Custodian

Custodian

A custodian is a financial institution that holds customers’ securities for safekeeping in order to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Since they are responsible for the safety of assets and securities that may be worth hundreds of millions or even billions of dollars, custodians generally tend to be large and reputable firms.

Registered Investment Advisers are prohibited by the Adviser’s Act from taking custody of client securities (unless exceptions apply or if they abide by certain requirements).  As such, client assets managed by advisers are often held at independent custodian’s such as Schwab or Fidelity.