Displaying items by tag: advisors

The debate over custodial pricing continues, with many questioning whether bundling all revenue sources into a single fee is fair. Since custodians don’t face significantly higher costs for a $10 million account versus a $100,000 one, a pay-for-services-used model may be more equitable. 

Another pressing issue is the slow adoption of automated onboarding, as many custodians still require paper forms and wet signatures despite available digital alternatives. Some speculate that firms hesitate to streamline transfers because it would make it easier for advisors to switch custodians, reducing client stickiness. 

Beyond pricing and onboarding, factors like service quality, cost, and additional features—such as dedicated support teams or integrated technology—shape custodian selection. 

Finsum: As the industry evolves, understanding these priorities will be key to creating a more efficient and competitive custodial marketplace.

Financial advisors are rapidly integrating generative AI into their workflows, with 76% reporting immediate benefits, particularly in efficiency and client engagement. Concerns about AI replacing human advisors have diminished, with only 8% viewing it as a threat, down from 21% a year ago. 

While firms are increasingly formalizing AI policies—jumping to 82% from 47% in 2024—advisors remain selective in their use, favoring AI for analytics and marketing rather than personalized financial planning. 

Many see technology as a competitive advantage, with 57% acquiring clients from competitors with outdated systems. However, despite AI’s rapid adoption, 65% of advisors believe their tech stacks still need improvement. 

Finsum: As AI-driven tools continue to reshape wealth management, firms that strategically implement these advancements stand to gain the most.

RIA custodians play a crucial role in safeguarding the assets of registered investment advisors while maintaining independence to ensure client funds are handled properly. These custodians can be banks, trust companies, or broker-dealers, but all must adhere to regulatory standards that prevent misuse of assets. 

Selecting the right custodian is one of the most significant decisions for an RIA, as it impacts everything from operational efficiency to client trust. 

Key factors to consider include the custodian’s reputation, experience working with firms of similar size and focus, and fee transparency. Additionally, some custodians have minimum asset requirements, which can be a hurdle for smaller firms looking to establish a partnership. 

Finsum: Beyond asset management, a strong custodian should also offer reliable service and support to help RIAs grow and navigate industry challenges.

Many financial advisors endure frustrations with their broker-dealers to avoid the challenges of switching firms, even when better opportunities exist. 

1. Declining service quality is a common issue, as both small and large broker-dealers struggle with staffing shortages and operational inefficiencies. 
2. High costs, including elevated advisory fees, platform charges, and insurance expenses, further add to the burden, often without delivering corresponding value. 
3. Financially struggling broker-dealers also fail to invest in technology, staffing, or advisor support, limiting growth potential. 

Advisors tied to outdated systems and inadequate resources risk falling behind competitors who embrace innovation. 

Finsum: Ultimately, remaining with an underperforming broker-dealer can stifle an advisor’s long-term success.

A separately managed account (SMA) is a professionally managed investment portfolio tailored to an individual investor's needs rather than pooled with others. Unlike mutual funds or ETFs, SMAs provide direct ownership of securities, offering more control over investment decisions and tax strategies. 

Originally created for institutional investors, SMAs have grown in popularity, with assets under management reaching nearly $2.2 trillion by 2023. 

Their key advantages include flexibility in strategy, greater tax efficiency, real-time transparency, and typically lower fees compared to actively managed mutual funds. Investors can customize holdings and optimize tax implications through strategies like tax-loss harvesting. 

Finsum: While SMAs can be cost-effective, additional fees from financial advisors may apply, impacting overall expenses.