DYADT? Does Your Advisor Do This?

Independent Custodians

If you work with a financial advisor, ask him or her if your account is held with the brokerage firm that employs him or her or if it is held with an independent third-party custodian.

A custodian is a specialized financial institution responsible for securely holding customer’s financial assets.

The word “independent” is important because when an independent custodian is involved, the advisor only has access to client accounts to manage the portfolio and place trades. Withdrawals and transfers to outside accounts is not permitted without client authorization.

Today, many brokerage firms serve as the custodian for financial assets – which removes an important “check and balance” with customer assets. Without an independent custodian, transparency and reporting the status of client assets could be impacted.

Fraud is illegal no matter what type of custodian you use – but an independent custodian environment is less conducive to bad actors and allows the oversight most investors would prefer.

As part of our commitment to fiduciary care, Annex Wealth Management uses independent custodians for client assets: Charles Schwab, TD Ameritrade, and Fidelity Investments.