It’s been eight months since I began the task of selecting a new custodian. I now have three months under my belt with the new firm and there are many lessons I’ve learned. Because this business moves very quickly the phrase, “The devil is in the details” has never been more apropos. In other words, if I had known then what I know now, I could have saved myself a lot of time and frustration. Let me explain.

Mutual Fund Share Classes

The actual time it took to change custodians from beginning to end was much longer than expected, for a variety of reasons. Can you say share classes? As it turns out, my new custodian didn’t hold all of the same share classes my old custodian. As a result, the new custodian had to convert some funds into a different share class. I should point out they were extremely helpful and did everything possible. Eventually, all funds were comfortably tucked into their new custodial home. How does the old saying go? Oh yeah, “Learn from the mistakes of others. You can’t live long enough to make them all yourself.” Thank you, Eleanor Roosevelt.

So if you are considering changing custodians, may I suggest that you print a list of every fund you currently hold and present it to the new firm. Make sure they hold each one in the same share class that you currently hold. If not, you may have to sell some funds which would trigger a taxable event. Fortunately, I was able to convert into another share class without flipping the tax switch. Now that it’s completed, all is well.

Software Interface

Another bump I had–and in fact am still having–is the interface between my new custodian and Morningstar’s Office Edition. After three months I am still not able to download properly. We are getting closer though and I hope to have this ability very, very soon. On a positive note, once this is fixed, all future advisors will be able to use this tool as well. Sometimes it’s hard being the guinea pig.

Thanks for reading and I’ll keep you posted.