ria custodian fee comparison

So it caught his attention when the level of service with smaller accounts at SEI exceeded the service he was getting with his current (not to be named) custodian. Instead of affiliating with a custodian and then having to pay for a portfolio reporting overlay on the custodial platform, EAS-affiliated advisors get the whole package for free in a more streamlined straight-through format. At the end of the day, all we are, all of us, is a service provider for them, so they can be the service provider for their clients, he says. When they send it in, we do it, and get it done on time., Mangan adds: We believe we can run our business on the theory that all of the advisors we support are important. We send clients a link and the account is established and the assets moved within a day or two. Clearing platform: Pershing The sudden need for digital tools and digital onboarding has been a nice tailwind for us. SSG was reasonable from the start. Even with $500, fractional shares are still beneficial, he says. But we know what it looks like, because we do, and they do., Advisory firm relationships: 135 We bring stability and commitment and balance sheet and capabilities to the advisor marketplace that you dont find elsewhere., Adds Holland: Were champions of the RIA market, providing a very similar value proposition to what independent advisors are providing to their clients., What is the opinion of advisors who are using SEIs new upgraded platform? When I was looking at options, I was able to communicate directly with Robb Baldwin, and I told him what I wanted to accomplish and how we wanted everything to work in the clients best interests. And I wanted it to offer top-rated technology.. Nobody has to look at the data mapping, and if a company that we get the data from changes how they tag some kind of incoming data feed, all of that is automatically reconciled., Wenk says he has had to maintain a measured pace of adding five RIA firms a day, to make sure that his team can answer questions about how to get started with the software. February 9, 2023 at 7:39 PM Brooke's Note: Never read too much into one talent move. But when you have a new company thats lean and mean and can start from scratch, they can create something that has a more modern set of features, in a shorter amount of time, for less money. What is an RIA custodian? - TDA Institutional He picked up his cell phone and he didnt know it was me until we talked. And in the initial decision, his firm also factored in the independence to be able to select investments without any competing incentives. RIA Custodian Alternatives To Schwab And TD Ameritrade - Kitces EAS became interesting to Toth when Orion developed that capability. The integrations we use are seamless: Orion, MoneyGuidePro, Salesforce. Normally something like that would take a day, Cuthbertson adds, but because this was a special circumstance, they took care of it immediately., When talking with advisory firms that work with SSG, you often hear stories about how the company principals would field calls and follow through on service requests. Lavrigata also likes the fact that Pershing can facilitate mobile check depositing, which, he says, Schwab declined to allow at the time. Traditionally, the money would come in and accrue in the cash account for a month before the firm would buy the ETFs it wanted, because there wasnt a large enough dollar amount to buy them. We never have to revisit a problem every time we call. But then E*TRADE was purchased by Morgan Stanley in an all-stock transaction, and the custodial business was swept up in an unfamiliar culture that viewed it as an afterthought to the possibility of accessing E*TRADEs stock plan administration business (where Morgan Stanley advisors could reach corporate executives with significant equity compensation administered on the E*TRADE platform) along with its retail customers that could be referred to Morgan Stanley advisors. Pershing X is aiming to become the second comprehensive product marketplace platform in the advisor space. Wenk followed that up with Formula Folios, a turn-key asset management platform (TAMP) which now has roughly $8 billion in assets serving 30,000 customers. Mangan adds that some dual-custody advisors who had been working with TDAI have begun allocating all new money to SSG, in part to hedge their bets, in part to improve the quality of service. In the minds of many observers, the Schwabitrade merger that seemed to diminish competition in the RIA custodial space might end up increasing it, by ultimately driving more interest in smaller, more personal custodial platforms, whose scale could rise dramatically in the next year or two. Clearing platform: APEX Clearing Set it and forget it., Does that save time? Because it doesnt have a retail presence driving its decisions, Pershing had the luxury of listening to its advisors before responding, and incorporated their input into choices for how to compensate the custodian for the services it provides. When I first started looking at the custodians, the Schwab, Fidelity, and TD sweep accounts for invested cash were paying extremely low rates, says Bhalla. It took them about a month, says Pollock. TD was willing to fix things when problems arose, says Cuthbertson. Finally, Altruists new custodial platform addressed the severe pain point of tracking the progress of the many requests and hands-on services that advisors require of their custodians: the check requests, trades, and everything else that clients expect them to keep track of. I had a real black eye with my clients and my community, Baldwin adds, because, as they pointed out, they didnt pick the custodian that was creating all these problems; I did. We should be behind the scenes helping them., Were trying to put the advisor in the center of that flywheel of services they provide, all those other things around investment management, so the advisor can go deeper with their clients, Watson adds. The firm has about $650 million on its wealth management side and manages 320 corporate retirement plans in the ERISA world. With TD, we would use DocuSign, and it takes longer to get clients set up., Side by side, Castelli prefers Altruists rebalancing engine to iRebal. The firm has positioned itself as the most service-focused and reliable platform on the market although in recent years, technology support has emerged as a huge part of the service package today. The first person I spoke with, I said, who can I talk to who would tell me what would be required to make this happen if I came to that conclusion? says Cuthbertson. In a presentation at the 2022 T3 Advisor Technology conference in Denton, TX, one of the advisors in an advisor tech panel discussion noted that his firm had gone to its other custodial relationships Schwab, TD, and Pershing asking for their help creating a customized piece of its service model and for some reason, he could never quite get an answer. So the only thing that ever gets surfaced on our front-end is what comes from our own data files, Wenk explains. But beyond that, the inquiries all seem to center around one common denominator. If youre looking for parity with an incumbent custodian that has been around for a long time, he adds, a year ago we probably supported 50-60 percent of the types of accounts that most advisors were using. Technology and innovation. When the client deposits new funds into their account, it is automatically brought into the model that is assigned to the account. Why build all those features that advisors can easily purchase on the outside? TradePMR was perhaps the first custodian on the market to offer a digital account opening experience, which has since evolved into a simplified data-gathering process that automatically maps client information to the required forms and documents. Some readers are likely to be surprised at how much competition is out there, and how popular those competitors are with the advisory firms that are using them. Look for a custodian that has spent years serving the type of RIA firm you want to build and grow. Option one is for the advisory firm to continue to pay trading costs as they had been before the zero-commission announcement. Our high-net-worth clients needed the investment credit lines and mortgage products that BNY offered. The banking and lending solutions allow us to compete with the JP Morgans of the world, in terms of matching rates, adds Telemus CEO Matt Ran. The more I work with Altruist, the more I like them, says Fox. Hohimer is multi-custodial, but roughly $660 million of the firms $800 million in client assets is housed at TradePMR. An additional consideration is whether the custodian has a retail presence, as those without one wont be competing directly with advisors in the marketplace (and the custodians management will be focused on the needs of advisors on the platform rather than spending much of their time trying to bring in more retail business). And there werent any truly good fractional share platforms. When something gets off-track and they always do, because nobody is perfect, says Everhart, I have a hard time moving up the chain at [my other custodian] to get to a decision-maker. It doesnt vary widely based on what people want to do, he says. Can I have him call you back?, The result? Wenk says that this is a major reason why the larger custodians havent allowed advisory firms to trade fractional shares in client accounts. The weirdest thing is that there really wasnt much change, says Karl. Theyve really plugged into our business, to the point where it's now a complementary relationship. We had about 30 engineers on the project, and built a really, really great user experience, says Wenk. All of the work that the advisor is doing inside of RightCapital is surfacing in our client portal and mobile app in real time, says Wenk. We had to do a lot of explaining to our clients about the acquisitions, but from the standpoint of managing our business, it was pretty much the same. Weve always done a manual report for every client, with beginning value, contributions, withdrawals, internal withdrawals from IRAs to a trust or taxable account, fees, everything, says Pollock. If an advisory firm is recommending/managing nontraditional, radically uncorrelated client assets like private equity, non-traded REITs, or cryptocurrencies, then EAS should probably rise to the top of their consideration, because unlike just about everybody else profiled here, the firm will custody and report on those assets in the client vault and client account statements. Matthew Fox, the founder of Ithaca Wealth Management in Memphis, TN, opened up his planning shop in 2019 after working as a portfolio manager for a much larger firm, specializing in SRI/ESG portfolios. Somebody always takes responsibility, with ownership. Jul 07, 2023. After the Morgan Stanley acquisition, I began to look around, and Equity reached out to me, and I was really impressed by their technology platform, he says. Theres been this conflict that everybody is aware of, that has been just too daunting to address: that product fees pay a lot of the freight, and the spread on the cash sweep accounts was really subsidizing a big part of an advisory firms custody relationship.. And their lending platform is second to none, he says. But with our system, he adds, it is a few clicks of a button, and the money is invested automatically, and they are never going to get a cash drag, so it is actually more efficient than robo solutions., Altruist, he says, is able to give people just starting out on their financial journey access to a human advisor plus the automated tools. The fact that they have fractional share investing capabilities means that I can now open an account for someone who only has $20,000 to invest right now, he says, and I can put them in my model portfolio, with individual stocks, U.S. large-cap blue-chip names, and ETFs in international and emerging markets, just as I can with a million dollar account. TradePMR is our primary partner, and theyve done a great job for us, says Hohimer. Not only did we go that route; we actually did it in 2016, says Erich Holland, Head of Sales and Experience at SEIs independent advisor business. The software actually integrates with us, with Veo [while its still around], Fidelity, and Schwab, Wenk explains. First, the fees are pretty high, and the firms have minimum asset requirements. For us, we literally click a button, and it is less than 30 seconds for an advisor to be onboarded., We could onboard a million users and it wouldnt really make a difference, Wenk adds. The process to get my clients assets from Vanguard and Schwab, says Fox, was a matter of me clicking a button that says initiate a digital ACATS, put in the Vanguard account number, click Vanguard as to where the client assets are, put in the account number from his brokerage statement, and then I would click full or partial, and its done. Meanwhile, the company has been building out its custodial management team. I felt like TD had their hearts in the right place, and I was worried that that attitude was about to disappear. Broker-Dealers vs. RIAs: What's the Difference? - Investopedia Probably not. TradePMR now holds a significant percentage of the firms $1.5 billion in AUM. An unknown number of firms, meanwhile, are planning to be proactive about their custody arrangements and are exploring the alternatives. I didnt expect the service to improve as the merger created such a huge firm, and I didnt think that Schwab was after businesses like mine [$43 million AUM] when they made the purchase.. Most other firms use third-party solutions for trading and billing, says Murphy. I started my business in 2008 with no assets, says Bhalla, who currently manages $50 million of client money. We have our service folks and our relationship folks literally sit at the same desk across a glass pane from one another, he says, and it has been a wildly successful business model., That model provides an immediate exchange of information and a lot more collaboration and understanding of the firms we work with, adds Garcia. RIA Custodians | Pricing Guide | Custodial Services - TradePMR An RIA custodian is an institution that maintains the client assets and holdings of a registered investment advisor (RIA). She says that Liberty has been a steady presence in the companys life. But most firms have multiple people in the business with different roles, some are licensed, some are not, he adds. If BLB&B represents one of the larger firms with a TradePMR relationship, Bischoff Wealth Management Group in Greenwood, IN, is on the smaller end of the spectrum, staffed by CEO Brian Bischoff plus a full-time client associate and two part-time associates. Recently, Altruist made it easier to add a firms own logo and cover page. The marketing plan was to create a referral program and really be able to go after the large RIAs that participated in the Schwab, Fidelity, and TD Ameritrade referral program, says Mike Watson, head of RIA services at Axos. Weve built out the secure vault, secure messaging, aggregation and integration through Plaid and generally the ability for advisors to communicate back and forth with their clients, says Holland. Telemus also required a strong banking relationship. It rebalances to your model portfolios for every client, which makes it perfect for my young professional clients. ", We do all of that; you just go out and service your clients, Withrow adds. His first custodian was Trust Company of America, which was acquired by E*TRADE, which was subsequently acquired by Morgan Stanley, which sold the custodial business to Axos Financial. Our customer representative has been there since the beginning and is still there. The new software dispensed with paper and even the actual forms themselves, would auto-fill and integrate, and most importantly automatically check account opening and other electronic forms for Not-In-Good-Order (NIGO) problems. For us, we built a lot more communication and transparency into our relationship model.. From a technology perspective, it gave us a very strong offering, because every time Orion creates new capabilities, our advisors benefit from them.. Trading platform: Wealth Platform One where many of the alternative RIA custodians highlighted here are explicitly aiming to differentiate themselves with a better offering (which, ironically, was also how TD Ameritrades Institutional platform grew and drew market share away from Schwab and Fidelity over the preceding 15 years before it was acquired, too). He added that sometimes his paperwork would be flagged by the TD service team as not in good order, and when he asked why, the person he was talking to was not the person who had flagged it. All the things we used to do in Axys, we can now go right to the portal and see what we need to see, he says. Platform rating in latest T3/Inside Information software survey: 7.05 Is there anything missing? This article was written for those advisors who are considering a switch. If Altruist was developed with an eye to Wenks own pain points, it also incorporates a lot of input from the broader advisory profession. If a client has $10,000 and they want to put $500 a month into their account, that is almost not even worth it at a place like TD or Schwab, says Wenk. Theres a client portal, plus the aforementioned seamless onboarding that is all handled electronically and largely automated. This also delivers the former TD Ameritrade experience for software vendors; instead of requiring the custodian to build their integrations, they can do it through the API suite. At Schwab, we have to use our computer systems to create blended models for our clients, Toth says. Feb 25, 2022 Sponsored by The custody landscape is changing, and it's making some RIAs consider the value they are getting from their custodian. There is a small markup on cash holdings Wenk estimates that it is under a basis point a year but he also says that, due to the fractional share feature, the total cash across all client portfolios is under 4%, often just 1% or so. Why bring this up now? This may sound like cross-selling, but the interesting thing to Watson is how the advisors on the platform are leveraging the bank to reduce client exposure to dysfunctional service providers. Heres an interesting challenge. A big part of SSGs growth has come from smaller firms just starting out. If you enjoyed this article and would like to read more from Bob Veres, those who join the Kitces Members Section canreceive a discount to Veres' monthly 'Inside Information' newsletter here! $ under custody: (Not Disclosed) SSG is also well-positioned to work with larger advisory firms looking for that second custodial relationship exactly the people who are most unnerved by the TDAI acquisition. We also have a commercial banking business, Watson adds. It's something that can't be replicated. Please dont play the same revenue games., That basically means that the firm doesnt have product-based incentives to recommend one fund or category of ETF over another. It has been a good long-term partnership., What about the Liberty platform? For the advisor who is under $100 million, chances are they wont need to adopt some third-party technology.. There are actually two aspects to the platform which are different from what advisors get from the larger custodian competitors. In practice, most RIA custodians make money in three ways: (1) earning money on cash (either through the expense ratio of a proprietary money market fund, or by sweeping the cash to a related bank subsidiary), (2) servicing fees for mutual funds and ETFs, such as sub-TA fees along with 12b-1s via "No Transaction Fee" (NTF) platforms, and (3) tic. But with our fractional share trading, he says, if somebody sets up a one-dollar-a-month automated contribution, the client sends the money into the account, and weve eliminated the operational paperwork and time commitment at the advisor staff level, and the drag of having the money sitting in cash.. There were a number of things that didnt sit well with me at a traditional advisory firm, he says. So we broke out that part of our business to TD Ameritrade, Hohimer explains. When Is an RIA a Custodian? For us, it is super-easy. The technology and clearing relationship, he says, was built to be almost infinitely scalable, and people have their accounts up and running in minutes, which addresses another pain point in the existing marketplace. An advisor might see a list of clients and issues relating to their accounts, including a ranked order of which of them are clicking into their private account platform, and how often potentially a way to tell which clients are getting nervous about the markets. Asset-Based vs. Ticket-Based Pricing #2.
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