In today’s post, we will look at the benefits of block trading, how we can help you manage custodian relationships, and how it could save you and your clients money.

The Benefits of Block Trading

Most of the larger broker-dealers have some level of institutionalized trading capacity that can adequately handle block trades. The more depth and professional experience a trading desk has ultimately enables you and your clients to benefit from a more institutional level of trading.

The bad news is that most financial advisors don’t have the access or the scale to take advantage of block trading strategies. In addition to having to place more trades, these advisors might see different prices from one account to the next depending on the timing of the trades. These inconsistencies in execution create problems for advisors and could lead to higher costs for their clients.

As the executor of trades on behalf of our advisors, we typically aggregate trades from clients across our entire platform into larger block trades. This institutional-style trading approach helps us obtain better fill prices from custodians and ensures consistent prices across all accounts involved in the trade.

We are consistently able to aggregate securities from multiple client accounts and group them into a trade block. Block trading enables us to execute equity trades in a timelier and more equitable manner. We typically aggregate trades into blocks that can then be executed directly at a broker or be sent to a specific broker that specializes in trading certain asset classes.

Managing Custodial Relationships

Custodians are broker/dealers or trust companies that process transactions and make distributions. Independent financial advisors can often use a variety of separate custodians, while larger financial advisors may have in-house custodian services. These custodians are generally compensated through commissions or other transaction-related or asset-based fees for securities trades that are executed through them.

As the outsourced trading desk for your firm, Simplicity Solutions manages the trading relationship with the custodian to let you focus on client relationships. We maintain an institutional-level relationship with custodians, which means that you can bring the infrastructure and trading expertise of a large firm while maintaining the individual focus and the attention of a small firm for your clients. These may be helpful selling points when it comes to meeting with potential clients.

Simplicity Solutions utilizes a variety of different liquidity providers to help fill in the gaps with thinly traded securities, such as American Depositary Receipts (ADRs) and other international investments. These securities are often off-limits for many retail custodian trading desks, since they can be difficult to execute. This means that Simplicity Solutions can help execute trading strategies that may be more comprehensive in nature and potentially improve your clients’ performance.

If you choose to work with Simplicity Solutions, you will establish an account with a qualified custodian or a bank and trust department that provides at least quarterly reports on all account holdings. We work with a wide range of custodians, and you’re not obligated to work with anyone in particular. Feel free to contact us for a full list of custodians we work with.

managing custodial relationships

Save Time with Simplicity Solutions

Financial advisors spend a lot of time rebalancing portfolios and making other trades. In fact, it might take an advisor upwards of 20 minutes to rebalance a single client household. Multiply that by hundreds of client households per quarter and you can see how these tasks quickly turn into a full-time job of their own. Advisors must then actually place trades across separate accounts and ensure that everything is running smoothly.

When you work with Simplicity Solutions, you can focus on engaging with your clients and explaining your investment decisions rather than dealing with these trading issues. Simplicity Solutions’s overlay management service performs all required trades and provides the option to rebalance the accounts at your request or select quarterly, semi-annual, or annual rebalancing to automatically ensure that client accounts are kept up to date.

Getting Started

Simplicity Solutions provides a complete technology and asset management platform built for financial advisors. In addition to block trading, we provide everything from prospecting and proposal generation to billing, compliance, and reporting solutions. You can even find the integrations that fit you best with the help of our experienced consultants. We handle the paperwork, billing, and other tedious tasks so that you can focus on client relationships.

Through our Unified Managed Accounts (UMA) platform, you can find a wide range of vetted investment options designed to meet any client’s unique needs. The platform consolidates the paperwork and trading in a way to increases efficiency, lowers costs, and frees up your time to focus on higher value work. At the same time, your clients benefit from increased attention and the potential for significant cost savings in their own accounts.

Schedule a demo today to see our trading solutions and full technology stack in action and learn how you and your clients can benefit from working with Simplicity Solutions.