Key Systems for a Healthy Independent Advisory Business, Pt. 8: Your Custodian

In this, the final post in my eight-part series on the three systems that mark a healthy advisory business, we’ll conclude with a discussion on the role of your custodian in running a healthy independent advisory business.

Your choice of custodian is very important. After all, your custodian runs the platform by which you (and your clients) will access their portfolios. Perhaps more important is the functionality of the custodian’s site. 

Does the platform increase your efficiency? For example, what type of trading system does it offeroffer? Can you do a position trade where you select a certain holding and sell it across all accounts? What about a model trade? Can you enter a model portfolio, assign it to an account, and instantly create a “sell” and a “buy” basket whereby you can execute the trades in each basket with one click? Can you rebalance, by model, across all accounts at the same time? Can you assign multiple models to a single account? What about a position swap? Can you sell one holding and replace it with another with only a few clicks? All of these are important factors in building an efficient practice. 

What about the custodian’s offerings? A custodian will have “selling agreements” with various fund families. Does the custodian offer enough funds (i.e.; families) to meet your needs? And if it lacks some fund families that you desire on behalf of your clients, will the custodian pursue an agreement with these funds?

This brings me to another key point, the custodian’s service personnel. How helpful are those people and are they available when you need them? Are they knowledgeable? Remember, we are in the advice business.