Last month, we discussed how over the last several years, custodians have come to play an important role in an advisor’s technology strategy. The big four—Schwab, TD Ameritrade, Fidelity and Pershing—have attracted substantial assets, but they are not for everyone. These firms have either official or unofficial minimums that range from approximately $10 million to $100 million in AUM, which excludes new advisors right off the bat. Some firms that pass the minimum test but are still considered small by their custodian complain about the service, or should we say lack of service, that they receive.
The good news for advisors of all sizes is that there are a wide variety of alternatives available to you. This month, we’ll look at four other custodians. Each of these firms offers some combination of technology and service that they believe sets them apart from the crowd.
How can a relatively unknown custodian in Gainesville, Fla., compete with the big firms? “With agility,” says Dennis Suppe, chief technology officer (CTO) at TradePMR Inc. “We are faster,” he says. “We are quicker to identify new technologies and apply them to our platform.” According to Suppe, TradePMR has a culture of innovation from the top down. Robb Baldwin, the firm’s president and CEO, is a great advocate of leveraging technology to improve efficiency.
TradePMR was the first custodian to embrace Windows 8 and realize its significance for advisors. While other custodians are waiting for their advisors to request Windows 8 features, TradePMR is already delivering them to clients. Fusion, TradePMR’s workstation for advisors, is the first touch-enabled custodial platform. Approximately 55 clients are currently using the new Fusion platform, and users of the previous platform are being converted. All new advisors to TradePMR automatically receive the new Fusion platform.
Advisors like what they are seeing. According to one recent report, TradePMR now ranks fourth, behind Schwab, TD Ameritrade and Fidelity, in the number of advisor clients they serve. According to Suppe, that’s because his firm views technology through a problem-solving prism. “Sure, our technology looks good,” he says, “but we want our technology to solve business problems.” And it does.
Workflows are built into Fusion’s DNA. Advisors have the ability to upload and track service requests. Digital signatures are fully integrated into the platform. With Fusion and DocuSign, advisors can process new account applications and other paperwork in a completely paperless environment. “A few others in the industry have paperless processes,” says Suppe, “but most are limited to a single signer. Our system can accommodate multiple signers.”
According to Suppe, TradePMR intends to get away from e-mail and faxes when communicating with advisors. “It is not secure,” he says. “The electronic way is the only way to go.” To date, he says, advisors are embracing these new methods. “We’ve had almost no pushback from advisors on this.”
TradePMR’s platform includes a fee calculation engine and a full billing module. It can accommodate virtually any fee schedule an advisor can create. It can calculate breakpoints at the household level, you can designate which account to deduct the fee from, you can split the fee across multiple accounts (e.g., deduct 60% of the fee from account A and 40% from account B). Once the advisor is ready to batch process the fees, Fusion will verify that there is cash available to debit the fees. If not, it will generate an alert showing which accounts need to raise cash. The system can generate a customized fee letter for each client, showing how the fee was calculated and where the fee was paid from.
Fusion’s sophisticated API supports deep integrations with leading providers. By the time you read this, the MoneyGuidePro integration should be complete. This integration will integrate the MoneyGuidePro SuperSolve meter on the household page of Fusion, so advisors can see if a household’s financial plan is still on track. The Fusion-MoneyGuidePro integration will be proactive. At regular intervals, TradePMR will communicate with MoneyGuidePro’s servers to update all plan data. If any of the plans are out of the Confidence Zone, Fusion will issue an alert to the advisor to look at those accounts.
TradePMR is also embracing big data and making it available to clients. They run an extensive set of calculations and analytics every night, and they make the results available to advisors through Fusion. “We’re happy with what we’ve accomplished,” says Suppe, but says they are not done. “We will continue to innovate.”
Shareholders Service Group (SSG)
According to Dan Skiles, president at SSG, his firm takes an approach to technology that is unique in the business. “We are both a builder of technology and a consumer of technology,” he says. “We are fortunate that we have a clearing relationship with Pershing, so we can leverage the technologies that they develop.” Skiles cites the upcoming versions of NetX360 and NetX360 mobile as examples of cutting-edge technologies that SSG advisors will have access to through the Pershing relationship.