’s effectiveness in delivering immediate and full responses to time-sensitive and essential questions.
Expertise. Assess a custodian’s expertise platform and whether or not it’s designed with the RIA mannequin in thoughts. How typically is the platform up to date to deal with suggestions and the evolving wants of RIAs?
Flexibility. Decide whether or not the custodian provides versatile merchandise and pricing that may meet your distinctive enterprise wants or in the event that they depend on a cookie-cutter menu and standardized price sheet. This can assist reveal their dedication to understanding and serving the advisors they work with.
Issuing a request for proposals can assist your agency objectively examine numerous RIA custodian choices. It permits advisors to ask the appropriate questions and collect detailed info, fostering alignment between the advisor and custodian from the outset of a relationship.
Though it is likely to be tempting to forgo correct due diligence and choose a custodian based mostly on model familiarity, selecting the unsuitable accomplice might show expensive in the long term. I’ve labored with advisors who, sadly, discovered the exhausting approach {that a} recognizable identify doesn’t assure the extent of service essential to serve their purchasers successfully. To keep away from a misstep that would probably impression your online business and compromise shopper relationships, it’s important to vet potential custodial partnerships correctly.
Asking the appropriate questions—particularly those who contact on the important thing elements listed above—can assist reveal the total extent of a custodian’s choices and supply a stable indication of whether or not they’re match.
Seven Inquiries to Ask When Vetting a Potential RIA Custodian:
1. Have they got a retail investor enterprise channel that would create a battle?
2. Are there assets to get a transitioning RIA up and operating on their platform—and do they supply post-transfer assist?
3. Is their enterprise service mannequin designed to ship service excellence at scale, with all purchasers receiving equally excessive ranges of significance?
4. Have they got devoted group members who can reply questions in a well timed method?
5. Does their expertise supply every part wanted to run an advisory enterprise with out slicing corners?
6. Do they perceive the precise objectives and alternatives of every RIA, and is their expertise customizable to fulfill quite a lot of distinctive advisor wants?
7. Is their pricing versatile, and do they provide a customizable menu?
Whether or not by way of an RFP or by different means, correctly vetting a custodian is important to serving to advisors guarantee their expectations match the service they obtain. By addressing the important thing areas of significance and asking the appropriate questions, advisors can probably keep away from undesirable surprises and work to ascertain a custodian relationship that’s optimally suited to their distinctive and particular person wants.
