Investment custodian accounts

Some investment advisors, such as Endowus, will make it a point to mention that your investments are held in a custodian account in your name. Other advisors will leave out the part about the account being “in your name”.

When an advisor uses a custodian account not in your name, your investments are co-mingled with other investors in a single custodian account. The legal owner of those investments is still the advisor. The bank has no record of which investments you own; the advisor has the ledger with that knowledge.

To be fair, advisors with shared custodian accounts are still MAS-certified. Your investments will not be compromised. There will however be more friction to claim your investments if the company ceases operation. You may be required to liquidate your investments, which given timing could be non-ideal.

Advisors with custodian accounts in your name is preferable from a security and risk-mitigation perspective. In the event that the advisor ceases operation, you can go to the custodian bank and claim your investments from them. Your investment ledger is owned by the bank, and kept seperate from the advisor’s ledger.