Our Custodian

We use FolioInstitutional, a part of Goldman-Sachs as our custodian and trading platform.

Why We Used Folio: Folio Has ALWAYS Offered Commission-Free Trading since its inception 20 some years ago!

Although you’d like to think that “don’t they all do that now?”, you’d be inaccurate. Charles Schwab, TD Ameritrade and E*Trade announced recently their respective moves to limited [1] commission-free trading. (And I assure you it’s limited–I have a personal trading account with TD that’s soon to close as a result of this sleight of hand) But some firms have retained ticket and other charges on various mutual funds (including, for example, ticket charges on Vanguard and apparently DFA funds), limited the commission-free trading to certain asset classes (excluding for example, fixed income securities) and, in some cases, retaining per contract charges for options, etc. When I complained to TD, they told me that “costs [were] different than fees”. Wow–hair splitting we don’t need!

Juxtapose that with Folio: Since its inception in 2000, Folio has offered commission-free trading as a cornerstone of its mission: “To deliver innovation that benefits investors and those who serve them.” Folio started with the key investing principles of diversification, personalization, consistent investing and tax optimization.  Empowering and encouraging investors and their advisors to embrace these principles required eliminating the barrier of trade commissions. Folio believed, then, that going commission-free was the right move – not to encourage active trading that’s often bad for investors but good for brokers – but to encourage the thoughtful application of these principles that they knew were hallmarks of smarter investing. Today, twenty years later, Folio remains certain that offering investing without trade commissions is the best way for clients, and those who advise and serve them, to invest.

Asset Guidance Group, LLC and Folio are committed to pushing the boundaries of technology innovation to advance our mission and to offering simple, transparent pricing to all who use our platform. For advisors, Folio offers a unique, end-to-end, state-of-the-art, technology platform combined with fully integrated brokerage, trading, clearing and custody services delivered with quality and responsiveness.  And, we do all that for one low, asset-based fee. We have no plans to change that approach. 

Folio’s comprehensive platform provides advisors, and their clients, a suite of unmatched tools and services that other custodians in the market simply do not offer, including:

  • Fractional-share trading and dollar-based investing
  • Seamless model management SMA/UMA and TAMP capabilities, with sub-accounts and folios with one-click smart re-balancing across hundreds, thousands and tens of thousands of accounts
  • A newly available, state of the art, advanced robo-type advisor, robo-TAMP and hybrid digital wealth technology platform that leapfrogs what’s currently available in the marketplace and that facilitates advisors’ digital engagement, practice expansion and further reduces advisor cost
  • Direct indexing, theme investing, and Ready-to-Go FoliosTM
  • Third-party model manager exchange, with hundreds of unique models and strategies from some of the industry’s most iconic brands
  • Individual client portfolio filters for specific industries, sectors, geographies, values-based preferences, and more, including increasingly important SRI/ESG overlays
  • State-of-the-art, automated tax optimization tools, including our patented Tax FootballTM and ten different tax lot relief methodologies
  • Real-time, paperless account opening and client onboarding
  • A full client portal with online compliance items for attention and other means for needed client approvals and authorizations, and statement, tax and proxy document delivery
  • Robust practice management tools to improve advisor productivity
    • customizable dashboards and reports,
    • proposal generation,
    • online proxy voting, and
    • automated billing covering a vast variety of billing types, including providing required advanced billing notices to clients
  • Built-in RegTech that automates compliance and regulatory processes, replacing costly trade order blocking and reconciliation systems, and eliminating round robin or other allocation requirements
  • Comprehensive performance reporting and in-depth portfolio analytics (with, coming soon, the ability to integrate data from accounts held at other custodians)
  • Multi-bank, FDIC cash sweep program with multiple millions of dollars of FDIC insurance per account
  • Private and alternative investing integrated seamlessly within a traditional brokerage account
  • Margin lending that automatically supports the varied and changing model, allocation and folio level securities positions in an account with different investing and trading strategies
  • And, all the above is available directly as hosted or white-labelled or co-branded applications and, for those advisor firms who wish it, through hundreds of APIs for deeper integration allowing for complete customization and control of the advisor and investor experience

Folio’s all-in pricing model is designed to make it straightforward for Asset Guidance Group as an advisor to manage and grow our practice, without the considerable time, expenses and third-party resources needed to build, integrate, and maintain the multitude of complicated systems needed to run a practice at other custodians. The cost of the trade was never the expensive part of running a brokerage or the primary cost for advisors to consider – it’s everything else that adds up, and for which clients ultimately bear the cost, that makes the difference.

It should also be noted that custodians who relied significantly on commissions and who are now forgoing that explicit revenue will likely adjust services and pricing in other areas, either by passing on charges for other services, by increasing reliance on products and practices that contain many of the hidden fees that permeate the industry or by cutting back on other services. In reality, “free” is rarely truly free.

Innovation, creativity, and a commitment to benefitting investors and those that serve them are the touchstones that have guided us, and will continue to guide us. We’re excited to see some firms begin to remove barriers to cost effective diversification, customization and consistent investing. I know some, perhaps many, believe eliminating commissions will once again entice retail investors to trade actively in an effort to time the market, ultimately to their disadvantage. We know that other advisors and their clients who have taken advantage of Folio’s decades long commission-free trading windows, have and continue to do the right thing. However, in the event other custodians continue to encourage active trading, instead of investing, by retail investors, then the need for us an an advisor to help ensure that clients are invested in a smarter way will only grow.

We look forward to what the future of investing holds, whether that is fractional-sharing trading for all, mass market customization and direct indexing or goal-based, highly personalized, values and SRI/ESG technology-facilitated investing. We will continue to lead, and welcome the opportunity to support your growth!

And, if you were really wanting a definition…

What is a ‘Custodian’
A custodian is a financial institution that holds customers’ securities for safekeeping to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Since they are responsible for the safety of assets and securities that may be worth hundreds of millions or even billions of dollars, custodians generally tend to be large and reputable firms.

BREAKING DOWN ‘Custodian’
In addition to holding securities for safekeeping, most custodians also offer other services, such as account administration, transaction settlements, collection of dividends and interest payments, tax support, and foreign exchange. The fees charged by custodians vary, depending on the services that the client desires. Many firms charge quarterly custody fees that are based on the aggregate value of the holdings.

A custodian is a person or entity selected to hold and protect customer funds or investments through either direct or indirect means. Additionally, a custodian may have the right to assert possession over the assets if required often in conjunction with a power of attorney. This allows the custodian to perform actions in the client’s name, such as making payments or changing investments.

Qualified Custodian
In cases where investment advisors are responsible for customer funds, the advisor must follow custody rules set forth by the Securities and Exchange Commission (SEC). The person or entity must be considered a qualified custodian, often limiting the options to banks, registered brokers, registered dealers, and certain other individuals or entities.

Reporting Requirements
Notices must be supplied to customers when certain activities are conducted on their behalf or using their assets. Further, account statements must be supplied to the customers to keep them abreast of the current holdings associated with their assets.

Source: Custodian http://www.investopedia.com/terms/c/custodian.asp#ixzz4vIUSoUCR

Folio Institutional

We primarily use Folio Institutional as our custodian. Folio Institutional* is a division of FOLIOfn Investments, Inc. (“Folio”), the custodian our Registered Investment Advisor has chosen to hold and support management of your investment assets. Founded in 2000 by Steven M.H. Wallman, a former commissioner of the U.S. Securities and Exchange Commission (SEC), Folio has been a self-clearing broker-dealer and a direct member of the Depository Trust & Clearing Corporation (DTCC) since 2001. Today, Folio provides custody and brokerage services for billions of dollars of investor assets. Folio provides direct, independent online access to view your investments, receive tax information, monitor performance, vote proxies, or take other actions not assumed by your advisor. Folio is a member in good standing of the Financial Industry Regulatory Authority (FINRA), the independent, nongovernmental regulator for all securities firms doing business with the public in the United States, and is subject to oversight by the SEC, FINRA, and various state securities regulatory agencies. As a clearing broker-dealer, Folio is subject to periodic financial audits performed by the SEC and/or FINRA. With access to innovative, patented online brokerage and investing solutions, advisors can efficiently maintain diversified portfolios of securities, retain hands-on control over investments, and utilize tools to manage tax liabilities, produce analytical reports, conduct compliance-type reviews, and take many other actions for their clients’ benefit. Folio is an ideal match for advisors and their clients seeking an established, well-respected custodian for client assets, and a cost-effective portfolio management, investment, and high-end client services platform that provides advisors with powerful tools to manage diversified strategies for clients

*Information was provided by Folio Institutional.

[1] Some firms have retained ticket and other charges on various mutual funds (including, for example, ticket charges on Vanguard and apparently DFA funds), limited the commission-free trading to certain asset classes (excluding for example, fixed income securities) and, in some cases, retaining per contract charges for options, etc.

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