Close Close

Industry Spotlight > RIAs

Custodial Data Aggregation: A Win-Win for Custodians and Advisors

Your article was successfully shared with the contacts you provided.

Over the past few years, data aggregation solutions have become a key component of how RIA firms deliver better client service, provide holistic wealth management, and boost AUM and profits. But what’s been less well publicized—and what I’d like to talk about here—is how top custodians are now using aggregation services to deliver data to their RIA clients. In doing so, they’re providing their RIA clients with better service and turning the typical data delivery model on its head.

A top custodian may have 500 RIA firms as clients, all using different portfolio management systems. For every Schwab or Advent system that the RIAs are using, there’s also a proprietary system that makes it more difficult for the custodian to deliver data. 

Today’s custodians can perhaps support two or three of the bigger portfolio management systems (PMS), but the idea of efficiently delivering data to dozens or hundreds of disparate systems is mind boggling from both an operational and cost perspective. The custodian ends up sending data in a format that the RIA is ill-equipped to receive. 

That’s where more effective data delivery comes in. Today, an increasing number of leading custodians are using a data aggregator such as my firm to deliver data to a vast array of RIAs with disparate portfolio management systems. Data aggregation makes data delivery to the disparate systems as seamless as possible so the custodian is freed from trying to service a seemingly infinite number of iterations and permutations of today’s PMS offerings. 

The Big Role of Support and Cost

Data aggregation is a win-win for custodians. Not only can they more efficiently deliver data to their RIA clients—and avoid the lose-lose of having the RIA walk away from doing business with them—but they also benefit immensely from a support and cost standpoint.

For example, using our hypothetical scenario, suppose there’s a data snafu that affects the custodian’s data delivery to all 500 RIA clients. Ordinarily, the custodian would be bombarded with 500 phone calls from irate RIAs, and the custodian’s support team would be stretched to the limit and beyond.

However, if the custodian is using ByAllAccounts—as several top custodians now do—it’s the ByAllAccounts personnel who field the calls and deliver the support services that correct the problem. ByAllAccounts serves as the funnel and solves the issue on a one-to-many basis, liberating the custodian from this time-consuming undertaking.

While the custodian saves significantly in terms of time, labor and cost, making this data delivery and support model even more attractive, for the custodian’s advisors, it’s a win, too. They benefit from quicker resolution of the problem, a time savings they can pass along in their service to their clients. 

One more point: Custodians need to take into consideration that advisors have a diverse range of custodial services to choose from. If a custodian can provide faster, more efficient data delivery to an advisor than a competitor it can greatly work to the custodian’s advantage. It’s a point of differentiation, and can be a compelling reason for a custodial decision-maker to look into the new data delivery model described here.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.