When it comes to deciding which custodian is right for your RIA, some of the criteria are obvious. Surely you will want to find a custodian that provides the services, products and reporting your clients desire. You’ll need a custodian with innovative technology offerings and an open-architecture platform. It also will be important to look for a custodian that can meet your business needs with practice management and business support. But with so many custody options available today, and many custodians offering seemingly similar services, the true differentiators are often much less obvious — not to mention harder to find — in a custodian.
Whether you’re an RIA searching for a new custodian that offers better service or a startup RIA that needs a custodian to support your emerging business, identifying a custodian that meets your needs is challenging.
Here are six hard-to-find, unconventional traits that should top your list of requirements when seeking a custodian:
- Secure Ally: If a custodian is extremely rigid, RIAs may constantly worry about being dropped. It’s also common for these more rigid custodians to turn away smaller RIAs. Taking the time to find and transition to a custodian that values RIAs of all sizes is worth the effort. The “Secure Ally” trait is a must-have for RIAs, because when you’re secure in your partnership with your custodian, you can be laser focused on serving your clients.
- Holistic Banker: As RIA firms move toward providing more holistic services to help clients meet their financial goals, they need to partner with custodians that can provide access to banking products. Offering a wide range of banking products, from high yield checking accounts to portfolio-based mortgages, makes it easier to help clients manage their money and achieve their financial goals. Additionally, RIAs can take advantage of lending for their own business when they partner with a custodian that has access to banking services. The “Holistic Banker” trait is necessary for custodians, because when you can adapt to your clients’ new expectations, you’ll be more successful.
- Flexible Investor: Without a custodian that supports alternative investments, RIAs are unable to offer the flexible investment opportunities required by many clients. RIAs that want to give their clients more options should look for a custodian that is open to alternative investments. These may include hedge funds, private equity, non-trade real estate investment trusts, managed futures and limited partnerships. Custodians who have the “Flexible Investor” trait can help you set your business apart from competitors by offering your clients alternative investment options.
- Non-Competing Champion: Many custodians have internal advisors that will compete with RIAs for clients. To get support rather than competition from a custodian, it is important to look for a custodian that does not have an internal advisor division. When you choose a custodian that has the “Non-Competing Champion” trait, you can avoid frustration and feel confident your clients won’t be lost to your custodian.
- Visionary Consultant: It is easy for RIAs to become so focused on helping clients that they don’t have extra time or energy to pursue their own goals for their business. Custodians who have the “Visionary Consultant” trait can help keep your business on track and propel you toward achieving your future business goals. Custodians with this trait have both the vision to see your potential and the know-how to fuel your growth. Look for a custodian that offers help where you need it — whether that be assistance with starting an RIA or improving efficiency.
- Relationship Cultivator: Custodians are known for investing heavily into building relationships with their largest clients. However, smaller RIAs don’t always receive the same level of relationship-based support. When choosing a custodian, look for one that has the “Relationship Cultivator” trait. Although hard to find, you’ll know it when you experience it. Custodians with this trait are committed to personal service and demonstrate a willingness to have face-to-face meetings, deep discovery conversations and regular communication to provide clients big and small with ongoing support. When you select a custodian with this trait, you will be working with someone who knows you and your business personally.
There is no question that technology, products and services are important when choosing a custodian. If multiple custodians offer what you need in those areas, dig deeper. Use this list of hard to find, unconventional traits to select a custodian to carry you into the future.
Are you curious about the custody and financial services Axos Clearing offers? If so, download this resource: Meet Axos Clearing.