What an independent RIA should look for in a custodian

Transition

What an independent RIA should look for in a custodian

RIA custodians are an integral part of both the advisor and client experience. Make sure you select the right one.

The independent RIA model offers the most freedom and autonomy of any affiliation option, as well as the most responsibility for managing your practice. For that reason, it is critical to choose the right custodian.

RIA custodians are an integral part of both the advisor and client experience. In addition to executing transactions and holding and clearing client assets, a custodian may provide a wide spectrum of product, customer management, technology and service support to RIA firms. As an RIA, you are the custodian’s client. And you’ll want to seek out the custodian best equipped to meet your client needs, whether that’s a larger partner who can offer a number of different programs and resources or multiple firms that can provide specific solutions.

Here are the types of services you can expect a custodian to offer:

Performance Monitoring and Reporting
In order to effectively communicate with your clients, you will need to provide performance monitoring to review and analyze each client’s portfolio performance regularly. A strong custodian partner should be able to provide you with performance reporting tools to support you in this area.

Transition and Business Startup Support
Setting up your new practice and converting your clients to a fee-based relationship is a critical step that should be handled with care. The custodian you partner with should help you plan your transition budget and may even be able to offer financial assistance under certain circumstances.

Client Management
Communicating with your clients on a consistent basis is important to the success of your practice. Custodians should provide a comprehensive client relationship management (CRM) solution, allowing financial advisors to manage clients and their accounts as well as schedule and track communications with them.

Marketing
You should look for a custodian with comprehensive creative and strategic marketing capabilities who can help you develop a brand and build a marketing plan that fits your style, reflects your standards and connects with your target audience.

Business Development
A full-service custodian should also possess expertise and intellectual capital services to assist RIAs in growing their practices. When choosing your custodian, ensure there is a dedicated team that can help you to resolve questions or concerns affecting your practice and offer advice on the direction you should consider taking your business over the long term.

Technology
To keep all the moving pieces of your practice seamlessly connected, you need access to integrated, efficient technology. During your custodian search, look for a comprehensive technology platform that offers a CRM system, trading software, financial planning software and portfolio reporting.

Open Architecture
As an RIA, you have the opportunity to choose from a vast array of investment products in order to recommend the investments most appropriate for your clients. Many custodians who offer open architecture support also provide tools to help manage investments via an integrated technology platform.

Compliance
Independent RIAs are ultimately responsible for compliance. Some custodians offer assistance to help you establish high compliance standards and procedures to develop a code of ethics, business continuity plan and privacy policy.

Operations
Taking the RIA route means setting up shop and hanging out your own shingle – or perhaps joining an already-established RIA firm. Some custodians will help you with operational needs.

Human Resources
As an independent RIA, you get to hand-pick your staff. You should look to your custodian to make recommendations on outsourced solutions and insurance and benefits providers. 



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