7 Questions for Your Team as You Build a RIA Custodian RFP

Check all the important boxes before signing on with your next provider.

Advisors that are considering a change in RIA custodians face a difficult challenge. Switching providers isn’t easy - it’s important to take the time to ensure your next provider is the right fit for the business in the long-term.

One of the most important steps in the custodial evaluation process is the RFP. To develop a comprehensive RFP, advisors should start by sitting down with the full RIA team.

Asking the Right Questions

Advisors tackle a lot for RIAs. They build client relationships, focus on business development, and may even manage client portfolios. Even with all these responsibilities, it’s rare for advisors to touch every part of the business.

That’s where the rest of the RIA team comes in. Before developing a RFP, advisors should sit down with the full RIA team to ensure the firm evaluates all the important traits in their prospective custodians.

In this conversation, every RIA team member should look to answer 7 key questions:

1. Where do you feel service has been falling short with our current custodian?
2. How could that service be improved in our next provider – are there any key service attributes you’d like to see in our next custodian?
3. What have been the biggest hurdles you have had to overcome in working with our current custodian and are there any ways the custodian could have done more in helping to tackle those challenges?
4. What are some of the most common issues you’ve had with our current custodian that you would like to avoid with our next provider?
5. What capabilities does our current RIA custodian offer that are integral to your work?
6. Are there any capabilities our current RIA custodian doesn’t offer that you’d like access to with our next provider?
7. What third-party platforms do you currently use or would like to leverage with the new provider via integrations?

Answering these questions will help to illuminate specific capabilities and traits that RIA would benefit from in their next RIA custodian. RIAs can leverage these answers to help build out their RFP to ensure their next provider fits the needs not only of the financial advisor(s), but of the full team.

Areas of Focus in the RFP

The feedback gleaned from these team conversations can be baked in throughout a RIA’s custodian RFP. The RFP should be broken down into some key areas to help ensure the provider checks the right boxes across the board.

These RFP areas of focus include:

• About the Custodian – value proposition, typical size and structure of RIAs that the provider works with, custodian ownership, available accounts.
• Service and Transitioning – approach to RIA transitions (both support and technology), service team structure, service tiers (if any), process for securing support.
• Trading – trading technology, trading team support, depth of trading features, upcoming expansions to the trading offering.
• Technology – current technology breadth and depth, third-party integrations, short- and long-term technology roadmap, approach to technology development.
• Cybersecurity – processes and procedures, safeguards in place, cybersecurity support for RIAs, data management and approach to data sharing.
• Pricing and Fees – available customization to pricing structure, fee billing processes, approach to pricing adjustment over the course of the relationship, pricing compared to alternative providers.
• References – RIAs currently working with the provider who can shed new light on these above points.

Only by diving into all of these points can a RIA be confident that their next provider could be the right fit for their business. Looking beyond the surface into the nitty gritty is an important step before making a major transition for the RIA.

Duty to Find the Best Provider

RIAs work in the best interest of their clients, every day. If your RIA is undergoing a merger that will require your team to transition custodians, it’s important that you make sure your new provider is still the best fit for your team, and your clients.

Before taking a wait-and-see approach to a custodian merger, connect with your team. Identify the core traits the firm needs in their next provider, and see what alternatives are out there.

You may find that your merging custodian is the best fit for your team, and that’s great. But, you may see that a different provider could be the better option – there is no harm is checking what’s out there.

If you’d be interested in learning about TradePMR and how the firm’s boutique approach to custodial services and technology could benefit your RIA, we should talk. We can even help you develop your custodian RFP to ensure that we (and any other providers) answer all of your burning questions before you move forward.