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Near a Decision on a New Custodian

By Mike Patton

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Well, I’ve concluded my search for a new RIA custodian and will make a final decision very soon. I anticipate the transition to be complete by year end. The new firm will offer a more competitive fee schedule, improved technology, and greater personal service. I’m very excited about the future with the new partner. There should be no dropoff in the product offerings or in the execution of trades. Before I make my choice, I do want to ensure one thing is in place–an interface with Morningstar Advisor Workstation, Office Edition. That’s critical as I derive my performance reporting from this subscription. Once I have confirmed this, I will be ready to move forward.

New Office

It seems the construction has reduced to a snail’s pace. Originally, I was scheduled to occupy my new quarters on October 1. Then a mid-November date was the target. Now, I’m not sure what the new date will be though it should be this year. If the building isn’t ready to occupy in 2008, the owner will lose some very important tax benefits as a result of Hurricane Katrina legislation. I suppose this gives me a great reason to talk to him about why he might consider hiring me as his advisor.

New Process

During the past few months, I have been giving a lot of thought to how I do business and I decided to create a list of initiatives for 2009. Among them was a better definition of what a client can expect. To this end, I have created a three page document to provide clients with an overview of this. For example, I’ll conduct portfolio reviews four times per year, during the month immediately following the end of a calendar quarter. Also, I will update all financial plans during the first quarter of each year. In August-September I’ll also prepare an income tax projection for the remainder of the year. I should note, however, that I have no plans to prepare income tax returns. Near the end of each year, I will make decisions concerning client’s mutual funds and capital gains expectations. This year, it appears that only a few funds will actually have capital gains to report.

I’ve found that clients hate to lose money in a mutual fund and pay capital gains tax in the same year. It’s kind of like rubbing salt in a wound except it has no medicinal effect.

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