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Percolating: RIA custody roundup for 2010

New faces, new programs, new technology and new assets

Author Brooke Southall December 31, 2009 at 4:23 AM
1 Comment
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Expect to hear more in 2010 from Mike Durbin, who leads Fidelity's fast-growing RIA custody unit





Merrill Lynch


Raymond James


TD Ameritrade








State Street


Trust Company of America


RBC Advisor Services


Shareholders Service Group


Asset Custody Project

Stephen Winks

Stephen Winks

January 2, 2010 — 12:26 AM


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.


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Mentioned in this article:

LPL Financial
RIA-Friendly Broker-Dealer, RIA Welcoming Breakaways, Advisory Firm
Top Executive: Dan Arnold

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

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

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

Scottrade Advisor Services
Asset Custodian
Top Executive: Brian Stimpfl

E*TRADE Advisor Services
Asset Custodian
Top Executive: Joshua Pace

RBC Advisor Services
Specialized Breakaway Service
Top Executive: Brett Thorne

Shareholders Service Group
Asset Custodian
Top Executive: Peter Mangan

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