How I Chose My New Custodian
How I Chose My New Custodian
To recap, in mid-2008 my current custodian made a corporate decision to double its minimum requirement for assets under management. I was over the minimum at the time, that is, until they raised it. Being under the custodian’s minimum was not the problem. Paying the $1,200 quarterly fee because of it was. To be clear, I don’t harbor any ill feelings at all. In fact, I firmly believe that everything will work out for the best. If anything, this process has opened my eyes to what’s available.
So I began my search. I contacted six or seven different custodians. One had a $25 million minimum, but the others had no such requirement. I viewed Web demos from five firms before narrowing it down to two. Then I went through another round of discussion with these two companies and made my decision. As it came down to the wire it became increasingly more difficult. The final two custodians were Shareholders Service Group and Trade PMR.
Trade PMR was initially recommended to me by someone whom I trust very much. Shareholders Service Group was recommended by several satisfied advisors who are also readers of this blog. To keep things straight, I created a spreadsheet with various metrics which I considered important. I included transaction fees, account fees, quality of their statements, and their technology platforms. How easy was it to place trades, deduct fees, and get research? I also considered their breadth of products. Here’s what I discovered in a nutshell.
People who use Shareholders Service Grou, really love their service. I believe they would be a great firm to work with, but alas, I chose Trade PMR. Trade PMR has one the very best technology platforms I have seen. For instance, all you have to do with the fee deduction is set the account parameters and it’s very easy from there. Flat fee or tiered? In advance or in arrears? Monthly or quarterly? Once these are set, you simply click a few buttons, it reads the ending account balance, and deducts the fee. Very, very simple. It will save much time and increase efficiency. There are several more advantages like this, but I’m out of room for now.
Several readers of this blog have asked about this issue. They wanted to know who I chose and why. If you’re in this group just send me an e-mail or leave a comment here and I’ll be happy to reply.
I hope you all enjoy your holiday season and thanks for reading!
Can I get more details on on who I chose and why? Thanks.
So with firm did you go with?
I am a small ria and am looking for another custodian. How easy was it to transition your clients and how does the platform compare to say other custodians. And how was it going from a “name” to a lesser known?
Rick, Johnny, & Edward,
I have only made my decision. I haven’t transitioned my clients as of yet. My understanding is that I will fill out a MS Excel template with the pertinent information such as name, address, DOB, etc. Then Trade PMR will fill out all applications and send them back to me. Then, I will have my clients sign, fax the forms back to Trade PMR, and they will initiate the transfer process. My former custodian is an ACAT firm so the process shouldn’t take very long.
I don’t believe that going from a big name to a lesser known name will pose a problem. The client is buying your advice. Plus, Trade PMR has an extremely broad array of products. I have discussed this change with all of my clients and they have not expressed any reservations at all. They trust that I am making a prudent decision. The technology platform that Trade PMR has is very strong and that is one of my chief reasons for choosing them.
Hi Mike – thanks very much for this valuable info. would you mind emailing me your spreadsheet?
How is the pricing structure for PMR differ from your current custodian? Are you going to offer your clients SMA and Banking as well?
How is the performance reporting capability of TPMR?
Hi Mike – in one of your posts i think i read you offered to share your spreadsheet with those of us considering switching as well. if i am correct, could you please email it to me so i can confirm vs my own spreadsheet? thanks, mary
interested in your comparisons of the contenders, how you narrowed it down.
Thanks,
Mary,
Sure. Send me an email.
Nelson,
Pricing structure – less than current custodian.
SMA & banking – Maybe. Still undecided.
Performance reporting – Pretty good. I use MS Advisor Workstation Office Edition currently, but may change this year to PMR’s tool.
Mary,
Sure. Send me an email.
Lew,
Send me an email. I can send you my spreadsheet I used to compare
I would love to see the spreadsheet as well. I enjoy your blog. Also any advice for a new advisor looking to setup an RIA?
Harry,
Send me an email and I’ll send you the spreadsheet.
Mike,
I came across your article in the latest addition of IA as I myself am looking for a change from my current Broker Dealer. I have become disappointed with the inability of my BD to make my life easier in these trying times. I manage the majority of my practice on a wrap basis and have found it difficult to effectively manage monies on our platform without discretion or block trading capabilities. It has become bad enough that the market has decreased my pay, but to add insult to injury my BD has decreased my p/o as well because I refuse to toe the corporate line and sell their product. Anyways, sorry for the rant but I have been interviewing Custodians and participated in a TradePMR webinar today and was impressed with their technology. Could you send me your spreadsheet as well in regards to custodian comparisons. Also, do you pass the ticket charge on to the client or do you absorb those in your fee? One more thing, what percentage of your clients followed you to your new RIA or custodian.
Thank you and your info has been greatly appreciated.
Mike,
I enjoyed your blog a lot. Thanks so much for the valuable info.
I’m starting my own IRA firm now and I’m deciding on which custodian to use as well. Can you email your spreadsheet comparing the different custodians?
Does Trade PMR has minimum AUM requirement?
My email address is cq_you@yahoo.com
Thanks,
Charlie
Hi Mike –
We are currently with Trade PMR, and I was glad to find your blog because I generally get the ‘never heard of them’ response from other advisors. We have been with them about a year, since we started up. We have about $8MM in AUM with them this first year.
I have a lot of small frustrations with them, but since we haven’t worked with anyone else, would love your feedback on these:
1.) They charge 1.35% expense ratio on their standard money market account, which we find outrageous, especially in this climate;
2.) They have promised aggregation softward for at least 6 months but it hasn’t materialized;
3.) The performance reporting is rudimentary at best.
Would you mind sending me your spreadsheet? We did the same exercise, but had a much lower level of knowledge. Appreciate your blog and the generous offer to share!
Carol
Tyler, Charles, & Carol:
I just saw your posts. Please send me an email and I would be glad to answer your questions.
Thanks,
Mike
Mike
I am also a new RIA and I am considering TradePMR. My book will be 99% mutual funds and ETFs. I would be interested in your responses to Carol and also your take on how they would view my book.
I have talked to them and got all the right answers but I am afraid of the “Carol type questions” that I didn’t ask or misunderstood their responses.
Peter
I’m interested in receiving the spreadsheet that you mentioned in your blog and your overall thoughts about the TradePMR vs others (performance reporting, money market expense ratios/options, etc.). Also, did you review their banking products?
Thanks
We have had a similar situation where our B/D doubled our minimums and started charging high fees. Would you please share your spread sheet with me showing the firms you explored etc. Thanks Bill
Hi -Mike – I am a startup RIA firm in Northern California, still setting up my office, and I’m leaning towards Trade PMR.
I would appreciate your feedback on how Trade PMR is performing in these 2 areas:
1. Account aggregation – they offer it through cash edge, meaning it includes positions but not trading. Is it working as advertised, and is the omission of trading/history on held away accounts posing any problems? (limitations on performance reporting, clients getting full info, etc)
Also, ever considered using By all Accounts (also gives positions) which integrates with Morningstar office?
2. Morningstar office – I plan to use this software also, even though it is somewhat redundant with Trade PMR. Still using it, and if so, How well are the two interfacing, and is it worth it to have both?
Thank you!
Alice
P.S. Geaux tigers (LSU grad, class of 83, NOLA native)
NOTE: Until somewhat recently, I did not receive a notice when someone posted a new comment on this blog. With several years of weekly postings, I am now seeing that many of your comments went unanswered. For that I apologize. That is why I have seemed to be negligent in responding. Now I receive an email alerting me to a new post. This should take of it.
Alice,
The long and short of it is that I haven’t signed up for AA yet, but plan to do so. I want to “poll” my clients first and see if there is enough interest. If the response is good, then I plan to embrace it fully. I think it would be a great help in staying current on my clients situation and when it comes to updating their financial plans, it will make my life a lot easier. On the MS Office interface issue….well as I understand it , it is working well. For my particular situation though there is still a snag. Basically, they’re trying to get my past data (prior to Trade) into the system. Moreover, there is apparently an issue with the way Trade prices their individual fixed income securities compared to what MS is looking for. Shouldn’t be too difficult, but that’s why I’m still waiting.
Take care!
Repost from September 26, 2009 at 11:13 pm
I’m interested in receiving the spreadsheet that you mentioned in your blog and your overall thoughts about the TradePMR vs others (performance reporting, money market expense ratios/options, etc.). Also, did you review their banking products?
Thanks
I too am in the process of choosing between SSG and TradePMR. I would appreciate the opportunity to review your spreadsheet mentioned in your blog in addition to any other information concerning your recent experience with TradePMR. Does TradePMR integrate with Money Guide Pro yet? Thanks.