The Custody Business: Q&A with Interactive Broker’s Steve Sanders 

Establishing a registered investment advisory (RIA) firm involves numerous critical decisions. Among them is selecting a custodian or multiple custodians to manage client assets and securities. Understanding what the RIA custodian does (and does not do) is the first step in deciding who to hire. 

When looking for an RIA custodian, advisors likely have their list of key features that are must-haves, including comprehensive RIA trading technology, strong organization of client information, and easy access to firm data. 

We asked Steve Sanders, EVP of marketing & product development at Interactive Brokers, what RIAs are looking for when choosing a custodian, and as the custodial business continues to expand what the firm is doing to distinguish itself from the rest of the field. 

Sanders also discussed what the company’s platform includes as well as its pipeline in terms of growing its RIA custody business. 

Q: What are the main features RIAs are looking for in a custodian, and how is Interactive Brokers addressing them? 

A: RIAs want their custodian to be low-cost and provide them with a robust platform that can support their operations.  

We deliver for advisors on these fronts at Interactive Brokers. By leaning into automation, our tech-forward offering is cost-effective and comprehensive. We eliminated common financial burdens for RIAs – including ticket charges, custodial fees, minimums, and technology-related fees. We also offer free access to powerful trading platforms, a CRM, and PortfolioAnalyst® for efficient portfolio consolidation and reporting. 

In addition, our open architecture supports a range of third-party tools, so advisors can use the tools they want. Interactive Brokers is 100% committed to RIAs – we don’t compete with advisors for clients, and we have no “in-house” products. 

Q: As the custodial business gets more crowded, what is Interactive Brokers doing to separate itself from the pack?   

A: Interactive Brokers offers advisors of all sizes a low-cost global trading and custody solution that puts their needs first. Advisors get the tools they need without a bloated cost structure, massive overhead or conflicts of interest. 

Unlike others, we don’t compete with RIAs for clients – we don’t have an in-house advisory team or a prop trading group. We are 100% agnostic and focus solely on providing the best tools and resources. 

What’s more, we serve advisors and their clients in over 200 countries and territories around the world – there aren’t many other custodians out there that can say they do this. We’re the only truly international broker with the ability to onboard advisors and their clients worldwide.  

Q: What does your pipeline look like in terms of growing your RIA custody business?  

A: Thanks to industry consolidation and increasing discontent among wirehouse advisors, we’ve got a healthy pipeline of advisor teams and firms interested in making a change.  

While we make it easy as possible for advisors to start up with Interactive Brokers, we know that for established firms, switching custodians has historically been a big deal. We’ve made the “re-papering” process easier with mass batch account uploads, which removes many of the challenges from the process.  

We also know that most RIAs today use multiple custodians, so we encourage firms that are considering a switch or adding a custodian to try us out. Set up a few accounts with us, use our industry-leading tools and tap into the global market access you can’t get anywhere else – and if you like what you see, move more accounts over.  

Q: How often do you review pricing arrangements with RIAs? Is there an opportunity for that pricing model to evolve over time? 

A: Our pricing structure is straightforward and transparent – and we don’t negotiate opaque deals. This means that the more volume an advisor or any client does with us, the cheaper the cost structure. This can all be found on our website. 

Q: What does your platform include?  

A: Advisors can easily diversify client portfolios across products and geographies on the Interactive Brokers trading platform – the only truly global platform in the industry. This includes access to stocks, options, futures, currencies, bonds and funds on over 150 markets, all trading from a single unified platform. Eligible advisors can also trade cryptocurrencies from the same platform.   

As I’ve mentioned before, we give our industry-leading technology away for free. With Interactive Brokers, advisors get a free CRM, portfolio management and trading platform, plus PortfolioAnalyst®, our market-leading tool that consolidates advisor clients’ entire portfolios, regardless of where these accounts are held.  

With PortfolioAnalyst, advisors’ clients link investment, banking, checking, incentive plan and credit card accounts into a single, complete portfolio view to calculate returns, understand risks and measure performance against benchmarks. Advisors can also work with clients on long-term planning and their retirement outlook using the new Retirement Planner we’re rolling out in PortfolioAnalyst over the coming weeks. 

In addition, we offer tools like Tax Loss Harvesting, Custom Indexing, and Model Portfolios to help advisors manage client accounts.  

For managing business operations day-to-day, RIAs can choose from three service model offerings, with customizable levels of control so advisors can choose the participation level that works well for them. Our automated and flexible client billing and free website building services are other ways we help advisors spend more time working with clients and growing their business. 

Pictured: Steve Sanders, EVP Marketing & Product Development, Interactive Brokers 

Steve Sanders is Executive Vice President of Marketing & Product Development at Interactive Brokers. Interactive Brokers Group affiliates provide automated trade execution and custody of securities, commodities, and foreign exchange around the clock on over 150 markets from a single unified platform to clients worldwide, including financial advisors, individual investors, hedge funds, proprietary trading groups and introducing brokers.