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How Advisors Can Trade, Store Metals

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Clients, of course, have multiple choices when investing in precious metals, such as mutual funds that invest in metals-related stocks and ETFs that invest in the physical metals.

Investing in metals through these securities allows advisors to manage how metals are allocated in their clients’ portfolios. Working with clients who prefer direct ownership of precious metals, though, has been more challenging. Advisors with many broker-dealers typically aren’t set up to trade and monitor such assets.

But the recently launched Hard Assets Alliance Advisors’ Service, an association of over 60 financial research providers and investment research publishers, aims to change that, according to general manager Ed D’Agostino.

Hard Assets Alliance had teamed previously with Gold Bullion International LLC (GBI) of New York to develop a precious metals trading platform and storage service for retail investors.  Those investors and their advisors were asking if the Alliance planned to roll out a similar service for financial advisors, D’Agostino says.

GBI was already working with the wirehouses, so “…it was really a logical extension for us to reach out beyond just the individual investor and start offering services to the smaller RIA and BD community,” he explains.

Precious metals’ dealers certainly want referrals from advisors and many are willing to pay for those referrals, but the Alliance wanted to take a different tack, D’Agostino says.

The group recognized that advisors benefit from retaining assets under management. If a client buys $50,000 of gold coins and puts them in a safe deposit box, for instance, it can be difficult for the advisor to monitor the investment and include it as part of the client’s managed assets.

Lettng advisors handle clients’ metals trades and integrate details on those holdings into the advisor’s reporting platform solves that problem.

GBI provides the service’s technology, and the company’s service ties into multiple advisor-reporting platforms, including Advent, ByAllAccounts and Envestnet, says Jason Viviani, assistant vice president.

“What that allows us to do is show up directly on the client statements that they’re normally getting; (it) shows up as a normal line item which they can follow the prices for,” he explains.

“They can also call their advisor and the advisor can buy or sell the positions at any time,” Viviani adds. “It really gives the advisor ultimate flexibility over the entire portfolio and not just calling over and buying a couple coins here and there.”

Metals Madness

The metals that can be stored and tracked through the service include gold, palladium, platinum and silver. Bars must be produced by approved refineries, and the service handles only sovereign coins, not collectibles.

Investors can store their metals in the United States and several overseas locations or take delivery of them. 

Intraday trades are based on live pricing with the service’s 15 bullion dealers and refiners.  Also, the service offers a full range of account ownership types. Advisors must register for the service, which runs a FINRA-check before allowing access.