How to Make the Most of Your RIA Custodian RFP

Answer all your burning questions before you sign on with your next provider.

Advisors that are considering a change in RIA custodians have a big task ahead of them. Making the move takes a lot of work but can bring immense benefits for a growing firm. The big challenge: finding the right provider to fit a RIA’s unique needs.

There are a few key steps every RIA should take when looking for a new provider to help whittle down the list:

• Identify what the firm absolutely needs from their next provider.
• Review information available online on prospective providers, eliminating any that clearly won’t meet the firm’s needs.
• Take a demo of each remaining platform and identify the short-list of providers that could work for the firm.

This will help the RIA cut down from the dozen-plus RIA custodians to just a select few. Then it’s time for one of the final steps in the review process: Request for Proposal (RFP).

Developing Your RIA’s RFP

By the time an advisor is ready to submit RFPs to prospective RIA custodians, they likely have a good handle on the providers’ base offerings. The RIA team may understand the technology structure at each provider, and how the respective custodians support RIAs day-in and day-out. These are points that the providers’ sales teams likely zoned in on during those initial conversations.

But engaging with a provider requires more than a base-level understanding of their offering. It requires the RIA to understand the details under the surface:

• What kinds of nonstandard assets does the provider custody?
• What methods are available for clients to deposit or withdraw funds with the provider?
• What are the provider’s data policies and business continuity plans?

The RFP is an opportunity to dive into all of these points that could impact the RIA over the course of a custodial relationship.

How can a RIA decide what questions to ask? We recommend looping in the full team.

Determining Points to Evaluate

Consider having the advisors, operational staff, trading experts, etc. sit down to identify all the ways this new provider could impact their day-to-day operations. Operational staff may touch projects that the advisor never will. Getting feedback from the full team will help to make sure the RIA has answers to all the questions that could impact their business.

Break down these questions by some key themes, including but not limited to:

• Resources – does the provider offer the technology and service to support your business? Do they have the flexibility to facilitate how your firm wants to grow and trade?
• 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?
• Focus - does your prospective custodial service provider have a retail channel? Will the provider’s team be competing with your RIA to attract clients?
• Timeliness – when you have a question, will you know who to contact for an answer? Further, will you get an answer in a timely manner that fully addresses your concerns?
• Technology – was the provider’s technology designed with the RIA model front-and-center? How will that RIA trading and back-office technology support the various facets of your business?
• 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?

Focusing on some of these key areas will help to make sure the RIA covers their bases before making any major business decision.

Share the RFP with the Prospective Providers

Once a RIA has developed their in-depth RFP, it’s time to send it out. Connect with the providers that the firm feels could be a good fit and see how they match up on all of those points.

Consider the care they put into each response. Are they being thorough? Are they fully answering each question? Are they providing additional resources to help fill in any gaps?

A RIA’s provider should be invested in their success and should be willing to spend the time ensuring they answer all of the firm’s questions.

At the end of the day, if a provider isn’t the right fit for the RIA, that’s a lose-lose situation. The RIA will be stuck with an unfit provider, and the provider will have to spend an inordinate amount of time trying to help the RIA accomplish their goals.

TradePMR’s Approach to RFPs

At TradePMR, the firm looks to work with growth-minded RIAs that can truly benefit from its offering. It doesn’t look to add advisors for the sake of adding advisors, it looks to bring on firms that it can help achieve the next stage in their growth.

If you have burning questions about how TradePMR could support your RIA, we should talk. We can dive into TradePMR’s offering, answer those initial questions, and dive into our offering in your personalized RFP.

Let’s make sure we’re the right fit before signing anything – if we can help you grow, let’s do it.