5 questions to ask when evaluating a custody partner

In my experience, custodians are rarely replaced because they fail at safekeeping assets. More often, organizations reconsider the relationship as operational complexity grows and exposes gaps in reporting, governance support, workflow automation, or service responsiveness.

These pressures have elevated the role of the custody relationship. As organizations face increasing demands from stakeholders, boards, auditors, and investment committees, the custody relationship becomes about more than asset safekeeping. The right partner can help strengthen oversight, streamline workflows, and bring valuable perspective to the decisions organizations make every day.

Here are five questions to help institutional investors assess whether a custodian is positioned to support their organization over the long term.

Every organization operates differently with its own governance structures, stakeholder expectations, reporting requirements, and internal workflows. It’s important to evaluate whether a custody provider can align its services with the way your organization actually operates. Look for a partner that can adapt to your specific needs rather than forcing your organization into a standard service model.

Being adaptable is something to ask about beyond onboarding. As relationships progress, clients often have the clearest perspective on opportunities to improve processes and identify areas where workflows can be tweaked. When evaluating providers, ask for examples of how client feedback has influenced reporting, workflows, or service enhancements. Their answer may reveal how committed they are to continuous improvement and client-driven innovation.

For example, one client needed reporting that better aligned with its internal governance and board review process. Working together, the custody team redesigned reporting outputs and delivery schedules to help meet those requirements, reducing manual data aggregation and helping decision-makers access information in a more useful format.

In another case, enhancements to cash movement workflows streamlined processing and reduced manual effort, allowing client teams to spend less time on administrative tasks and more time on higher-value activities.

Such operational improvements can help strengthen oversight, simplify day-to-day administration, and improve the overall client experience.

Payment fraud has continued to rise to the top of the list of concerns for most organizations. The 2025 AFP Payments Fraud and Control Survey found that 79% of organizations experienced attempted or actual payments fraud in 2024.

Evaluating a custody partner's security program requires looking beyond broad claims about technology and controls. Effective programs combine technology, oversight, and experienced professionals who can recognize unusual activity and respond quickly when risks emerge.

Real-world examples often reveal the difference between having controls in place and having controls that work. In one instance, our team used established verification procedures to identify a fraudulent wire request before funds were released, preventing the loss of several million dollars. The outcome wasn't simply avoiding a financial loss. It demonstrated the value of having a custody partner with the visibility, expertise, and discipline to identify potential issues before they become much larger problems. In complex investment operations, some of the most important successes are the risks that never become realities.

Scale alone rarely differentiates a custody provider today. Many firms have the resources to support complex organizations. The real test often comes when operational issues arise. Institutional investors rarely need a call center. They need people who understand their accounts, know their operating environment, and can mobilize the right resources quickly.

Strong providers combine institutional resources with dedicated relationship teams that provide continuity, reduce handoffs, and help organizations navigate change. Recent client feedback reinforces this point. One client shared that their relationship and service team were the primary reasons they had never explored changing custodians. In another instance, when a client identified an opportunity to improve how data was delivered, the relationship team quickly coordinated product, technology, and operational subject matter experts to evaluate solutions and determine a path forward.

Together, these examples illustrate how accountability is reflected not only in attentive service but also in an organization's ability to bring the right expertise to the table when it matters most.

A custody provider occupies a unique position within the investment ecosystem. Unlike most service providers, custodians regularly interact with investment managers, consultants, trustees, auditors, and operations teams across a wide range of organizations. Over time, that perspective can provide insight into emerging risks, operational trends, and opportunities for improvement that institutional investors may not identify from within their own operations.

When evaluating prospective providers, institutional investors may want to ask:

• How do you identify and share industry best practices?
• What operational trends are you seeing across the marketplace?
• Can you provide examples of process improvements you've helped clients implement?
• How do relationship teams proactively identify opportunities to strengthen operations?

The answers can help reveal whether the provider acts primarily as a service provider or as a strategic partner that brings broader market insight to the relationship. Custodians that work across many organizations often have visibility into emerging practices that can help clients strengthen controls, improve efficiency, and respond to emerging operational requirements.

For example, through our work with institutional investors, we've seen a growing shift away from manual trade instructions and toward more automated approaches that strengthen oversight and reduce operational risk. In one instance, a client decided to stop sending individual trade directives by email and instead upload trade files directly through our online portal. The change helped them maintain appropriate oversight and operational controls while reducing manual processing. More importantly, it reflected a broader trend we were seeing across the marketplace.

By sharing those insights and providing perspective on new approaches, custody partners can help organizations identify opportunities to strengthen operations before they become necessities.

In my experience, the technology discussion is less about individual features and more about reducing complexity. Investment programs evolve, reporting expectations change, and new demands emerge from stakeholders and regulators. The strongest custody platforms typically help organizations keep pace without adding administrative burden.

When evaluating a provider, look beyond what the platform can do today. Instead, ask how a provider prioritizes enhancements, incorporates client feedback, and approaches long-term platform development. The willingness to respond to changing business needs often says more about long-term value than any single feature.

Future readiness isn't simply about technology features or having the newest tools. It's typically about whether a provider continues to invest in new capabilities that help clients operate more effectively as their expectations change.