Is Custody Free? The New Generation of Custodial Options for Advisors

There’s a fallacy among advisors that selecting a platform partner is an either/or proposition: a TAMP or an open-architecture solution. There is a middle ground. Some describe it as a “full-service portfolio management platform.” The team at SEI calls it a TechstodianSM.

Steven A. Gardner is a managing director for RIA Sales with Independent Advisor Solutions by SEI. He heads up SEI’s sales efforts within the independent and hybrid registered investment advisory (RIA) market. As a part of these efforts, he is responsible for market validation and research for SEI’s RIA platform offering within the United States.

Erich A. Holland is a Senior Vice President and head of distribution and engagement with Independent Advisor Solutions by SEI. He is responsible for the distribution and go-to-market strategy, leading efforts focused on SEI’s continued growth and expansion in the independent advisor market.

I spoke with Steve and Erich on September 9, 2021. This interview was sponsored by SEI.

There are a range of choices an advisor can make when selecting a platform, from turnkey asset management platforms (TAMPs) to in-house systems that provide full open architecture. How do you view the choices along that spectrum?

Steve Gardner: This is great news for the advisor community because, prior to this, there were just two end points. There were the TAMPs, which SEI and many others have historically offered. There's been the open architecture platforms of the legacy custodians – Schwab, TD, Fidelity and Pershing. For many advisors, they were a square peg trying to fit into a round hole. They were trying to fit one of those solutions and they unfortunately did not fit well. That leads to this dissatisfaction that we are hearing in the market. The great news is that there is now a continuum that advisory firms can take advantage of that they didn't have previously. At SEI and other firms, there's much more flexibility on the turnkey side; it’s no longer cookie cutter. You have a lot more investment options.

The open architecture custodians are still in their space, but there are new entrants moving in that allow advisors to get the best of both worlds – the functionality and simplicity of the TAMPs and the open architecture of a custodian. SEI happens to be one of those. We use the term “Techstodian”—technology included in the custody solution, and that is resonating.