This article was penned by CAPIS

On February 25th, CAPIS hosted the second of its virtual panels, “RIAs and Outsourced Trading: What You Need to Know To Navigate the Markets.” View the full recording here. 

The panel featured:

• Mark Viani (Moderator), Director of Institutional Sales, ARC Product Manager, CAPIS 
• Matt Krebs, Director of Outsourced Trading, CAPIS 
• Chris Hurley, Director of Institutional Sales, CAPIS 
• David Krebs, Principal & COO at Signia Capital Management 
• Marc Van Rijssen, Director of Operations, UX Wealth Partners 

Mark Viani, CAPIS

The discussion centered on the operational processes and intricate requirements for when registered investment advisors (RIAs) consider outsourcing, either in whole or part, the aggregation of their institutional and wrap/custodial platform orders.

On the subject of outsourced trading, Hurley said that clients are choosing to divert their attention from costly and time consuming operational and execution processes to focus on portfolio management and increased alpha generation. David Krebs estimated that the migration  of his prior  labor and capital intensive process to a complete outsourced trading solution saves his firm ~$150,000/year. 

Other topics covered included:

• Operational complexities RIAs encounter when contemplating outsourcing.
• The aggregation and execution of institutional and wrap/custodial platform orders.
• Negotiating the elimination of “trade-away” penalties.
• Payment for order flow.

Marc van Rijssen, UX Wealth Partners

Elaborating on the topic of trade-away penalties, Van Rijssen said custodians have more flexibility to waive the trade-away penalties for turnkey asset management programs (TAMPs) than  RIAs. He argued that if the allowance of trading away was more widely accepted, not all orders would be traded away from the custodian — smaller cash flow trades would continue to be executed with the custodian broker-dealers.

The panel also discussed the elephant in the room — payment for order flow — in relation to the order routing practices of custodian and wrap platform sponsors.

Via the incorporation of the technology behind CAPIS’ ARC solution (Allocation, Reconciliation, and Clearing) into the functionality of its outsourced trading desk, RIAs can seamlessly aggregate their wrap/custodial platform and institutional orders for execution. The panelists also touched on how TAMPs can take advantage of this solution.   

For questions about CAPIS’ outsourced trading capabilities or our ARC solution, please contact  [email protected] or [email protected] and follow us on Twitter (@capisinc) and LinkedIn for more updates from our team.