A Guide for Evaluating Your RIA Custodian — Before You Sign the Contract

Planning a move? Forced to switch custodians? Ensure your expectations meet reality.

You’ve been busy recently! Perhaps you’ve been adding new clients, even as you’ve had to guide investors through a period of rapid interest rate changes and an election year. Or maybe you’ve been building out other areas of your business, like your marketing funnel or adding new automation.

Amid all of your day-to-day work, switching custodians might be the last thing on your mind. After all, evaluating prospective RIA custodians can be tricky.

But when your custodian is affected by an impending merger or is otherwise subject to a transition, there are a ton of points to evaluate before signing on to something new.

Get the Custodial Assessment Guide to Help Streamline Your Search. 

How can you be sure that the RIA custodian is offering everything your RIA needs? How can you be confident that their technology, service, and resources will support your growing firm?

It comes down to knowing what qualities to evaluate, and what questions to ask. 

What to Evaluate

When evaluating prospective RIA custodians, there are a few key points to focus on before starting a relationship:

1. Resources – does the provider offer the technology and service to support your business? Is the provider’s service tiered (with only the largest RIAs able to leverage high-touch support), or are they committed to offering every RIA white-glove, hands-on support? What solutions do they provide?
2. Team – does the provider’s team focus 100% on serving RIAs like you, or do they split their time serving different types of advisory firms? Does your prospective custodial provider pursue investors via a retail channel (a potential conflict of interest if the provider’s team competes with your RIA to attract clients)?
3. Questions – when you have a question, will you know which department and support team member to contact for an answer? Further, will you get an answer in a timely manner that fully addresses your concerns?
4. Technology – was the provider’s technology designed with the RIA model front-and-center? Does the technology continue to expand to address advisor feedback and evolving needs? Does your provider have all the capabilities you need?
5. Flexibility – does the provider have flexibility in their approach to pricing? Or will you be met with a cookie-cutter pricing rate sheet that may not fit the needs of your business?

Level-setting on these five points and making sure that any prospective provider will offer the service, technology, and support that your RIA needs can save you from making what could be a big mistake.

Questions to Ask

In your meetings with prospective providers, they may give you the lip service that they have white-glove support, advanced technology, and an experienced team to fit your needs. But how can you cut through the noise and see if that’s really the case? 

Make sure you’re getting real answers from any prospective providers. We recommend asking these questions in your meetings:

• Do you have any business channels that are direct to investors and compete with my business?
• Do you have the resources to support my business? Can you help us get our RIA up and running on this new platform?
• Do you have dedicated team members who can answer my questions in a timely manner?
• Can you deliver a white-glove service model at scale? What does your service look like?
• Does your technology cut corners, or does it offer everything I need to run my business?
• Is your technology built to fit my unique needs? Do you understand my goals and opportunities as an RIA?

RIA Custodian RFP – Opportunity to Dive in Deeper

Conversations with a provider’s team can shed a lot of light into the five key traits identified above, but they likely won’t be able to cover all your questions. 

For more in-depth items (like cybersecurity protocols, technology features, and available account types), RIAs should consider developing an RFP. An RIA Custodian RFP is a great tool to dive into the nitty gritty details of a provider’s offering that could impact how your RIA operates and serves clients. 

The great news about RFPs is that once you create one, it can go to any RIA custodian you’re considering. Even if you’re planning to make a move as part of a custodian merger, you should consider sharing your RFP with other providers. You may be surprised to find that a different RIA custodian could be a better fit for your business once you look beyond the surface.

Thinking of Making a Switch?

If you’re considering a change in RIA custodians, we should talk.

We can dive into your unique business, and if TradePMR’s RIA support and flexible technology could be the right fit for your firm.

Editor’s note: This post was originally published in April 2022 and was updated in August, 2024.

About TradePMR

For more than two decades, TradePMR has worked with growth-minded independent registered investment advisors (RIAs), providing innovative technology tools and support designed to transform their businesses. The privately-held brokerage and custodian services provider (Member FINRA/SIPC), based in Gainesville, Fla., works to streamline investment advisors' operations through comprehensive custodial, operational, and trading support. For more information, visit www.TradePMR.com.

Follow TradePMR on X, Facebook, and LinkedIn for the latest news, updates, and event information.