Where do advisors go for custodial services when they’re new to the profession or if they have only $1 million to $25 million in assets? That question is on the minds of a growing number of advisors. The good news is there is help to be found.
Ron Pearson, a planner with Beach Financial Services in Virginia Beach, Virginia, says he mentors quite a few nascent fee-only planners, and he’s finding it increasingly “difficult to suggest a custodian.” Pearson says he eschews recommending Schwab because of its high costs, and is leery of pushing Fidelity because of the brokerage firm’s reluctance to serve him when he was just a babe in the planning woods in 1994. Back then, “Fidelity said ‘We’ll be happy to serve you as long as you sign this commitment that you’re going to have $3 million in our accounts within the first year,’” Pearson says. “And I said, ‘I’m a new guy. I have no idea what I’m going to have.’”
Jay Lanigan, executive VP of Fidelity Investments Institutional Brokerage Group, and Tom Bradley, president of TD Waterhouse Institutional, both say their firms do not require advisors to meet an asset threshold. However, both firms would prefer to deal only with advisors who are serious about growing their assets. “We’ll take anyone on,” Bradley says, “but we don’t want the advisor with $2 million under management who’s managing some money for family and friends and does it on the side.” Lanigan states that Fidelity wants “full-time” advisors “willing to grow their businesses.”