October 29, 2019Individual Investment Management

A custodian is a financial institution that will hold or maintain your securities for safekeeping. In addition to holding securities for safekeeping, the custodian generally offers account administration, transaction settlements, collection of dividends and interest payments, and tax support.

Below are a few items you should consider when choosing the best custodian for you. 

  • Depending on the custodian and the size of your account, there may be an annual fee plus transaction fees associated with your account.  These fees can vary significantly so it is best to ask any prospective custodian what they charge.
  • Since the custodian is your official book of record, you should consider whether their statements are clear and easy to read, whether you can electronically access your account information, whether they provide cost-basis information, and if they reinvest dividends, among other concerns.
  • Ask your Advisor for help in the selection process. They typically have worked with numerous custodians and have the experience to know what custodian is best suited for your needs and business model. Ultimately, the RIA wants a custodian whose staff feels like an extension of their own office. 

Choosing the right custodian is an important decision. Consider everything the prospective custodian offers and make the best, most informed decision possible.  Also, remember that while it can be a time-consuming process to change custodians, if your current custodian relationship isn’t working, you can change it.