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Retirement Planning > Spending in Retirement > Required Minimum Distributions

Time to Change Partners?

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Change. Clearly, it’s the one thing which remains constant. When I started this journey over a year ago, the decision I had was to align with an independent broker/dealer or become an RIA. I chose the latter. In retrospect, I’m very glad I did. I also made the decision to custody my client’s assets at one of the largest firms, partly because they had great name recognition. Since I was starting from scratch, in terms of assets under management, I needed a custodian with a lower AUM minimum. Well, this firm’s AUM minimum was reasonable and within seven or eight months, I had exceeded it. I was actually over their minimum by a few million dollars when they made a decision to raise their minimum. Their new minimum was double the old one and once again I was under some pressure to get to their new benchmark. The problem is, for every dollar I was bringing in the door, given the current bear market, I was losing ground.

Even with the bear market, I’ve remained over their original minimum. Now comes the punitive part of the story. If I am under their new minimum on a calendar quarter basis, I will be charged a fee of $1,200 for that quarter. For a newer business, this is somewhat significant. So I am left with a choice: to stay and pay their fee for a few quarters until I reach their minimum, or leave and find another custodian. I am now searching for a new custodian.

I’ve found there are several good choices in the marketplace. Now I have to perform some due diligence and decide which custodian I will use. Most of them have the same amount of product offerings, but there is some difference in the amount of their ticket charges. For mutual funds my current custodian charges around $35 to $44 and I am finding that these other custodians charge $24 or less. It’s too early to elaborate more on this as I am only in the beginning stages of this process.

Perhaps you wouldn’t mind sharing the name of your custodian and whether it makes sense for a relatively new and small advisor to partner with them, or not?

Thanks in advance for your input.


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