A custodian’s duties and responsibilities are numerous, including interacting with your clients, overseeing securities transactions, removing fees from accounts, posting dividends, and sending statements. In other words, they act as your business extension, reflect your RIA (registered investment advisor), and impact clients. Since their roles touch all aspects of a business, you cannot overlook the importance of selecting the most suitable custodian. Read on to learn five essential things investment firms must consider during your vetting process.
The Importance of Personal Relationships
Every RIA understands the worth of a personal relationship. Most of your business’s success depends on the capacity to develop a robust personal relationship with your clients. However, custodians’ support and personal services are becoming hard to find, with some custodians choosing to route registered investment advisors through call answering services. This often translates into working with someone who knows very little about your practice. Moreover, it could take longer to receive the resolution and support you require. Therefore, it is paramount to understand your custodian’s strategy for service and ask the right questions before materializing a business partnership.
Key questions you could ask include:
- Will you reach a seasoned team member directly, or will you be sent to a call answering agent?
- Who will you contact should you have concerns or require support?
- Can you have one-on-one meetings?
- What is their average response time?
Assess Technology
Each custodian utilizes technology platforms. It is essential to examine every custodian’s solutions and flexibility for managing everyday transactions like portfolio management, trading, and financial planning. Some smaller custodians might not provide advanced technology platforms that allow you to access your accounts online. Ensure you select a firm that will assist you to do business seamlessly, and quickly.
As technology advances, it’s imperative you select a firm that adapts fast. Choosing a company that is slow to improve technology could result in future business frustration and losses. Choose a more technologically advanced custodian who will streamline your processes.
Compare Pricing
Financial institutions charge transaction and custodial fees for the maintenance and management of accounts. Often custodial fees are charged for management tasks, such as storing and collecting dividends and interest of your investment and sending statements. Please note, custodial fees could affect your business returns. Choosing a company with competitive pricing can help maximize your savings growth and investment returns.
Additionally, depending on how you want to use accounts, you should compare fees like paper statement fees, overdraft fees, account closure fees, and wire transfer fees. Although these costs might not be the basis of your final decision, remember to include them when evaluating all custodians. It will prevent surprises along the way.
Check Whether the Custodian Has the Right Services and Products
There are many custodians, providing a wide selection of specialties, services, and products. It is crucial to choose one that meets your business needs. Create a checklist of what you need, and then engage a firm that ticks the most boxes.
Many people are unaware of one-stop shops that offer trust services, banking, and custody and use several vendors for the services. If you take the time, you could acquire them all in one location at a competitive cost.
Understand the Firm’s Reputation and Stature
Since you trust your custodian with what you value the most, your business, you should know of their reputation in the market for offering outstanding customer care services and protecting financial assets. Check whether the firm has received any outside recognition for their services and how reputable they are in your sector.
Ideally, financial experts would collaborate and share business ideas, increasing your practice’s economies of scale, while still maintaining the capability to brand your business as a trusted institution. That was the concept behind the establishment of Global Custodian Solutions, and we will continue to execute this mission on behalf of our members. For years we have been dedicated to the success of investment advisors. We make decisions and use strategies that allow you to strictly prioritize your clients. Our experienced team innovates, collaborates, and works to deliver exceptional value and world-class services irrespective of your business complexity or RIA size.
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