Survey Points To Need For Custodial Innovation

Michael Madden, Contributing Editor & Research Analyst, Wealth Solutions Report

F2 Strategy Publishes Results On Views Of Wealth Management Custody, Highlights Needed Tech Enhancements, Data Delivery, Reveals 70% Are Multi-Custodial

F2 Strategy, led by Liz Fritz, Co-Founder and Chief Commercial Officer, and Doug Fritz, Co-Founder and CEO, published results of a survey of 29 RIAs, wealth management firms and asset managers representing approximately $6 trillion in assets. The survey identified three trends in the areas of needed improvements, multi-custodial arrangements and satisfaction with data delivery.

Doug Fritz, Co-Founder & CEO, F2 Strategy

The report notes firms’ frustrations interacting with custodians, stating, “The industry expects that custodians will do a better job developing technology that suits their needs, but at the same time, they aren’t waiting and are building workarounds with third-party providers to get what they need.”

On a positive note, the report points out the opportunity in this situation. “This is a golden moment for custodians to lean into technology that offers experiences that work for both advisors and their end clients.”

Needed Improvements

Liz Fritz, Co-Founder & Chief Commercial Officer, F2 Strategy

The first trend noted in the report is that firms would like to see improvements in several areas, most of all operational enhancements and integration. Forty-eight percent of respondents identified operational enhancements as an area needing improvement, while 44% said that integration was not currently offered.

Client services also ranked highly on both lists, with 24% of respondents saying that this category needed improvement and 22% saying that client services were not available.

Multi-Custody Approach

According to F2 Strategy’s report, 70% of firms use two or more custodians, with 40% using three. The reasons respondents most often gave for multi-custodial arrangements were operational support, asset safekeeping and integration.

The report adds, “Firms generally take a least-friction approach to getting advisors on board; adding a new custodian is easier than repapering accounts in terms of client experience.”

Data Delivery Tools

Respondents also showed much greater satisfaction with data delivery tools from third-party providers versus custodians, with 83% ranking their third-party data delivery tool either four or five out of five for satisfaction, while the satisfaction for custodian data delivery tools was only 43%.

The report notes that custodians need to provide flexibility in data delivery methods for RIAs, which take varying approaches to data aggregation. “Currently, firms are not relying on their custodians for innovation and they want more out of what they have and will get it in whatever way they can to solve their challenges.”

Michael Madden, Contributing Editor and Research Analyst at Wealth Solutions Report, can be reached at

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