Choosing a New Custodian
It’s been eight months since I began the task of selecting a new custodian. I now have three months under my belt with the new firm and there are many lessons I’ve learned. Because this business moves very quickly the phrase, “The devil is in the details” has never been more apropos. In other words, if I had known then what I know now, I could have saved myself a lot of time and frustration. Let me explain.
Mutual Fund Share Classes
The actual time it took to change custodians from beginning to end was much longer than expected, for a variety of reasons. Can you say share classes? As it turns out, my new custodian didn’t hold all of the same share classes my old custodian. As a result, the new custodian had to convert some funds into a different share class. I should point out they were extremely helpful and did everything possible. Eventually, all funds were comfortably tucked into their new custodial home. How does the old saying go? Oh yeah, “Learn from the mistakes of others. You can’t live long enough to make them all yourself.” Thank you, Eleanor Roosevelt.
So if you are considering changing custodians, may I suggest that you print a list of every fund you currently hold and present it to the new firm. Make sure they hold each one in the same share class that you currently hold. If not, you may have to sell some funds which would trigger a taxable event. Fortunately, I was able to convert into another share class without flipping the tax switch. Now that it’s completed, all is well.
Software Interface
Another bump I had—and in fact am still having–is the interface between my new custodian and Morningstar’s Office Edition. After three months I am still not able to download properly. We are getting closer though and I hope to have this ability very, very soon. On a positive note, once this is fixed, all future advisors will be able to use this tool as well. Sometimes it’s hard being the guinea pig.
Thanks for reading and I’ll keep you posted.
Mike,
I have enjoyed your blog and followed your search and move to a new custodian. Could you send me the grid you mention in earlier postings where you compare different custodians? Also, if you could tell me what custodian you started with before the move I would be interested. Thanks for sharing your experience with others. I really appreciate it.
Scott
Hi Scott,
Send me an email and I’ll reply with the item you are seeking.
My email is: mike.patton@integritywealth.us
Mike a few weeks ago you talked about the American Funds 529 College America product for handling these accounts through your Advisory. What do I need to request from American to get this set up.
Hi Todd,
To find out more about the American Funds 529 Plan for RIA’s, I would suggest calling AF and they will direct you to the right person.
Mike
Todd,
Here’s the AF contact info:
Kevin Zealberg
RIA Specialist, American Funds
800.421.5450 ext. 32129
kez@capgroup.com