Although generally not thought of as a technology decision, the choice of a custodian or custodians for your client’s assets can have technology implications. For a number of years, Schwab, Fidelity and TD Ameritrade dominated the independent advisor custodial space. More recently, Pershing, Shareholder Services Group, Scottrade, and Trade PMR have been actively competing for advisor’s custodial business.
The choice of custodians can influence your overall technology plan in a number of ways. First, each firm offers advisors some connectivity to their back office, but standards and file types are not uniform. For example, some custodial websites may be accessible through multiple web browsers (Internet Explorer, Firefox, Safari, Chrome, etc.); some may be limited to one. Some custodians may offer discounts on third party CRM, portfolio management, financial planning, and rebalancing software. A number of firms offer you their own proprietary software as an inducement to do business with them.
More recently, custodians are software integration has become a competitive battle among custodians. All are trying to offer advisors a higher level of integration, but each is taking a somewhat different approach. As a result, some third party software may integrate better with one custodial platforms than with another. All of this should be noted before final technology purchase decisions are finalized.