Reconciling custodian data with your records: a monthly routine for small RIAs
Reconciling custodian data means checking, on a regular schedule, that the accounts in your own records match the accounts the custodian holds for your clients, and that each one is linked to the right client, strategy and billing setup. A monthly routine for a small RIA usually covers new accounts, closed accounts, accounts with no client assigned, strategy and discretionary status, and billing exclusions. Record what you checked, what didn't match, and how you fixed it.
The custodian's account list and your own records start out the same. Then a client opens a new IRA on the custodian's site, an old account closes, a transfer arrives under a slightly different registration, and nobody updates your records. Three months later the billing run misses a new account and still includes a closed one.
What does reconciling custodian data mean?
It means checking that the accounts in your records match the accounts the custodian holds for your clients, and that each account is set up correctly on your side: linked to the right client and household, following the right strategy, with the right discretionary status and billing exclusions.
What should a monthly check cover?
| Check | What you're looking for | Usual fix |
|---|---|---|
| New accounts | Accounts at the custodian that aren't in your records | Add them and link them to the client |
| Unassigned accounts | Accounts in your records with no client or household | Assign them, or find out why they exist |
| Closed accounts | Accounts closed at the custodian but still active for you | Mark them closed, stop billing, remove from models |
| Strategy | Accounts with no strategy, or the wrong one | Set it, with an effective date |
| Discretionary status | Status that doesn't match the agreement | Correct it from the signed agreement |
| Billing exclusions | Excluded assets or accounts not flagged | Set the exclusion before the next run |
A worked example
Take a hypothetical two-person RIA with about 120 households and roughly 300 accounts. At the start of each month, the operations assistant compares the custodian's account file with the firm's records. This month:
- Three new accounts appeared: two linked to existing clients, one a new client still being onboarded.
- One account closed after a transfer out; it's marked closed and taken off billing and its model.
- One account had no strategy assigned since it opened in August; the adviser sets it, effective from the funding date.
The whole check takes under an hour. Before quarter-end billing, the same check runs again so the fee file starts from a clean account list.
What should you record?
- The date and who did the check.
- The data used (the custodian file and its date).
- Each exception found.
- How and when each was resolved.
Over a year, these short records show the account list was kept in step, and they make the annual compliance review easier.
When is this overkill?
A solo adviser with a few dozen accounts and little turnover can do this quarterly, before billing. Once accounts open and close every month, a monthly check costs less than fixing a bill after it goes out.
How Advorra fits
Advorra brings in your custodian's account files, shows accounts that aren't yet assigned to a client, and lets you assign them, set discretionary status and place trade holds. The strategy each account follows is dated in the Strategy Journal. See the product page, or read the discretionary account list and quarterly billing in arrears.
One thing to do this week: compare your custodian's current account list with your billing file and count the accounts that appear in only one of them.
An operations routine, not legal or compliance advice.
Questions advisors ask
How often should a small RIA reconcile?
Monthly works for many small firms, with a fuller check before each billing run. Firms with a lot of account activity may want to check more often.
What usually doesn't match?
New accounts that were never assigned to a client or strategy, closed accounts still in your records, and accounts whose discretionary status or exclusions were never set.
Is this the same as reconciling positions and transactions?
No. This routine is about the account list and how each account is set up in your records. Position and transaction reconciliation is a separate process, often handled by portfolio accounting tools.
Who should do it?
Often the operations person, with the adviser reviewing exceptions.
Is this compliance advice?
No. It is an operations routine. Your procedures and compliance consultant decide what your firm must do.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
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