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The Hidden Costs Of Changing Custodians And How To Avoid Them

The financial services industry is full of people like me who get up and go to work every day in order to help people like you maximize your investments and build a sound financial life for your family. We call ourselves financial advisors because that’s what we do; we give you advice regarding your finances.

Oftentimes we don’t just give you advice, but we step in and manage your investments for you as well. You have better things to do with your time, and we have specialized knowledge and experience, so it works out nicely for both of us.

How Custodians Work In Financial Services
While most advisors give advice and manage investments, we don’t physically hold on to your money and investments for you. We outsource that to a custodian, or a company that has physical custody of your assets. TD Ameritrade and Charles Schwab are examples of custodians with whom many advisors work.

In fact, you don’t even have to work with an advisor to work with those custodians. Many custodians work directly with investors in what is called a self-directed brokerage account, where the custodian holds the assets and the investor decides what to do with them.

The One-Custodian Problem
Currently, in the financial services industry, most advisors work with one and only one custodian. If you want to work with that advisor, you have to move your investments over to the custodian with whom they work. Some do this to make things easy on themselves and some are contractually obligated to work with only one custodian.

The problem with that is that it can cost the investor a lot to transfer their assets between custodians. There are usually fees, special charges, and a lot of paperwork involved when moving assets from one custodian to the next.

Also, not every custodian has access to the same investments. An investor may have to give up a good investment in order to make the move. Add to that the tax implications of changing investments and possible commissions that will have to be paid to buy into the new investments. It all adds up quickly.

The Advisor’s Fiduciary Duty
As advisors, we have a fiduciary duty that says we have to act in our clients’ best interest. The one-custodian problem creates conflicts of interest and can lead to a breach of fiduciary duty.

After all, if moving your assets to my custodian costs you unnecessary charges, is that really in your best interest? Is moving your investments to inferior products so that you can work with me in your best interest? Is only providing you with one company’s products in your best interest?

The truth is, most of the time only having access to one custodian is not in the client’s best interest.

How Wealth Management Solutions Puts Your Best Interest First
In light of all this, we at Wealth Management Solutions decided to buck the trend and work with more than one custodian. It may create more work for us, but we want to do what’s best for you, not us. Working with only one custodian presents many conflicts of interest and we seek to eliminate them as much as possible.

So whether you are currently with TD Ameritrade, Charles Schwab, or Fidelity, we can work with you without making any changes to your investment accounts except for the name of the representative. No surrender charges, transfer fees, or liquidation. Doesn’t that sound nice?

To find out how we help clients with their investments or if we work with your specific custodian, call us at (949) 475-9700 or email info@wms-llc.com.

About Richard
Richard Riva is the founder of and wealth advisor at Wealth Management Solutions, LLC, an independent financial services firm based in Newport Beach, California. For more than two decades, he has specialized in managing the complex financial matters that affect high net-worth individuals and their families. He strives to serve as a trusted advisor and fiduciary, helping clients build a strong financial plan that allows them to live an abundant, complete, and distinctive life. Learn more about Richard by connecting with him on LinkedIn or emailing info@wms-llc.com.



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