What Is a Custodian?

What Is a Custodian?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

A custodian is an institution or individual that holds the financial assets for safekeeping to minimize theft or loss. These custodians are able to hold a variety of assets like stocks, bonds, precious metals, currency, and even real estate deeds. Their primary responsibility is to secure these assets, not to manage them. That’s handled by financial advisers or the individual investor. These custodial services are typically provided by banks or other types of financial institutions.

Related Questions

1. Can a custodian also manage the assets they’re holding?

No, a custodian’s primary role is to secure the assets, not manage them. The management of the assets is typically handled by financial advisers or the individual investor.

2. What types of assets can a custodian hold?

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A custodian can hold a variety of assets, including stocks, bonds, precious metals, currencies, and even real estate deeds.

3. Why would someone use a custodian?

Individuals and institutions use custodians to minimize the risk of their assets being stolen or lost. It also provides a measure of legal protection.

4. Are custodial services free?

While some banks and financial institutions may offer limited custodial services for free, most custodians charge fees for their services. The cost can vary depending on the value and type of assets being managed.

5. Can individuals act as custodians?

While typically institutions like banks act as custodians, in some cases an individual may also take on this role. However, due to the risk and responsibility, it’s uncommon without a specialized legal and financial framework.