New faces, new programs, new technology and new assets

December 31, 2009 — 4:23 AM UTC by Brooke Southall

1 Comment

As assets leave wirehouses and banks, they end up under the aegis of registered investment advisors in towns and cities across the United States.

But those assets also pool in the hands of a very short list of asset custodians, mostly in San Francisco, Jersey City, N.J., and Boston, Mass.

Schwab Advisor Services is in San Francisco. Fidelity Institutional Wealth Services, State Street and RBC Advisor Services are headquartered in Boston. Pershing LLC , TD Ameritrade Institutional and Broadcort Advisor [Merrill Lynch’s RIA custody unit] call Jersey City home.

These custodians have traditionally evolved at a slow pace. The rate of growth has been high but the absolute flow of assets was more nominal, which had a moderating effect on the amount of money parent companies invested in those units.

That picture is starting to change, as both brokers and clients retreat from wirehouses and bring hundreds of billions of assets with them. Many of those assets are destined for independent RIAs.

Noticeable evolution

Many asset custodians are beginning to act with greater resolve to seize on this favorable trend. One result is that 2010 promises to be year of noticeable evolution at virtually all of the custodians.

In a soon-to-be-published article RIABiz will chart the Outlook and challenges of all the more significant and identifiable asset custodians. Who are the people to watch? What technology will come online? What niches will be claimed by whom? Who is winning with breakaways? Who is winning with hybrids? Who is winning big RIAs? Who best serves smaller RIAs?

The custodians I’ve reached so far are excited to participate in this article and I have, for instance, plans to speak to Mike Durbin at Fidelity and Tom Bradley at TD Ameritrade.

I am writing this article today to encourage other RIA custody execs to participate and for advisors to send along thoughts about what challenges that they see facing these custodians.


If the strategic circumstances surrounding asset custodians stay dynamic, I will update this report semi-annually.

Other asset custodians I also plan to report on include: Scottrade Advisor Services of St. Louis, Trust Company of America of Denver, Shareholders Service Group of San Diego, Raymond James of St. Petersburg, Fla. and LPL Financial of Boston and San Diego.

Please send your thoughts to me at

No people referenced

Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

Raymond James Financial Inc.
Asset Custodian
Top Executive: Bill Van Law

Scottrade Advisor Services
Asset Custodian
Top Executive: Brian Stimpfl

LPL Financial
Asset Custodian
Top Executive: Bill Morrissey

State Street Wealth Manager Services
Asset Custodian
Top Executive: Marty Sullivan

RBC Advisor Services
Specialized Breakaway Service
Top Executive: Brett Thorne


Top Executive: John Tyers

Shareholders Service Group Inc.
Asset Custodian
Top Executive: Peter Mangan

Trust Company of America
Asset Custodian
Top Executive: David Barry

Share your thoughts and opinions with the author or other readers.


Stephen Winks said:

January 2, 2010 — 12:26 AM UTC


Serveral areas to querry these firms on their industry leadership in advisory services:

1. Like brokerage firms, custodians have not provided access to the enabling resources which would make fiduciary standing scalable, safe and easy to execute. The fear of fidiciary liability is only managed by providing the necessary enabling resources with an audit path to objective fiduciary criteria of statue, case law and regulatory opinion letters and expert opinion letter to prove fiduciary standing. Will any of these firms actually make fiduciary counsel safe and easy to exectute?
2. Do any custodians plan to offer expert advisory services support for each of the ten major market segments (Mass, Retail, HNW, Ultra HNW, DC.DB, Foundations and Endowments, Public Funds, Profit Sharing)advisors serve?
3. Scale is terribly important for RIAs as it determines profit margins, the level of counsel provided and the capacity to grow. Are any of these custodians effective in offering practice management services that actually enhanse service yet reduce cost.
4. Unlike brokers, RIAs offer accountability. Do any of these custodians help advisors in portfolio construction, improving the client experience, if so how?
5. A functional division of labor is essential in managing clients and internal human resources and require extraordinary skill and operational insight. Do any of these custodians help advisors optimize practice operations and staff effectiveness?
6. Advisory services sales and marketing are materially different from product sales, do any of these custodians have an advisory services sales and marketing function by market segment which would help the advisor develop and articulate a preemptive advisor value proposition relative to the predominant brokerage business model?
7. Do any of these custodians provide a prudent investment process (asset/liability study, investment policy, strategic asset allocation, performance monitor, tactical asset allocation) with an audit path the the necessary statutory documentation to prove fiduciary standing for each of the ten major market segments in which advisors are active?
8. Do any of the custodians provide an objective assessment of enabling technology?
9. In managing conflicts of interests, do any of the custodians provide omnibus block trading to advisors which drive down trade execution cost, reframe from principle trades, minimize fixed income spreads, fully disclose 12(b)1 fee compensation and/or waive 12(b)1 fees, disclose and/or reframe from keeping the interestr earnings on the float between execution and settlement? All of which are prohibited transactions in fiduciary accounts.

The questions are endless, but these would be a good start.

My survey of several months ago established that custodians have little understanding of any of thes questions.


Submit your comments: