Keats, Connelly, the Arizona and Florida-based fee-only RIA firm with $265 million under advisement that specializes in serving Canadian citizens who also work and live in the United States, has named RBC Advisor Services as its new custody platform of choice.
Dale Walters, Keats, Connelly’s CEO, said the “most obvious” benefit for its Canadian clients, who he said accounts for ”99%” of all the firm’s clients, is their existing level of comfort with RBC, the Canadian bank parent of RBC Advisor Services. “Canadians are more comfortable with a name they recognize” when it comes to where their assets will be custodied, he argued, noting that Schwab has only a very small presence in Canada and Fidelity not at all. “Clients are concerned with the health of U.S. financial institutions, but they think that would never be a problem with RBC.”
Keats, Connelly has used Schwab as a custodian “since the beginning of time,” and has used Fidelity’s custodial services for nearly 10 years, Walters said, and when it makes sense to continue those custodial relationships for clients, it will do so. However, Walters said that in addition to the comfort level for clients of custodying with a Canadian bank, Keats, Connelly did its own comparison of the products and services offered by Schwab, Fidelity and RBC, and concluded that RBC had more of what the firm wanted.
In particular, Walters (left) said RBC’s research — “as a traditional brokerage firm, they’re much more active there than Schwab or Fidelity” — was a main attraction, as was its best execution on trading. “We do a lot of business with RBC already,” Walters said, but “beyond that, RBC gives us access to research and tools that Schwab and Fidelity just didn’t offer.”
Having both U.S.and Canadian dollar-denominated accounts was a draw, as was access to the products from Forefield, the publisher of educational and marketing materials for clients. He is also seeing some referrals from RBC bank branches to Keats, Connelly, which he doesn’t expect will be a major source of new business, but said would be a nice side benefit.
Walters said it will be mostly new clients that are placed on the RBC custody platform, though he expects that “some of our existing clients will hear of” the RBC option and will want so shift their assets. That’s apparently happened already. Walters says one client with $100 million in investable assets had resisted putting those assets under Keats, Connelly’s management, but now with the RBC announcement he’s said he will now do so. “It used to be a challenge to have multiple custodians,” Walters says, but advances in technology have made that no longer a issue.
When asked if Keats, Connelly was concerned that RBC Advisor Services (which was profiled in an Investment Advisor cover story in 2010) was a relative newcomer to the custody ranks, Walters said he wasn’t worried.
“We’ve kind of been early adopters all along,” and said that with RBC Advisor Services, the RIA firm decided “the risk-reward is certainly there.”