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Why I’m Happy With My Custodian

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Last week an advisor called me after reading some of my writings on AdvisorOne. He was considering taking the RIA route and wanted to get my thoughts on the matter. We spoke for about 20 minutes as I attempted to answer his questions. In a typical month, I receive a few calls like this with a consistent question, “Which custodian should I select?” Therefore, in this post, I’d like to give you an update on my choice, TradePMR. 

TradePMR may not be a household name…yet, but they are clearly gaining ground. One of the things I like is that fact that they don’t compete with their advisors. For example, Scottrade or TD Ameritrade have a do-it-yourself platform in addition to their RIA service. While this may not be an issue to some, by not doing so TradePMR is able to focus 100% of its resources on its clients, namely, the investment advisors it serves.

Another key ingredient is TradePMR’s personnel, especially its technology guru, Dennis Suppe. Dennis spent time heading up key initiatives for the Microsoft Corporation back in the 1990s. His experience has been instrumental in the development of Trade’s eCustody system, a technology platform second to none. Without delving into the details, let’s just say its technological advancements have made my job much easier. 

Last August, TradePMR changed clearing firms from Sterne Agee to First Clearing Corp, a wholly owned subsidiary of Wells Fargo. This change has brought many enhancements. For example, because Firs Clearing uses omnibus accounts, Trade PMR’s advisors can now access institutional share classes of mutual funds. With Sterne, we had access to a few institutional shares with a few fund families. This enhancement allows advisors to utilize the lowest expense ratio for a given fund. Any reduction in a fund’s expense ratio translates to a higher return than, for example, a class A or other share class. Even if it’s only 0.15% to 0.40%, it boosts returns by an equivalent amount. 

TradePMR has a performance reporting tool available for a modest fee. Hence, I do not need to pay a high subscription fee for an outside tool and I also do not have to reconcile my data each day, which saves a great deal of time. It also has an agreement with Morningstar and provide Morningstar’s three-page portfolio snapshot report and fund detail pages along with a stock overlap report. And for only $50 per year, you can subscribe to Morningstar’s fixed income database and include individual fixed income in the portfolio snapshot reports. Finally, for less than the retail price, you can access Morningstar’s QuoteSpeed, a valuable system for deep analytics.

I’m sure there are other quality custodians out there. This just happens to be the one I chose. 

Have a great week and thanks for reading!


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