As a Registered Investment Advisor (RIA), the security of your clients' assets is always a top priority. By law, RIAs cannot hold their clients' assets directly—advisors must rely on a critical partner called a custodian. There are only a few of them—why there are so few is another story.
You may be wondering: what is an RIA custodian? And perhaps more importantly, “How do I choose the best custodian for my firm?”
In this brief but comprehensive explainer, we'll cover RIA custody, compare fees across custodians, and share why over 4,200 advisors have chosen Altruist—making us the third-largest RIA custodian by advisor count.
What is an RIA Custodian?
An RIA custodian is a financial institution that holds and safeguards your clients' assets. Custodians are responsible for securely storing client funds and securities, settling and clearing transactions, processing account-based actions, assisting advisors with data management and reporting, and staying compliant under the rigorous oversight of federal and state regulators.
Beyond these foundational responsibilities, your choice of custodian deeply impacts your RIA’s operations.
Why RIA Custody Matters
While core responsibilities are relatively standardized across custodians, there are variations worth noting in technology, cost and fees, and service, as well as differences in user experience for firm owners, employees, and end clients. Choosing the best custodian for your firm will require you to consider the experience you want to provide your clients, and conduct rigorous due diligence in each of these categories.
How to Choose the Best RIA Custodian
Below we’ve included some categories to consider as you evaluate the right choice of RIA custodian for your firm.
Technology
Custodians are in a unique position to build incredible technology. Surprisingly, many face inertia challenges—after all, decades of legacy infrastructure are difficult to unwind and upgrade. At Altruist, we’ve benefitted from building on modern rails from the start. Our platform digitizes and automates operational tasks that formerly required time or additional expenses. Features like fractional shares, built-in tax loss harvesting, industry-leading APY on cash, accessible direct indexing, and others are helping advisors create better outcomes for their clients, simply by using better technology.
Security and Stability
Today, cyberattacks are more frequent and complex than ever. A custodian’s security infrastructure needs to adapt and evolve to match those threats. At Altruist, we implement best-in-class security measures, including encryption, multi-factor authentication, and around-the-clock monitoring in order to protect you and your clients’ assets.
Through our partnership with leading cloud infrastructure provider Amazon Web Services (AWS), we ensure 99.99999% uptime. AWS IAM helps us restrict access to applications with short-lived access keys, and AWS CloudTrail gives us the ability to quickly detect and respond to suspicious activity. These measures help protect clients' data and assets, significantly reducing the risks associated with managing sensitive information.
Support and Resources
While technology and infrastructure are important pieces of the puzzle, equally important is the relationship an advisor has with their custodian’s support team. Altruist only serves RIAs (as opposed to other custodians that also offer services to retail investors), which means our support staff is highly trained on advisor-specific issues, and when you call or chat in, you’re quickly connected to a real person. In addition to highly responsive support, Altruist provides a host of resources to help RIAs grow and scale, including detailed blog content, webinars, events, podcasts, and more.
User Experience
For advisors, support staff, or end clients, the experience of interacting with your custodian should be simple, intuitive, and most importantly, effective. The tools your custodian provides should make it easy and fast to accomplish the task at hand.
There’s nothing explicitly wrong with user interfaces that feel like they’re from the 90s, but today, most people expect their application interfaces to work well and look good. At Altruist, we work very hard to ensure that advisors are happy with every dimension of the product—that means regularly surveying, beta testing, and gathering feedback on areas of improvement through our Idea Portal.
Fees and Pricing
While many custodians promote low trading commissions, other fees, like account maintenance, ticket charges, or platform fees, can add up. Altruist offers a transparent fee model with no commissions on equities or ETFs and no unexpected account maintenance fees. On our platform, RIAs can manage costs predictably without worrying about hidden fees cutting into profitability or client portfolio performance.
How Altruist Makes Money
Altruist’s revenue model is simple and straightforward. We primarily earn revenue from interest on uninvested cash balances held at FDIC-insured banks and fully paid securities lending. Additional revenue sources include mutual fund revenue-sharing agreements (such as 12b-1 fees), fees outlined in the schedule linked above, and a handful of optional fees for certain integrated technology tools. Payment for order flow (PFOF) is part of our revenue model, representing a small fraction of our total revenue. You can learn more here.
The #1 Custodian Advisors Are Considering Switching to in 2024
As the #1 custodian advisors are considering switching to in 2024, we’re proud to have earned an 8.51 satisfaction score in the 2024 T3 Survey, reflecting growing trust among RIAs. Nearly 12% of Schwab-affiliated advisors are now exploring a move to Altruist, drawn by our streamlined processes, ease of use, and modern technology.
We offer the same core services as the "Big Two" custodians—Schwab and Fidelity—yet distinguish ourselves with advanced technology and a more cost-effective, transparent model that enhances efficiency and simplifies client service. For a full comparison with Schwab and Fidelity, explore the breakdown here.
Finding the Best RIA Custodian for Your Firm
Choosing the best RIA custodian for your firm is more important than ever. Whether you're a new firm or an established advisor looking to scale, your choice of custodian will have a lasting impact on your operations and client relationships.
At Altruist, we are focused on making your life easier by providing transparent pricing, cutting-edge technology, responsive service, and robust security. If you’d like to learn more, we encourage you to contact our team by clicking the button below.
