Custodian

A custodian, in finance, is a bank or regulated firm that holds a client’s securities and cash in safekeeping. The word here does not mean a building caretaker or a keeper of records, and it does not mean the person who invests the money. The custodian settles trades, collects dividends and coupons, processes corporate actions and reports what is held. For a private client, it is usually the private bank where the account sits.

How custody works

Three roles are often bundled inside one bank, and they are worth separating:

• Custody: who holds the assets and keeps the record of ownership.
• Management: who decides what to buy and sell, on advice or under a discretionary mandate.
• Reporting: who tells you what you own and how it performed.

A bank can do all three, or only custody while an external manager trades the account. For foreign markets, large banks often use sub-custodians, so the chain behind a single statement can run through several institutions.

What is a custodian bank?

A custodian bank holds and safeguards investors’ securities and cash, settles their trades, collects income and reports positions. Securities held in custody are kept separate from the bank’s own balance sheet. The custodian keeps the assets; it does not decide how they are invested unless the client also gives it a management mandate.

Several banks, several custodians, no single view

What the bank does not tell you: each custodian reports only what it holds. A family with accounts at several banks has several custodians, each with its own statement format, valuation date and asset labels. None is responsible for the total, and none values property, private companies or the entities that own the accounts. That gap is what consolidated reporting fills, and it is the problem in consolidated reporting across multiple banks.

Custody is also a design choice. Keeping assets at a custodian independent of the manager makes it easier to change managers and to check what they report. The distinction between who holds, who decides and who advises runs through what is wealth advisory.

PWA designs and runs the operating layer around private wealth: mapping custodians, collecting their data and reviewing the custody set-up within investment and wealth architecture and administration and back office. PWA does not manage money, hold mandates, take commissions or give regulated investment, tax or legal advice.

If you are unsure which custodian holds what, or who answers for the total, a written second opinion maps it in writing.

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This entry is part of PWA’s plain-language glossary of terms used in modern family office architecture.