Summary

On November 1, 2024, your investment account will be changing custodian from Pershing to Altruist.  The change will occur through a process called “negative consent,” meaning that the transition will happen by default unless you wish to do otherwise. We recommend you allow for the transition to Altruist to occur. 

We (Trail FP) often refer to your custodian by a different name – Shareholder Services Group (or SSG).  However, that is not quite correct.  SSG are a group of humans who help us navigate the world of a gigantic custodian like Pershing. We are going to continue to work with most of the folks from SSG, as they are absorbed into Altruist.

Trail FP will continue to be the investment advisor on your account, and you will continue to interact with John, Liz, Kim and Casey.

Kim, John, Casey and Liz at the Altruist conference. September 2024. Please note, Trail FP is

We (Trail FP) are excited by this change, and we are not saying so blindly. When we learned that Altruist had bought SSG in Spring 2023, we had many questions.  Can we trust Altruist? Is your money safe? What can Altruist do? How much will it cost? Over the past 18 months, we have dug in to find answers. Even though Altruist is a relative newcomer to the custodian world, it has already grown to become the fourth largest custodian by advisors served (behind Fidelity, Schwab and Pershing).  

Read on to learn more about what we have learned.

Most Common Questions

Is your money going to be safe?

Yes!! Altruist has the same sort of insurance and relationships with FDIC (Federal Deposit Insurance Company) and SIPC (Securities Investor Protection Corporation) that Pershing does. In fact, Altruist has purchased higher levels of SIPC than is required. 

In order to better understand why I can say that your investments at Altruist will be safe, I find it useful to think about the true home for your investments. They are actually located in a trust institution called the “DTC,” or Depository Trust Company.  DTC is kind of like Gringotts, the wizard bank from the Harry Potter world. Each custodian has a unique key that is attached to the investments in their custody. This allows the custodian to jump in the cart, get past the dragon and access your investment vault. No key, no access. Thus, when the transition of your investments goes from Pershing to Altruist, your investments won’t actually be moving anywhere. The DTC will simply “re-key” the access from Pershing to Altruist.

What will this cost?

Is there a cost to you for the custodian transition?

No.  Altruist is covering any fees to Pershing that result from the transition (Pershing charges a $95 fee per account).  

What are the ongoing costs at Altruist?

In a word, less than at Pershing. For smaller dollar accounts, the cost will be a lot less. For larger dollar accounts, the cost will be a little bit less. Custodians earn money in various ways, so to understand the true costs to you requires a lengthy explanation. Please refer to the “Details on costs at Altruist” section if you would like a better understanding.

What do you need to do?

You won’t actually need to do anything.  Technically, this process is called “negative consent” where your investment custodian changes name and ownership.  On Sept 27, you will receive an email notice from Altruist notifying you of the transition.  You will also receive a notice in the mail to your address on record.  On Nov. 1 2024 your accounts will transition.  The plan is that any and all bank account connections that are currently in effect (called “Standing Instructions”) will also come over!  Wow, that sounds like magic.

We would like for you to agree to this process and set up a client portal where you can view your accounts.  Also, if your email, mailing address or phone number has changed recently, please let Kim know!  She will send you a form to input your updated information.  You will receive lots of information on how to set up your portal.  And, of course, we will be available to help you get access all set up. 

Altruist webpage describing the transition along with other FAQs

Altruist has prepared a webpage to help you learn more about Altruist, and what the Pershing to Altruist transition will look like.  
https://altruist.com/ssg-client-hub/

Details, details and more details 

Who/what is a custodian?

A custodian is essentially like the bank for your investment account(s). They do things like open accounts, facilitate cash movement, broker investment transactions, and keep your money and information safe.  

What are the most important functions of a custodian?

Custodians do many things for you, but in essence there are five important functions of a custodian:

• Security for your assets/investments
• Cost 
• Functionality 
• Service to the advisor
• The client experience

As we evaluated Pershing and Altruist, we gave a grade to each of these functions as follows.  We have also re-initiated our relationship with Schwab in case any clients want to to move their account.  Here are our grades on the five key areas for each custodian:

For us (Trail FP), the most important element of the custodial relationship is service. When something needs to get done, we appreciate the ability to contact Bill or Velda directly, and not some call center. When Altruist announced that it had bought SSG, service and functionality were our primary concerns. In that time, we’ve seen significant improvements to both. We are impressed by what is in place today, and how Altruist continually innovates and improves. We think it says volumes that after 18 months of Altruist working to incorporate SSG, none of the SSG people who we work with have quit or moved on. That says a lot about Altruist’s stated intent of delivering high quality service to advisors (and their clients).

Our story of, and history with, Altruist

We learned about the upcoming transition from Pershing to Altruist in the Spring of 2023, with an email that proclaimed “Altruist has bought Shareholder Services Group.”  Our initial reactions were skepticism and concern.  However, we knew that we needed to learn more.  We embarked on a research project that I will call “Who is Altruist?”  One and a half years later, we can say that we are excited about Altruist as a business, and as a custodian partner for Trail FP.  

In 2021, we went through another custodian transition.  At that time, we were with TD Ameritrade, who was bought by Schwab. After much research at that time,  we decided that Schwab was not the right fit for us, and so we avoided the negative consent event by moving all clients to SSG+Pershing. Interestingly, our second choice at the time was Altruist.  At that time, the functionality at Altruist wasn’t quite there, and we had concerns about what their service would be like.

Fast forward to March of 2023, when we learned that Altruist has bought SSG. So, again we confronted a similar question. Did we want to allow our accounts to move into Altruist’s custody? After a year and a half of exploring the question, we can confidently saying yes.

We (the Trail FP team) have been on a mission to discover who Altruist is, what they stand for, and how they operate. We have learned a LOT, and we are genuinely excited by the upcoming transition. We are confident that they (Altruist) are going to support us, and serve you, as the custodian to your accounts.

What is Altruist’s Mission and vision?

Altruist’s mission is to make independent financial advice better, more affordable and more accessible. 

Our take on their mission statement. Words are just words unless they are backed up by action.  When we look at their mission, we see direct evidence of them working towards it.  A summary:

• Make independent financial advice better.  Altruist is a custodian for financial advisors, not direct to the consumer.  The tools that advisors have with Altruist are very good, and getting better than the tools at other custodians.
• More affordable.  When we compare costs, Altruist is less expensive than other custodians.
• More accessible.  This statement is aimed at the gap between who is able to access financial advice in this country.  Right now, financial advice is clustered into the higher affluence sectors of the population.  Altruist would like to see more people get financial advice.  

Who are Altruist’s People?

There are 400 plus people who work for Altruist.  We have met many, from service specialists to members in the C-suite.  My impressions:  They are smart.  They listen well.  They ask good questions of us.  They do not seem egotistical.  It seems to us like they care.  When asked about why they work at Altruist, they are enthusiastic and say something like “we are building something special.”  For what it is worth, the SSG people who we typically work have similar countenances and say similar things about Altruist.

Here is a group of folks from the Executive team:

Photo by John Chesbrough

Members of the Altruist executive team.  From left to right: 

• Dan Skiles.  President of SSG, transitioning to Director of Advisor Success),
• Jason Wenk.  Founder and CEO of Altruist
• Harpreet Ahluwalia, MBA.  Chief Product Officer
• Michelle Shotts.  VP Customer Success.
• Marc Greenberg, Chief Financial Officer
• Mazi Bahadori, JD, MBA.  Chief Operating Officer and Chief Compliance Officer

Details on security at Altruist

In order to better understand why I can say that your investments at Altruist will be safe, I find it useful to think about the true home for your investments. They are actually located in a trust institution called the “DTC,” or Depository Trust Company. Or more accurately in a digital world, the master ledger that tracks everything is at the DTC. Nearly all investments, held anywhere (e.g. Altruist, Pershing, Schwab or Fidelity), are actually located at DTC. I imagine the DTC to be sort of like Gringotts, the wizard bank from Harry Potter. Each custodian has a unique key that is attached to the investments in their custody. This allows the custodian to jump in the cart, get past the dragon and access your investment vault. No key, no access. Thus, when the transition of your investments goes from Pershing à Altruist, your investments won’t actually be moving anywhere. The DTC will simply “re-key” the access from Pershing to Altruist.

Of course, we will rely on Altruist to not lose the key. Thus, Altruist needs to provide safeguards against risk. The most common type of risk protection is insurance. Your cash at Altruist will be FDIC-insured. Altruist is a member of SIPC (Securities Investor Protection Corporation), which provides protection against Altruist failing financially.

Beyond insurance, we (the Trail FP team) wanted to feel good about Altruist’s business practices and financial strength. We asked many people at Altruist.  We explored the finances of a custodian.  We’ve read what the information from Altruist.  Here is a link to Altruist’s page on “Strength, Stability and Protection” (at Altruist). To read more about, see the following link:

Strength stability and protection at Altruist

Details on costs at Altruist

When we talk about costs, it is important to consider both explicit and implicit costs.  In order to dive into those costs, it may help to understand the various ways that a custodian makes money.  Custodians makes money in one of several ways:

Transaction Fees.  They charge a commission on each trade.  This is a cost to you.

Interest Spread.  They lend out your cash, earning a return on the money, and paying you a lower amount.  This is an “opportunity cost” to you.

Securities Lending.  When a security is in demand, they may lend it out, earning a return.  This can be a source of return for you, as custodians share this revenue with you, the client.

Account Services revenues.  Custodians may charge issue-specific fees such as wire, returned checks, or interest on a margin account.

Order Flow.  Some custodians sell the information about their orders to outside entities before the trades are placed.  No cost to you apart from less efficient pricing on your trades.  

Execution.  Custodians help you buy and sell securities.  Some custodians earn money on the spread between the “bid” and “ask” prices of a security. 

In order to cost compare, we lined three custodians up and compared them on the revenue/costs that our clients will explicitly bear.  Our assessment of the fees is in bold italics:

To read more about fees at Altruist, read this blogpost:

https://blog.altruist.com/news/fee-schedule