Time to Change Partners?

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.