Ask most advisors of all sizes how they feel about their custodian, and you’ll probably hear some version of the same thing:
“It’s fine.” (Though, of course, some might have a few … stronger opinions.)
Still, “fine” isn’t exactly a ringing endorsement. What does it mean? It’s not a disaster, not impressive … just manageable. And for advisors focused on the client experience above all else, manageable often feels safer than shaking things up. Even when service is slow, the technology feels outdated, or workflows are clunky, the idea of switching custodians can seem like more trouble than it’s worth.
That instinct isn’t wrong. The hard truth is that switching is disruptive. It takes time, planning, coordination and usually a few uncomfortable conversations. If you’ve ever thought, “This is just too much to take on right now,” you’re not alone.
You’re also not alone in your frustrations. Complaining about your custodian is practically a rite of passage in this industry. Whether it’s a lack of integration, rigid processes or service that feels stuck in the past, most advisors can rattle off a list. In fact, according to a 2023 survey by F2 Strategy, fewer than half of wealth management firms are satisfied with their custodian’s native data tools. That dissatisfaction has pushed many RIAs to build workarounds using third-party tech. In effect, they’re working around the custodian rather than with it.
And yet, most firms stay put. Not because they’re satisfied, but because switching feels harder than staying put. However, if your business is focused on growth or simply looking to run more efficiently, it can always be worth considering a change. In this case, it doesn’t mean you’ll ultimately switch custodians, but if you take the time to evaluate your options, you’ll know the decision was intentional and genuinely in your best interest.
Fears vs. Reality
The common fears about making a move on the backend of an advisor’s business are valid: it isn’t simple. It can’t be solved by a quick Google search, ChatGPT or Gemini (yet). There is a lift involved: retraining your team, updating internal processes and communicating changes to clients.
And then there’s the big concern: how will clients react?
While clients are typically aware that their accounts are held at firms like Fidelity or Schwab, they often don’t understand what differentiates one custodian from another beyond the client portal or user experience. From the client’s perspective, what can feel like a monumental shift internally is often barely a ripple.
To drive the point home, a 2022 FINRA survey found that 21% of investors didn’t think they paid any fees to invest in non-retirement accounts, and another 17% didn’t know how much they paid. This level of disengagement highlights how little attention many clients pay to backend operations.
That can help shift the mindset for advisors who are considering a change. Any changes on the backend of your business also open the door to educating clients. In this case, it opens up an opportunity to teach clients what a custodian does, why a change could matter and (most importantly) how it could benefit them.
It’s a chance to reinforce transparency and strengthen client trust. Most custodians recognize this and actively support advisors during transitions, often providing ready-made communications and resources to help guide client conversations.
As with any investment decision, it’s worth considering the potential upside once you’ve taken a hard look at the risks. You may have smoother integrations, less administrative overhead, and more tools to personalize client engagement. It might even mean no longer duct-taping your tech stack just to complete routine tasks.
Considering a Multi-Custody Strategy
For advisors who aren’t ready to fully commit to a new custodian, there is a middle ground worth exploring: a multi-custody model.
According to the same F2 Strategy research, nearly 70% of RIAs use more than one custodian. While this used to be a tactic reserved for larger firms, it’s becoming increasingly common among smaller and mid-sized RIAs. Advisors use different custodians to segment client types, test new workflows, or access capabilities their primary provider doesn’t offer. This approach lets you evaluate a new platform in real time, without a full operational upheaval.
Questions to Ask Before You Stay (or Go)
If the wheels are turning and you’re thinking about re-evaluating your relationship with your custodian, here are a few big-picture questions worth asking. These are questions to ask of both current custodians and potential new ones.
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How are you actively reducing the administrative burden on my team?
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How transparent are you about how you make money?
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What are you doing to help me deliver a better client experience at scale?
These aren’t just product questions; they’re strategic ones. And the answers (or lack thereof) can reveal whether or not your custodian is aligned with where your business is headed.
What we believe is the most critical question to ask, especially for smaller RIAs, is this:
“Is your custodian building for advisors like you?”
No matter your firm’s size, it’s critical to consider whether your custodian is structured, staffed, and innovating with your specific business model in mind. For many small RIAs aiming to grow, working with a custodian that understands the unique challenges and opportunities you face isn’t just a nice-to-have; it can make all the difference.
The End Goal
In today’s evolving wealth management landscape, switching custodians isn’t the right move for everyone. Sometimes the timing isn’t ideal. Sometimes the lift is just too much. However, when you complain about your current day-to-day shift from background noise to actual roadblocks, it may be time to have some hard conversations.
This isn’t about chasing the next shiny platform. It’s about ensuring your business’s foundation is still working in your favor. Because at the end of the day, that’s what matters most.
#Rethinking #Custodian #Fine #Isnt