High-Net-Worth Individuals (HNIs) have complex financial requirements. Their monetary dealings don’t just involve a few bank accounts or stocks. Their financial world consists of multiple income sources, diverse investments, and substantial assets. Managing this much cash and assets means they need smart strategies to keep their wealth safe and to grow it further. This is where custody services help. 

Offered by financial institutions, these services are particularly useful to HNI and Ultra-High-Net-Worth Individual (UHNI) clients as they get an extra layer of protection and control over their wealth. Let’s understand how. 

What do custody services offerings include?

They often include but are not limited to:

  • Real-time derivatives platform to view and confirm trades.
  • Internet platform to let customers handle settlements, corporate actions, and fund transfers.
  • Investment solutions with end-to-end support for settlement processing.
  • Portfolio reporting.
  • Customised fund accounting services, such as records of investments bought and sold, valuation of securities held under custody, managing income and expenses, and regulatory reporting.
  • Coordination with customers’ accountants for financial management.
  • Reporting, market news, and updates.

The role of custodians: Responsibilities of custody services

From safety and integrity to efficient investment management, custody services play an important role. 

Safekeeping of assets

Custody services act as the guardians of financial assets such as stocks, bonds, Exchange-Traded Funds (ETFs), derivatives, real estate, and other valuable investments. Custodians perform accurate fund accounting, maintain the integrity of securities, manage corporate actions, and provide detailed investment reports. They also provide assistance across various time zones and manage necessary regulatory reporting, which keeps the assets compliant with laws and preserved in their value. 

Administrative duties

Custodians manage administrative responsibilities such as opening and closing client accounts. They keep records for each account and make sure clients get regular updates. Custodians also deal with complex corporate actions such as dividend payments, stock splits, and mergers and acquisitions. They make sure that such events are reflected on an investor’s account.

Risk control and management

Custody services are not just about protecting assets, they are paramount for risk and investment management

Custodians work along with the stock exchanges and data providers so that their clients get up-to-date information. Clients are provided with the latest stock valuations, bond prices, and mutual fund NAVs (Net Asset Values). This service helps investors monitor how their investments are performing and make decisions to lower risk. Through these efforts, custodians help clients maintain a strong grasp on the pulse of their portfolios, allowing them to make quick and calculative judgments.

Advantages of custody services

Custody and fund accounting services offer numerous benefits that are crucial for investors with substantial portfolios. 

  • The safety of assets, be it physical or digital, is a top priority.
  • You get the latest market news and insights about the factors that can influence your investments.
  • They simplify the collection of dividends and interest so that you receive all earnings without delays.
  • They help in quick trade settlements to enhance the trading experience.
  • Detailed reports on how your assets are performing and the specifics of your transactions are provided, which promotes data-driven decisions.
  • They help you maintain compliance with regulations to prevent any legal complications.
  • This service takes care of all the paperwork and administrative tasks, so you can focus on your investments.

While risks exist, as with any service supervising assets of great value, custody services are in high demand due to their invaluable role in asset protection and management. Choosing the right custodian is a decision that will shape the safety and growth of your investments for years to come. So, it’s wise to look into the custodian’s reputation, services offered, security measures, technology adoption, client service quality, and compliance with necessary regulations.