Peter Mallouk is exploring new RIA custody vendor for his $300-billion firm, despite new Fidelity referral deal; this time around upstart brands are in the running

Peter Mallouk is still searching for Creative Planning's next custody match in a quest for client referrals, almost five years after Charles Schwab Corp. began drying up his principal source, TD Ameritrade (TDA). 

The CEO of the Overland Park, Kan., firm is “exploring” ways to diversify its RIA custody vendor relationships after the lion's share of its $300 billion of administered client assets (AUA) ended up at Schwab post the TDA merger. 

“We would consider another custodian … [We're] always looking at the marketplace … [and] we're always exploring all solid available options,” he explains, in an email exchange.

Creative Planning recently deepened its relationship with Fidelity Institutional, agreeing to pay $50,000 a year* – and 10- to 25-basis-points on referred assets – to participate in its referral program. 

It also put a token tranche of assets with Goldman Sachs, but that relationship is not taking off, sources say, amid the unit's growing pains. See: Goldman Sachs RIA custodian delayed indefinitely, as 'technical details' bedevil launch date

Even the $20-billion-plus of “United Capital” AUM that Mallouk bought from Goldman Sachs is held at the big custodians.

Best options

Mallouk is known for leveraging its custody relationships with national retail brands, especially TDA, to win referrals from investors who outgrow the services of those legacy discount brokers.

Mallouk is also open to signing RIA custodians that specialize in serving RIA practices to the exclusion of retail investing – though he also signals that their lesser breadth and scale give him pause.

“The bottom line for us is we need to have the best options for our clients," he says. 

"If a custodian is at scale and can deliver what our clients need, and is user-friendly for our team, then we are going to have to seriously consider it as an option.

“The reality is there are two dominant custodians, and to serve the mass-affluent, it makes sense to have them available to our clients,” says Mallouk, referring to his firm's ties with Fidelity.

“Just a few years ago there were four or five [top custodians], and the landscape has changed quickly and substantively. We see others – traditional and non-traditional – enter the custodian space, and I think we will see a lead number three emerge,” he adds.

Helping hand

You'd think such an expressed willingness to tango would stop RIA custodians dead in their tracks, says Andrew Besheer, principal of Besheer & Associates, a wealth-tech and fintech business consultant, via email.

"Considering the size and influence of Creative Planning, it’s a little like EF Hutton. When Peter talks, or doesn’t, people should listen," he says.

Altruist founder and CEO Jason Wenk says he has yet to hear from Creative Planning, but he's ready to welcome Mallouk aboard his custody firm.

“We do have quite a few large firms in the process of onboarding that are of comparable scale to them – [with] multiple tens of billions of [managed assets] … so we can definitely support a firm like that,” Wenk says, via email.

"I suspect there are a lot of things we could do to help them and their clients quite a bit," he adds.

Altruist has never formally received a request for a proposal from Creative Planning, according to Wenk.

Service friendly

Besheer says Altruist may, indeed, be a good fit for Mallouk.

“Especially with the addition of the SS&G team, [Altruist] is building a very service-friendly business," he explains. See: Altruist is taking careful aim at RIA custody power, with SSG a big building block.

"Maybe it’s not the place that you put your largest account or most complex holdings, but maybe it is the place that you custody for new accounts and smaller acquired RIAs," he adds.

Altruist just raised a fresh $169 million from private equity investors – not least ICONIQ, known as Mark Zuckerberg's RIA. See: Division of $80-billion RIA leads a $169 million round as ICONIQ takes a 10% Altruist stake.

It may even have a referral engine soon enough, Wenk says.

“We built an early version and tested it in 2023. We've used the information gathered to start ideating on a larger scale marketplace to connect consumers to advisors but it likely won't be something we release this year. I'm optimistic for 2025 but don't have concrete timelines just yet.”

Axos Advisor Services – formerly E*TRADE – has also previously stated its intent to develop a referral-like scheme.

A 2010-announced deal to refer selected Citi clients to Pershing RIAs never took off. See: Citi will support Pershing RIA referral network.

Third spot open?

Pershing is technically a dominant No. 3, although it's willingness to move downmarket has frequently been questioned.

“Pershing is what it is; whether any individual wants to bestow a title on it, you can’t deny their numbers,” says Besheer.

“But the client base they serve certainly has skewed large, historically, hence they [did] not bid for SS&G [as Altruist did], or [make] a major play for the Schwabitrade small advisors,” he adds.

Indeed, Pershing's determination to court smaller RIAs, those with between $100 million and $200 million of managed assets (AUM), has ebbed and flowed over years. See: Mark Tibergien sets up Ben Harrison to challenge Schwabitrade with a $150 million cut.

Size counts

Wenk declines to speak for Mallouk but suggests Pershing's often noted status as No. 3 may be inflated. See: The old trick of new math Pershing used to make its RIA assets in custody soar from $200 billion to $615 billion in one year.

“[Pershing] really doesn't work with many pure RIA firms. Their RIA assets under custody are driven primarily by broker-dealers that also support RIAs; rather than stand-alone RIAs like Schwab, Fidelity, and Altruist,” he says

Altruist has already become the third-largest custodian behind Schwab and Fidelity, based on a practice count of RIAs served, and today it serves at least 3,662 RIAs, according to the firm.

It still trails Schwab, Fidelity and Pershing – and perhaps others – on the basis of assets under its custody.

Pershing did not respond to a request for comment for this article.

* Creative Planning's 'transformational' 2021 purchase of Lockton's $110 billion of administered assets retirement business is another major contributor to the firm's stratospheric growth over the past decade. See: Creative Planning goes ‘transformational’.

* RIAs gaining referrals through Fidelity WAS pay it a $50,000 annual program fee, 10 basis points annually on referred fixed income assets and 25 basis points annually on other assets. If an RIA moves those assets away from Fidelity, they must pay a one-time fee equaling 0.75% of that client's total assets.