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Institutions that store the funds and records of a registered investment advisor’s clients are known as “RIA custodians” (RIA). RIAs provide clients with financial guidance that may include investment services but do not execute the trades necessary to implement the strategy.
Providing highly individualized service to clients is a significant draw for many advising firms to remain autonomous. RIA custodians evaluate the service offerings of prospective custodians in the same way that many IFAs highlight their exceptional client care as a competitive advantage.
The consulting firm should find out if they worked with a single person or a group. Establishing new customer accounts, settling deals, and making quick wire transfers to clients are all standard operating procedures for consulting businesses. Inquire about the service quality during these types of contacts.
Increasing technological dependence and demand characterize today’s financial services sector. Independent advising businesses can compete with much larger financial organizations that use obsolete methods thanks to the abundance of technology solutions available.
Firms offering RIA services often juggle numerous tasks, including client account management, client communication, billing and invoicing, performance reporting, and financial planning.
It’s common for a custodian to supply either their proprietary software or the ability to use a third party’s software. When deciding which platform to use, RIAs need to weigh the various technological possibilities available and the quality of the available assistance with making the right choices for system integration.
The consulting company should also check its internal processes to ensure its clearing firm can assist them. Advisors to the investing public often fail to account for the time and effort required to find and implement the best solutions for their business.
To effectively manage their customers’ portfolios, investment advisors must have access to various markets and assets. Stocks, bonds, ETFs, and other derivatives are just some investment vehicles that a custodian can make available to a portfolio manager.
A custodian might provide access to many mutual fund options and the families that manage them, making it easier for businesses to implement asset diversification and allocation strategies. Separate portfolio management systems provided by custodians allow companies that do not specialize in money management to employ the services of institutional financial advisers. Besides, some clearing houses may make a broad selection of nontraditional investments available.
Focus and Suitability
There is a wide variety of advising firms, and not all RIAs will be a good fit for every company. Additionally, new firms have minimum asset limitations with some conventional financial adviser custodians.
Even so, wirehouse channel fans will always want a more decentralized RIA setup. Therefore, an investment advisory firm needs to identify the type of organization they are and then seek to align with a clearance firm that is a good fit for that type.
Value Implication on Business Support
Protectors are well-versed in the nuances of various advice practices and the difficulties that can arise while expanding and running a business in this field. To help their clients succeed, a custody company may provide services such as goal setting, client acquisition, and research on industry standards.
In addition, they should offer advice on how to choose the best technology for investment advisers. Effective utilization of such value-added areas of knowledge allows an advisor to construct a more effective and scalable business.
Independent consultants are often forced to work with a custodian due to their association with a professional organization, previous employment arrangement, or desire to increase their credibility with customers.
Storage fees for client assets are a standard feature of most realtor services. Mutual fund administration and 12b-1 fees are more sophisticated than trading charges or interest earned on cash.
Numerous advisers charge their clients more when custodial fees are high. In contrast, you may save your customers money and use that extra cash toward expanding your business by choosing a custodial associate with more transparent pricing and fewer surprises.
Custodial solutions of today have the potential to completely transform your company by improving efficiency, allowing you to offer more services, and producing better results for your clients. Get the most out of this chance. Invest time and thought into selecting a trustworthy caretaker.