FINANCIAL ADVISOR – GBI Rolls Out Physical Precious Metals Platform For RIAs

By Jeff Schlegel
February 22, 2013

Financial Advisor Magazine

GBI Rolls Out Physical Precious Metals Platform For RIAs

Investors hankering to own precious metals often turn to online sites, radio hucksters or late-night infomercials that sell coins, bars and bullion directly to the public. Registered investment advisors with clients clamoring to hold actual gold, silver, platinum or palladium in their own name can now help their clients directly by tapping into GBI Advisors (GBIA), a system billed as the first online platform that lets independent financial advisors buy, sell and store physical precious metals for their clients.

The platform, which debuted last month, was created by Gold Bullion International (GBI), a New York City-based company that enables financial professionals to invest directly in physical precious metals at both the institutional and retail levels through its network of physical precious metals dealers, bullion banks and refiners. According to the company’s website, GBI bids orders out to this market of dealers to ensure that clients receive best execution.

GBI says metals purchased through GBIA are manufactured by refiners recognized by the London Bullion Market Association, and are stored in protected and insured vaults in New York, Salt Lake City, London, Zurich, Singapore and Australia that are operated by Brinks, Via-Mat, and Malca Amit. All precious metal transportation and storage is fully insured by its vaulting partners through Lloyd’s of London. In addition, all holdings are reported daily and are audited at least annually by KPMG.

Branching Out

GBI’s existing client base on the institutional side includes family offices, hedge funds, mutual funds, pension funds and endowments. The wealth management side previously catered to advisors at the big wirehouse companies.

“We focused on the wirehouse channel because it has the advantage of a central authority that can create mass distribution very quickly,” says Savneet Singh, GBI’s president and co-founder. “For us, it was a quicker way to create adoption.”

He notes that GBI now handles more than $750 million in assets from the wirehouse channel. That success, says Singh, has generated interest in GBI’s service among RIAs. “We started getting a lot of calls from the independent community.”

Previously, GBI accommodated RIAs by partnering with independent platforms that work with financial advisors. That includes CAIS, a New York City-based alternative investment platform for advisors and other financial professionals that last year added GBI’s precious metals trading system to its own platform.

With GBIA, the company is now reaching out directly to RIAs, who can create an account for a client on the GBIA portal at no charge. Eligible account types include individual, joint, corporate, partnership, sole proprietorship, LLC, and trust accounts. Fees are charged after a client orders precious metals for storage.

Investors using the platform are charged a transaction fee ranging from 0.25 percent to 2 percent, depending on the size of the transaction. The minimum transaction of $5,000 costs 2 percent, and the fee drops to 0.25 percent for orders of $10 million or more. The fee covers the dealer network and the transport of metal from dealer to the selected vault.

The annual storage fee, which covers insurance and audit, is 65 basis points. GBI says that’s analogous to a fund management fee.

Reporting Systems Forthcoming

“Ordering through GBIA gives independent advisors all of the bells and whistles that wirehouse advisors have such as statements and reporting on financial software,” says Singh.

GBI says it’s working on integrating the GBIA platform into several major RIA reporting systems that will enable advisors to aggregate a client’s precious metals holdings into monthly statements and include the allocation in the overall investment portfolio. This will let an advisor bill for precious metals assets in such a way that they can be wrapped in the advisor’s overall fee.

The company says that by the end of the first quarter it expects to make announcements regarding relationships with various reporting systems.

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