Don't Skimp on Referrals: How to Have Honest Conversations with RIA Custodians’ Biggest Fans

Sift through the bias and get the inside scoop on your next RIA custodian platform before you sign on.

It's been said that wealth management is indeed a relationship industry. Advisors work tirelessly to build and nurture strong relationships with clients. As any RIA will tell you, maintaining good relationships is practically a full-time job. But a client referral is among the most significant benefits of all the hard work.

Referrals are one of the most valuable forms of marketing any company can hope to receive and can be a crucial source of growth for registered investment advisors. In fact, 58% of wealthy investors found their financial advisors via referral.¹

Why are these referrals so powerful? It's simple –implied trust. Referrals typically come from people in the same shoes as the prospective client. Like that prospect, it is a seal of approval from individuals looking to grow their wealth and achieve their financial goals. A Google search of financial advisors can only tell investors so much – at a certain point, they look to hear from real people with similar experiences.

For RIAs, referrals can be an excellent tool for building out client rosters and an advisor's suite of business tools, such as RIA technology and custodial services.

Systematize Your Vendor Evaluation Process

When an advisor starts looking for a new technology vendor or RIA custodial services provider, their search typically starts relatively broad. Advisors will likely look at the entire RIA technology landscape, see what kinds of offerings are available, and begin narrowing down the list from there.

In this first stage, advisors can likely disqualify most providers just by evaluating the information on the firms that are available online. But, once that list has slimmed down to a group of vendors that could all potentially be a good fit, that’s when the advisor should look to dive in a little deeper. This is an excellent time to set up demos and have conversations with providers’ sales teams.

Throughout these conversations, RIAs should focus on answering the below questions on each vendor:

Do they offer all of the solutions that the RIA will look to use day-in and day-out?
Is the provider priced appropriately for the business? Is that pricing flexible, or is it a one-size-fits-all model regardless of the firm’s needs?
Does the provider integrate with the third-party solutions used by the RIA? If not, does it have an open approach to data-feed integrations?
How does the provider approach data? Will the RIA have easy access to client data? How will that data be delivered?

These points should help narrow this list of providers to just a few candidates. Once advisors reach this stage, they're in the home stretch. On the surface, all of the providers remaining probably offer technology that could fit the advisor's needs. But what about the service? How can these advisors evaluate the more intangible qualities of a provider?

One way to unlock these insights is via referral – having a conversation with an advisor currently working with the provider.

Referrals: More than just Cheerleaders

RIAs may hesitate to put too much weight into what referrals have to say. After all, the provider typically hand-picked these referrals and likely are strong proponents of their offering.

When engaging in these conversations, it's essential not to settle for the basics. Hearing "they're great, I've worked with them for a long time" doesn't tell us too much about how the provider performs.

Instead, it's the job of the RIA to ask these referrals the tough questions. To try and dive into their experience and if that experience would benefit the advisor's firm. Some questions to consider asking the referral:

How quickly does the provider respond when you have a question?
When an issue arises, how long does it take to get someone on the phone who can help?
Tell me about a time things went sideways - what did they do to help?

Regardless of the technology provider, occasional issues will arise. Everything can't go right 100% of the time – what matters is how the provider responds when something goes wrong.

If the provider goes MIA and leaves the RIA to fend for themselves, that can create real issues for the advisor and their clients. If the provider remains proactive and stays in front of the advisor, providing hands-on support throughout any problems, that can make all the difference.

Don't Take the Provider's Word For it – Hear it From Your Peers

If you're considering changing or adding a new vendor to your RIA, make sure to take the time to connect with a referral. You can dive into their experience with the provider and determine if that vendor's service approach could work for your RIA.

If you're considering changing your RIA custodian roster, we should talk. We can dive into TradePMR's service approach and get you set up on a call with one of the firm's clients. You can hear about how TradePMR works to deliver white-glove service to their team and how the firm has responded when occasional issues have arisen.