Displaying items by tag: custodians

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. 

With 2024 coming to an end, financial advisors contemplating a switch to a new broker-dealer may wonder if there’s still time to make the move. While possible, the process can take several months depending on the complexity of the transition and level of support available. 

Advisors looking to act quickly may benefit from financial incentives and smoother tax records by completing the transition before the new year. However, rushing such an important decision isn’t advisable, so careful planning and blocking time for key discussions is essential.

Transition consultants can help expedite the process by securing offers and guiding advisors through the logistics. Ultimately, those who begin the process now may still be able to switch broker-dealers by the end of 2024, but many may find it more practical to plan for early 2025.

Finsum: While it’s certainly late in the year these services could help optimize time in order for a smooth transition.

Transitioning to a new custodian in the financial industry can seem challenging, especially with the complex regulatory environment. However, with thoughtful preparation and the right choice of custodian, the process can be seamless and beneficial. 

This involves understanding the differences between bank custodians and broker-dealers, with banks often providing greater transparency, asset safety, and flexibility. Key steps include reviewing existing contracts, gathering necessary documents, and clearly communicating your organization’s needs to the new custodian.

Engaging a dedicated conversion team ensures a smooth transition by managing timelines, addressing concerns promptly, and customizing the process to your specific requirements. With these measures in place, you can successfully navigate the transition, allowing your organization to thrive with the support of a custodian that aligns with your long-term goals.

Finsum: These tips provide a nice framework for transitioning and considering wither you are ready, but keep in mind the technology accommodations as well.

As custodians in the independent advisor market undergo mergers and consolidations, advisors are increasingly finding it challenging to secure a stable home for their clients' assets. Many advisors are opting to use multiple custodians to mitigate risk and increase efficiency, akin to diversification in investment portfolios.

However, frequent changes in custodial arrangements add layers of complexity and concern. This instability can lead to tedious processes like transferring accounts. The landscape is further complicated by the rise of niche custodians and specialized services targeting specific needs, such as real estate or gold investments.

The trend of using multiple custodians is driven by the need for diverse capabilities and the ever-evolving market dynamics, including mergers, competition, and new technologies.

Finsum: Getting a fuller picture of the technology and services offered by different custodians is a huge benefit.