Three Steps Financial Advisors Can Take Today to Prepare Their Firm for an RIA Custodian Transition

Avoid some common mistakes ahead of your big move.

You have made the decision to switch custodians or possibly add a new one to the roster. Now what?

Whether you’re approaching a major RIA custodian merger or are otherwise considering a change in providers, there is a big hurdle to get over before you reach business-as-usual: the custodial transition.

A RIA custodian transition can have a major impact on a business, but it doesn’t have to. Check out 3 key considerations to help make your custodial transition as smooth as possible and set your team up for long-term success.

1 - Getting Your Team and Your Clients On-Board

A custodial transition can feel like a big deal, both internally and externally.

For the RIA team, there may be hesitations about learning a new technology and service ecosystem. RIAs should look to employ four key steps to get their team on-board for the move:

1. Keep the team in the loop from day 1 – advisors don’t touch all aspects of a business. Connect with the full RIA team to get their insights on the custodial search and make sure the firm’s next provider checks all the required boxes from client service to back-office support.
2. Reinforce the value gained from the move – an excited team is a motivated team. Make sure the entire RIA is invested in the success of the move and looking forward to the new capabilities and services available with the RIA’s next provider.
3. Manage expectations on timeline – be honest and up-front. RIA team members should have a clear understanding of how long the transition will take, and when they can expect to return to business-as-usual.
4. Set internal tracking system and individual goals – advisors shouldn’t take on the transition alone. Leverage the full strength of the RIA team and ensure that each team member knows how they can contribute to the success of the move.

In addition to getting the team on-board, it’s important that RIAs make sure that their clients are also updated and informed on the move. During client conversations, consider employing these four tactics:

1. Lay the groundwork – start client conversations with the goal of the move. What the RIA is looking to accomplish, and the ways that this new provider will benefit how the firm serves those clients.
2. Manage expectations – let clients know that there will be a transition period, but that they shouldn’t experience a dip in service. Explain that they will have to fill out some new paperwork, but the impact should be minimal.
3. Don’t overexplain – clients work with the RIA for the advisor, not for their technology and service providers. Clients don’t need to know all the nuances of the move, just that it is happening and how it will benefit their relationship.
4. Provide clarity on process – offer clients a step-by-step guide of what they can expect from a 10,000-foot-view. Knowing what’s coming can help keep clients calm and unfazed throughout the move.

Ensuring that the RIA team and clients are ready to make the transition can be a key to a successful move (and can help avoid any unwanted surprises down-the-line).

2 - Compiling, Organizing, and Storing Data

Historically, client data has been primarily held by RIA custodians. This data spans from client demographics to performance history and can be indispensable for advisors looking to build and maintain long-term client relationships.

In order to know where you’re going, you need to know where you’ve been – this principle especially holds true for advisor-client relationships.

Making a custodial transition without all relevant client data can put RIAs at a disadvantage moving forward. Advisors can rely on this data to show account progress and justify their recommendations. Without this data, advisors can be forced to operate without the complete picture.

Before making a move, advisors should be sure to retrieve all relevant data from their custodians. While this data can be directly ported over to their new provider, it’s important that advisors consider also storing this data internally.

RIA custodians do not approach data the same way. While firms like TradePMR look to share data advisors want, when they want it, in a format that is easily leveraged for analysis, not all providers share that outlook. Some RIA custodians limit what data advisors can access based on specific time horizons or types of data. Additionally, these providers may only share data in a certain format which could limit how the RIA can leverage that data.

While establishing secure data storage can feel like a big investment up front, it can ultimately protect RIAs down-the-road. Ensuring an advisor has access to the data they need, when they need it, can save a lot of headaches and help to arm the RIA with the information they need to effectively serve their clients.

3 - Finding Support Every Step of the Way

Before making a move, RIAs should make sure that their next provider has the resources to support their transition.

Perhaps the biggest mistake RIAs can make when approaching a transition is trying to tackle the move alone. There are a ton of i’s to be dotted and t’s to be crossed – trying to take on the transition without ample support can be a recipe for disaster.

TradePMR’s CEO and Founder, Robb Baldwin, understands this point intimately. Back in the 90’s, Robb was a RIA whose custodian underwent a merger. During the transition, a number of his client accounts seemingly vanished. Monies were transferred incorrectly, and he was unable to get the support he needed from his new provider.

It took Robb months to sort out the issues and even longer to rebuild trust with his clients. The experience ultimately led him to launch TradePMR – a custodial services and technology provider 100% focused on serving RIAs the way Robb needed to be served when he was an advisor.

For nearly 25 years, TradePMR has prioritized delivering white-glove service to RIAs from the moment they sign on with the firm.

TradePMR offers RIAs hands-on support from a talented Transitions team. This dedicated team helps advisors prepare, navigate, and complete their transition to the TradePMR platform. The team focuses on ensuring advisors bring over all relevant client data, complete necessary paperwork, and get comfortable leveraging the firm’s Fusion technology.

While TradePMR takes this white-glove approach, not all providers follow suit. Especially when managing a major custodian merger, big-name RIA custodians may be hard-pressed to provide the type of support RIAs need to confidently complete their transition.

Are You Ready for Your Move?

If you feel like you’re taking on your transition alone, or that you aren’t fully prepared for your upcoming move, we should talk. We can dive into your unique business, your goals, and if you’re in a position to transition on your desired timeline.

If your upcoming custodial relationship isn’t putting your team in the best position to succeed, it may be time to look elsewhere. Let’s see if TradePMR could be the right provider to help take your firm to the next level.