By Robb Baldwin, Founder, President and CEO, TradePMR
Every RIA will likely consider changing custodians at some point. Maybe you're looking for new tech, better pricing, enhanced service… there are no shortage of reasons to shop around.
Regardless of if you have $100 million or $10 billion AUM, finding the right custodian can be complicated. So, how do you choose the best provider to support your firm and your clients? Consider building a Request for Proposal (RFP).
Benefits of Developing an RFP
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Developing and distributing an RFP can enable your firm to:
- Compare custodians directly on the points that impact your business.
- Secure a transparent review process with a clear paper trail, so you can hold prospective providers to their promises.
- Create alignment with your team – prospective providers can answer everyone's questions, so you can be confident your next custodian meets your staff's needs.
- Limit your list of prospective custodians to those that truly want to work with your firm.
- Streamline your conversations to focus on your priorities, not just the points that the custodian wants to address.
So how do you develop an effective RFP? And what separates a good RFP from a bad one? It comes down to focusing on a few key points.
What to include in Your RFP
Above all, a good RFP is clear, concise, and highly personalized to your firm. The more efficient the RFP is in identifying the points that are essential to your RIA, the easier it should be to find the right provider for your team.
Every RFP should include 5 key elements:
- Introduction – Tell your prospective custodian about your firm: why you are considering a change, what kind of clients do you serve, what your goals are for the future. The more the custodian understands about you, the better they should be able to answer your questions.
- Your Firm's Priorities – If there is a specific topic that is especially important to your firm (
cybersecurity ,RIA software integrations ,data access , etc.), make sure to put that topic front-and-center in your RFP and explain what you're looking for in your next provider. If you are looking to save costs, for example, consider including your current custodian's rates. - Communication Strategy – Set clear expectations about communication. If you're moving quickly and need responses to the RFP within a couple weeks, let the custodian know! In fact, this could be a good test for how the custodian would serve your firm should you sign on. You might determine that, if they are invested in your success and are committed to serving your business, they'll make sure they work with you on your timeline.
- Selection Criteria – Outline deal-makers and deal-breakers and ask pointed questions to get to the truth. Start by asking yourself: what does
a successful RIA-custodian relationship look like for me? Figure out those points and work backwards to build your questions. - Deliverables – What documentation do you need from the prospective custodian? An SOC report? What about a list of funds? Consider including a checklist in your RFP with important documents that your team will need from the provider.
Focusing on these 5 elements can help ensure your
Develop Your RFP Today
If you're
To that end, we have developed an RIA custodian RFP template to help you get started. The template includes suggested topics, questions, and format for your firm's RFP to help ensure your next provider is the right fit for your business.
If you'd be interested in hearing how our team at TradePMR would respond to your RFP, email
This article is being provided for informational purposes only and is not intended to be relied on as investment advice, does not constitute a recommendation of any investment or strategy or an inducement to buy or sell securities. The opinions expressed herein are those of the author and do not necessary reflect the opinion of TradePMR. Any opinions expressed are subject to change without notice. There is no guarantee that any forecast implied will come to fruition. Past performance is no guarantee of future results. Any reliance on the information is done solely at the discretion of the reader. Investing involves risks and the possibility of losing principal. TradePMR does not provide investment, tax or legal advice.
