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Choosing a custodian to hold your client assets is one of the most important decisions you’ll make when transitioning your practice to the RIA model.

While it might at first seem as simple as picking from the “Big 3” (formerly “Big 4”) custodians, the reality is there are close to a dozen custodial providers to potentially choose from.

Differentiators amongst them include: AUM minimums, pricing, approach to technology, value proposition, service offerings, etc.

In this episode of the Transition To RIA question & answer series I discuss how these variables will factor into your custodial decision.

I'm Brad Wales with Transition To RIA (TransitionToRIA.com). This is episode #135 of my question and answer series where I answer RIA related questions I get from advisors just like you.

What I do: At Transition To RIA we help financial advisors and teams between $50M and $1B understand everything there is to know about WHY and HOW to transition their practice to the Registered Investment Advisor (RIA) model.

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🔹 Website: https://TransitionToRIA.com/
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🔹 Transcription of video:

What is the best custodian to use with your RIA? That is today's question on the Transition To RIA question and answer series. It is episode #135.

Hi, I'm Brad Wales with Transition To RIA where we help you understand everything there is to know about why and how to transition your practice to the RIA model.

If you're not already there, head to TransitionToRIA.com where you’ll find all the resources we make available from this entire series in video format, podcast format. There are articles, whitepapers. All kinds of things to help you better understand the model.

Again, TransitionToRIA.com.

On today's episode we're going to talk about what is the “best” custodian to use with your RIA.

And for reasons I'm going to get into, it's hard to necessarily give some blanket statement about which one is the best because as you'll see, different custodians appeal to different advisors in different ways.

We're going to go through what some of those variables and differences are out there in the marketplace and hopefully it helps you realize that choosing a custodian for your RIA, whether you're starting your own RIA, or if you're joining an existing RIA – which part of the value proposition of an RIA you could join is they already have (usually, multiple) custodians available to choose from.

And so the question is which custodian should you use? And this is a big decision, as I'll expand upon later in this episode.

For starters, it's often thought of as the custodians in the marketplace as the “big three.” Now this used to be thought of as the “big four”, and the four previously were Schwab, TD, Fidelity, and Pershing. Schwab acquired TD, so the big four is now thought of as the big three.

But even then, it comes down to how you define big? Is that based on assets on the platform? Or based on number of RIAs served? So it gets a little blurred as there are other custodians that would argue that they're in the big three based on the number of RIAs they serve, versus assets.
Either way, the reality is when you look at the whole landscape, there are closer to about a dozen custodians in the marketplace providing custodial services for RIAs.

Now, that doesn't mean you will necessarily be interested in all dozen, and maybe not even half of the dozen. But it's important to know they're out there. It's important to know there are differences. There are lots of different options.

The first custodian you talk to might not be the best fit for you. Now it might be, but you want to at least understand what's out there.
To help with that, I want to go through some of the variables involved that differentiate the custodial options.

First, most custodians, not all, but most custodians have some amount of AUM minimums required to use their platform.

Some custodians have no minimums. They’ll work with startups, to very large firms, and either way, don’t have an asset commitment from day one.
Whereas other custodians, due to their chosen business model, their value prop, do have minimums. Con't....

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