Displaying items by tag: custodians

Custodian transitions can make RIAs anxious about losing clients, but careful planning and strong communication can significantly reduce attrition risk. On average, advisors may lose nearly 20% of client assets during a transition, but that figure often reflects poor preparation rather than an inevitable outcome. 

The key to a successful move lies in two areas: reinforcing client relationships and clearly explaining the reasons and benefits behind the change. Advisors should prioritize transparency without overloading clients with technical details, offering reassurance, a timeline, and emphasizing how the switch enhances service. 

Relationships that feel unstable before a transition may signal deeper issues, making them worth addressing whether or not a move happens. 

Finsum: Ultimately, sticking with a subpar custodian out of fear can hurt more than switching—especially if poor service impacts how clients perceive the advisor’s value.

The debate over custodial pricing continues, with many questioning whether bundling all revenue sources into a single fee is fair. Since custodians don’t face significantly higher costs for a $10 million account versus a $100,000 one, a pay-for-services-used model may be more equitable. 

Another pressing issue is the slow adoption of automated onboarding, as many custodians still require paper forms and wet signatures despite available digital alternatives. Some speculate that firms hesitate to streamline transfers because it would make it easier for advisors to switch custodians, reducing client stickiness. 

Beyond pricing and onboarding, factors like service quality, cost, and additional features—such as dedicated support teams or integrated technology—shape custodian selection. 

Finsum: As the industry evolves, understanding these priorities will be key to creating a more efficient and competitive custodial marketplace.

RIA custodians play a crucial role in safeguarding the assets of registered investment advisors while maintaining independence to ensure client funds are handled properly. These custodians can be banks, trust companies, or broker-dealers, but all must adhere to regulatory standards that prevent misuse of assets. 

Selecting the right custodian is one of the most significant decisions for an RIA, as it impacts everything from operational efficiency to client trust. 

Key factors to consider include the custodian’s reputation, experience working with firms of similar size and focus, and fee transparency. Additionally, some custodians have minimum asset requirements, which can be a hurdle for smaller firms looking to establish a partnership. 

Finsum: Beyond asset management, a strong custodian should also offer reliable service and support to help RIAs grow and navigate industry challenges.

National brokerage firms are now sharing updates to financial advisors' compensation plans for 2025, a yearly event that often brings new requirements for earning bonuses or changes to how firms prioritize client segments. 

Merrill Lynch's 2025 plan, announced Wednesday, surprised many by largely maintaining the current structure, which has been rewarding advisors for onboarding new clients and encouraging existing ones to use Bank of America banking services. Merrill reported 5,500 new client relationships in the third quarter, with client assets reaching $3.5 trillion, an 18% increase from last year. 

The only notable adjustment for 2025 is a reduced banking growth award threshold, dropping from 55% to 35% for advisors operating without a nearby Bank of America branch. Other large brokerages, also introduced modest 2025 updates, such as reduced pay on smaller accounts and increased incentives for internal referrals, respectively. 

Finsum: These incremental changes reflect the industry's focus on stability while selectively encouraging growth and broader client relationships.

TradePMR has introduced Fusion SYNC, an AI-powered tool designed to ease the custodian transition process for registered investment advisors (RIAs). By allowing advisors to upload complete client data and automatically transferring it to TradePMR’s Fusion platform, Fusion SYNC aims to reduce manual data entry and speed up transitions, potentially cutting transition time from weeks to days. 

The tool also cross-checks for errors, minimizing the need for manual corrections and improving data accuracy. Jon Patullo, TradePMR’s chief product officer, emphasized that Fusion SYNC aims to ease the burdens of custodial transitions, helping advisors maintain client trust through streamlined service. 

With 40% of advisory assets expected to change hands in the next decade, Fusion SYNC positions TradePMR as an early AI adopter in custodial services. 

Finsum: Lean into technology, and particularly AI when it comes to changing custodians as it can greatly aid the data transfer process.