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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
Dear Readers,
One of my favorite clients, with whom I have worked for a couple of years now, is considering a transition from his current broker/dealer to an RIA environment. Over the past two years, he has downgraded the dependence the firm has had on its OSJ, and the growing team is now ready for another form of firm.
Going independent can be excellent in many ways, from having full control over the management decisions, to choosing the right investment platform, to attracting talent who might want to be part of a growing company with opportunities for leadership and ownership. But it also means establishing all the infrastructure needed to run the firm well. The right custodian will be more of a partner than a vendor. Here are some things to consider when making your selection:
1. Before you speak with any custodian, you want to establish the goals for the partnership in advance. What expectations do you have for the relationship? What are the priorities for your decision-making process — what matters most?
To identify these, consider asking team members who will need to liaise with the custodian what they would hope to see in a partner. Seeking input before the process starts is important so you aren’t swayed by a great salesperson, though the best salespeople may open your eyes to things you haven’t thought of yet. This just gives you a good starting point.
2. Know who should be involved in the decision-making process for your firm. Identify what role each decision-maker should play and perhaps give them each a list of questions to ask. You can conduct one-on-one interviews with the custodian or have the team meet as a group. I prefer the latter so you can hear what other colleagues are asking and hear the custodian’s answers all at once.
3. Develop questions to understand the custodian’s strengths and weaknesses. Examine things such as:
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- Investment platform access;
- Practice management support focused on growth;
- Training and support;
- Technology options, such as CRM or operational back office;
- Onboarding experience;
- Consulting resources;
- Customer support;
- Referral programs; and
- Fees.
Always ask custodians how they believe they stand out from their competitors and what you should know about them that you didn’t ask.
4. Ask to talk to other clients of the custodian. Make sure the firm is similar to yours in terms of size and support infrastructure. Do your own due diligence and, if you have connections through an association or other industry group, ask around about who your colleagues are using and why.
5. It can be helpful to read the industry press. Google the custodian’s name to find articles featuring them, topics they’re writing about, or comments advisors are making about them.
6. Examine who is involved in the sales process. Do they bring their senior management to speak with you or a team of people? How important do they make you feel in the sales process?
There is no “best” custodian. They all do some of the same things in terms of providing excellence in infrastructure and support, but they can vary significantly in what they focus on, how much ongoing attention they will give, and what the RM can bring to you as your relationship evolves.
Do your due diligence to ensure you are making a good match; it is a partnership that should last for many years.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. The firm has won the Wealthbriefing WealthTech award for Best Training Solution for 2022, 2023, 2024 and 2025. Beverly is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. She is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
