Ep 144: The Past, Present, And Future Evolution Of The RIA Custody Model with Tom Bradley

Financial Advisor Success

Michael Kitces

News, Business, Entrepreneurship, Business News

4.8 • 696 Ratings

🗓️ 1 October 2019

⏱️ 118 minutes

🔗️ Recording | iTunes | RSS

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Summary

Tom Bradley is the former president of TD Ameritrade Institutional, one of the leading RIA custodial platforms serving nearly 7,000 independent RIAs with almost $600 billion of assets held in custody. For over 25 years, Tom was a part of the growth of financial advisors operating as independent RIAs on a custodial platform. Today he joins the show to discuss the evolution of the RIA custody model and how technology has affected the business.

Listen in as we talk in depth about how TD Ameritrade uses the Veo open-access platform, as well as the surprising ways that RIA custodians generate their revenue from advisors and their clients. You’ll hear Tom’s views on why the RIA custodial options for how cash is invested has become such a hot topic and his predictions for the future of the RIA custodial business.

For show notes and more visit: https://www.kitces.com/144

Transcript

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0:00.0	Welcome to the Financial Advisor Success Podcast, where you go behind the scenes with financial planner,
0:08.4	speaker and consultant Michael Kitsis to hear stories of how leading financial advisors
0:13.6	navigated the inevitable challenges that arise on the path to success and get insight
0:18.7	from leading industry consultants about how to break through to the
0:22.0	next level in your advisory business. And now here's your host, Michael Kitsas.
0:27.9	Welcome, everyone. Welcome to the 144th episode of the Financial Advisor Success Podcast.
0:33.9	My guest on today's podcast is Tom Bradley. Tom is the former president of TD Ameritrade Institutional, one of the leading RA custodial
0:40.9	platforms serving nearly 7,000 independent RAs with almost 600 billion of assets held in custody.
0:47.2	What's unique about Tom, though, is that he led the original Waterhouse Advisor Services
0:51.8	platform when it was first started back in 1992 and has been a part of the growth and evolution of financial advisors operating as independent RAs on a custodial platform for more than 25 years.
1:03.4	In this episode, we talk in depth about the evolution of the R.A. custody model itself. From the early days when advisors had no direct means to actually trade
1:11.8	across multiple client accounts and had to manually enter transactions off paper trade confirmations
1:17.4	into their portfolio performance reporting systems. To the development of the first wave of
1:22.0	R.A. custodial tech integrations, when few advisors had more than $20 million of AUM and couldn't
1:27.2	demand much of their providers.
1:29.4	To Titi Ameritrade's unique pivot into an open architecture system with its VO open access platform,
1:34.6	because their acquisition by Ameritrade in 2006 gave them a unique opportunity to leverage the first wave of APIs that other RA custodians hadn't fully developed yet.
1:46.0	We also talk about the nature of the RA custodial business itself, the not always apparent ways that RA custodians generate
1:51.1	their revenue from advisors and their clients, why the RA custodial options for how cash is
1:56.4	invested has become such a hot button issue. What it really costs an RA custodian, service and advisor on
2:01.9	average, and what clients actually pay as a percentage of their assets, and what it would take
2:06.8	to develop an RA custodial platform that itself operated on a truly fee-only basis.
	...

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