Custodians and trustees

Custodians and trustees play key roles in the management and protection of assets, especially for institutional investors or trusts. Though both are involved in safeguarding assets, their functions and responsibilities differ.

1. Custodians

• Jurisdiction: Custodians are financial institutions responsible for safeguarding a client's financial assets, such as stocks, bonds, and other investments. They handle the administrative tasks related to asset custody, including trade settlement, income collection, and record-keeping.
• Example: State Street Corporation acts as a custodian for large institutional investors like pension funds. They ensure that securities are safely held, track their movements, and provide services such as dividend collection and tax reporting. If an institutional investor buys shares of Tesla, the custodian will hold the shares in its account and ensure all transactions are processed accurately.

2. Trustees

• Jurisdiction: Trustees are responsible for managing assets placed in a trust on behalf of beneficiaries. They have fiduciary duties to act in the best interest of the beneficiaries, ensuring the assets are invested prudently and distributed according to the terms of the trust agreement.
• Example: A family might set up a trust with JPMorgan Chase as the trustee. The trustee manages the assets in the trust (e.g., stocks, bonds, real estate) and ensures that the income or principal is distributed according to the instructions, such as providing funds for the beneficiaries' education or retirement.

Key Functions

• Custodians: Safeguard assets, handle administrative tasks, and ensure proper record-keeping.
• Trustees: Manage assets, make investment decisions, and distribute funds per the trust’s instructions.

In summary, custodians protect and manage the physical custody of assets, while trustees oversee the administration and management of assets for the benefit of beneficiaries. Both are essential for proper asset management and protection.

You can buy the entire printed book on Amazon using this link.

https://www.amazon.com/dp/B0F2ZCQP5T?ref_=pe_93986420_774957520

I have a small request. Please enroll in this free trading strategy simulator to support this wiki. It will only take a couple of minutes.

https://collective2.com/details/149633684

Please do not forget to subscribe to this wiki so that you will get a new notification when a new bite is posted and it will also help us grow our community :)

"Rome was not built in a day neither will you pass Securities Industry Essentials (SIE) Exam by studying for one day"