Brooke’s Note: This is the second profile rolled out in the Asset Custody Project.
Three things stand out about a little-known asset custodian called Trade-PMR, Inc..
The first thing is its recent growth. The Gainesville, Fla.-based firm has been around since 1998, but 200 of its 550 RIA custody clients came aboard in 2009. Most of these advisors fit into the emerging [read small and start-up] category, and the company declines to disclose the combined assets in custody.
A second interesting aspect to Trade-PMR is that it attributes the spike in last year’s growth to a strategy all but unheard of in the RIA business – television advertising.
Trade-PMR uses a 30-second spot that runs on CNBC and Bloomberg Television five to 10 times a day and about two or three days per week, according to Frederick A. Van Den Abbeel, the company’s executive vice president. He declined to give any specifics on cost but says the company is able to work a deal.
“We’re darn good negotiators,” he says.
Here’s the advertisement that is perking up Trade-PMR’s business:
Part of the deal
The third thing that stands out is the approach the company takes to make its portfolio management system part of the deal, charging just $1,200 per year for the software, eCustody Advisor Workstation. It provides free fee-billing and CRM software. Extra charges include $25 a month for streaming quotes and $150 a month for account aggregation software.
This technology is what makes Trade-PMR competitive with other asset custodians, according to Van Den Abdeel.
“The biggest draw is the technology,” he says. “RIA’s budgets are more restrained.
This price looks particularly good when compared to bigger custodians in the industry, Van Den Abbeel says.
“Schwab reduced it’s price to $8,000” for the outsourced version of its portfolio management system, PortfolioCenter, he adds. “Eight thousand dollars! Are you nuts? It’s just an Excel spreadsheet on steroids.”
For $8,000 an emerging RIA gets a full outsourced software solution from Schwab, according to Lindsay Tiles, a spokeswoman for the The Charles Schwab Corp.
What they pay for
“Advisors have to evaluate what they need and what they pay for,” she says. “We have over 3,000 firms that use PortfolioCenter [including the outsourced and desktop versions] and it has a reputation of high quality and good service.”
She adds that emerging advisors can get the desktop version of PortfolioCenter for $3,000.
Morningstar also has a competitive technology package for emerging advisors, says Michael Wilson, director of marketing for the company’s Advisor Software Solutions.
“While Morningstar Office has a price tag of $5,400 per advisor, it also includes all of Morningstar’s research and analytics, a CRM, investment planning module, client web portal and document vault,” he says.
He adds that the PMS software accounts for about $2,000 of the $5,400 price.
Here’s the data download on Trade-PMR:
Name of custodian: Trade-PMR, Inc.
Address: 1015 NW 56th Terrace, Gainesville, FL 32605
Phone number: 888.579.8640
Parent company: N/A (Clearing through Sterne, Agee & Leach, Inc.).
Total Assets in custody: not provided
Number of RIAs using platform: 550
Head of RIA custody business and executive’s starting year with the company: Mr. Robb W. Baldwin, President & CEO / 1998
Head of RIA sales and starting year: Frederick A. Van Den Abbeel / 2008
Name of RIA technology platform: eCustody Advisor Workstation
Date of last major update on tech platform: February 2010
Minimum assets for advisors: none
Size of biggest advisory client by assets: not provided
Custody fees [including fees for RIAs that fall under the minimum]: Zero
Brand names of [now defunct or soon to be] custodians absorbed by custodian: N/A
One advisor who chose to use Trade-PMR largely for its technology and low cost is Mike Patton, president of Integrity Wealth Management, which manages $9 million from Baton Rouge, La.
He had worked as a financial planner for JPMorgan Private Client Services, so he didn’t have a book of business when he broke away in 2007. Patton built his practice to $5 million as an RIA using Fidelity Institutional Wealth Services, but when the company began to charge him a custody fee in 2008 for having assets of less than $10 million, he decided to look at other options.
Modern look and feel
He looked at Scottrade Advisor Services and Shareholders Service Group in addition to Trade-PMR but decided he liked the latter company’s technology best. He describes Fidelity’s technology as functional but says that Trade-PMR’s platform has a more modern look and feel. “All in all, I like it better,” he says.
Patton adds that he’s very impressed by Trade PMR’s Dennis Suppe, a former Microsoft employee. “He’s a whiz,” he says.
Trade-PMR’s success in attracting small RIAs at the rate of one per day seems to be part of a trend. Scottrade Advisor Services of St. Louis and Shareholders Service Group of San Diego both grew at virtually the same rate in 2009.
Van Den Abbeel praises both of those companies for being open to start-up RIAs and for placing emphasis on RIAs ahead of other channels for wealth management.
He doesn’t see the supply of new RIAs slowing because the primary source – independent broker-dealer reps seeking to become RIAs – is vast.
“There are many more independent reps, so there’s a lot more growth that can go on,” Van Den Abbeel says.
Trade-PMR’s founder and CEO, Robb Baldwin, hired Abbeel in June 2008 to handle marketing and sales.
The executive cut his teeth with American Express. What impressed him about that company was how it was able to leverage financial planning to build a big business.
“The more times you touch someone, the more they stick with an advisor,” he says.
From American Express, he went to work with Cambridge Investment Research, a top broker-dealer for hybrid RIAs. “I learned a lot about RIAs from my friends at Cambridge,” he says. “I saw a wave of growth, and I wanted to be there.”
Van Den Abbeel is pressing the accelerator as hard as a small custodian can – expecting to host 200 advisors at a company conference at the Walt Disney World Swan Resort in Orlando, Fla. Feb. 24-26 – the first time the company has held such an event outside Gainesville.
Open to suggestions
Patton says he’ll be at the conference to take up some issues with Baldwin of Trade-PMR. “I’m going to share some things that will make our lives easier,” he says. “They’re very open to suggestions.”