What Is a Non-Bank Custodian?

Custodian banks protect both physical and electronic financial assets for customers, and also manage investment activities on their behalf. Pricing arrangements may differ between custodian banks.

Whoever intends to use their individual retirement account (IRA) to invest in alternative investments such as real estate, private placement securities, precious metals and private notes requires a self-directed IRA custodian. Fees and customer service should both be considered when choosing one.


Custodian banks typically provide custody services such as safekeeping, transaction processing, compliance support and foreign exchange management to investment advisory firms and asset managers, who rely on them for protecting assets worth millions or billions of dollars. Custodian banks may be subject to federal or state regulation.

As non-fiduciary custody activities increase operational, reputational, and credit risks for national bank and Federal savings association custodians, the OCC believes it appropriate to establish core standards governing custodians’ custody of client assets.

When choosing a custodian, it is crucial that you select an entity with experience managing investments similar to those you intend on making. You can access a list of qualified custodians on the IRS website. Likewise, regulatory bodies like SEC or Financial Industry Regulatory Authority will need to approve them as well as customer service.


Custodian banks serve a crucial function, protecting financial assets from theft, misappropriation and loss. They provide various investment services including record-keeping, fund transfer between accounts, monitoring investments and reporting account activity to customers as well as tax filing preparation services and consolidate billing statements to reduce time tracking down multiple sources.

Non-bank custodians specialize in alternative investments like private placement securities and real estate. Many also provide services for self-directed IRAs that enable you to access more exotic, riskier forms of investments not normally available through traditional providers.

Contrary to banks, custodians typically provide custody as an independent product and do not package it together with other services. This allows clients to select only those services they require without paying a bundled fee. Furthermore, using one custodian for all your accounts may save money on brokerage fees by enabling advisors to execute bulk trades that settle with one single commission charge.


A custodian (also referred to as a brokerage custodian) protects clients’ securities (tradeable financial assets like stocks and bonds) against theft or loss by providing safekeeping. They also offer tax services like filing filings and collecting and dispersing dividends and interest payments, and handling trade settlement, recordkeeping and reporting services for commingled vehicles, individual retirement accounts, and private equity funds.

The Internal Revenue Service only authorizes certain financial institutions as qualified custodians for individual retirement accounts, such as banks, savings and loan associations, federally insured credit unions or those with explicit written approval by the IRS. When selecting your custodian it’s essential that you do your homework by researching licensing, registrations with SEC/FINRA/state regulatory bodies as well as reading reviews before making your choice. Likewise be sure to inquire about fee structures as high fees can seriously restrict growth over time.


Fees should be your top priority when choosing a custodian for your self-directed retirement account, so make sure they offer competitive fees with comprehensive services and can meet all of your investment goals. Take note of which technology platform they utilize too as this may have an effect on your investments.

Custodians provide asset-holding services for individuals, corporations and institutional investors alike. Their responsibilities include safeguarding assets, record keeping, managing cash flows efficiently and collecting dividends.

Investors can significantly decrease custodial fees by researching providers, negotiating with custodians and consolidating accounts to take advantage of special promotions or discounts. It is crucial to balance costs with quality of service and investment options to maximize long-term investment returns. True Tamplin is a published author, public speaker, CEO of UpDigital and founder of Finance Strategists; not registered investment advisor but can be reached at www.equitytrust.com for more information. For additional resources regarding self-directed IRA trustee/custodians please refer to www.equitytrust.com The IRS publishes an approved list of nonbank trustee/custodians who can hold/administer self-directed IRAs but this list does not encompass every possible custodian in existence or available on this list – visit equitytrust.com

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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