Running an RIA can be a daunting task. It seems that every year there are new industry forces to contend with, new technologies to learn, and new regulations to navigate.
However, it’s looking like 2023 could be an especially turbulent year for RIAs – specifically for firms that are approaching an RIA custodian merger.
As these advisors approach the new year, they should look to answer one big question: does my firm’s infrastructure – specifically the technology and custodial services - put my clients and my team in the best position to succeed in 2023? End of the year can be an ideal time to take stock and perform the necessary due diligence to be prepared for a new year.
First stop, technology. At the core of every advisory firm is technology: RIA trading tech, CRM capabilities, in-depth performance reporting. The list goes on – technology can help create massive efficiencies for RIAs and enhance the offerings they can deliver to their clients.
Over the past couple decades, RIA technology has experienced an explosion of options for advisors. It seems like new platforms and capabilities advance each year, and it’s an advisor’s duty to ensure they’re working with the right providers for their unique firm and client base.
When thinking about the RIA technology stack, it all starts with the RIA custodian platform. The central hub for an advisory business which can connect with all the third-party providers that an RIA uses day-in and day-out.
Looking towards the coming year, advisors should make sure their RIA custodian technology is the right fit to help them scale their business and serve their clients. Advisors could benefit from making sure their current or prospective RIA custodian’s technology has four key traits:
Setting RIA teams and clients up for success in 2023 starts with making sure the provider has the right RIA custodian technology to fit their unique needs. While it’s important to dive beyond the surface into specific capabilities, RIAs can start by making sure their provider prioritizes these four traits.
On top of evaluating RIA custodian technology, advisors should take a close look at how their provider approaches service.
Consider a few key questions about service:
In the eyes of a client, the RIA custodian is an extension of the advisory firm. If the RIA custodian takes weeks to complete a simple service request, that can reflect poorly on the advisor.
Getting strong support from a custodial services provider can not only save an RIA team valuable time, but it can also directly benefit clients.
A marriage of comprehensive technology and strong service can be a recipe for success for RIAs. If an RIA’s provider isn’t moving at the speed of their business, that could spell trouble in 2023.
Once an advisor has evaluated an RIA custodian’s technology and service at a high level, they have hopefully been able to identify any major red flags. The next step: diving into the details.
Before sticking with an RIA custodian, or undergoing an RIA custodian merger, advisors should consider developing a request for proposal (RFP) for prospective providers.
The RFP can be a detailed list of questions that dive into the points most important to their unique business: technology integrations, trading offerings, RIA support, CRM capabilities, available account types, any operational restrictions… Whatever is top of mind for the firm.
Advisors undergoing a merger may find that their new provider checks all the right boxes – that’s great and could mean they’re making the right decision by sticking with the custodian through the move. On the other hand, if that provider falls short on some of the most important questions for that RIA’s business, that could be an issue.
One great thing about an RIA custodian RFP – once it’s developed, it can go to any RIA custodian the firm believes could have the tech and service to support their business. Getting an RFP in the hands of a few RIA custodians can save an advisor a ton of time on research. Rather than trying to answer burning questions by scouring information available online, the RFP lets the advisor go straight to the source and get candid answers.
When looking for their next provider, RIAs should consider looking beyond their merging custodian. Surveying the big-name providers as well as the boutique custodial service providers could help advisors make sure they are with the right RIA custodian in 2023.
Whether your RIA custodian is approaching a merger or if you feel like your firm could find a better provider in the new year, it’s the right time to start looking. There’s no harm in seeing what’s out there.
Finding the right technology and service for your team and your clients should be a priority in 2023. If you’d be interested in learning if TradePMR could be the right fit for your firm, and how our team would respond to your RFP, we should talk.