{"type":"practice_guide","title":"How to Choose an RIA Custodian: What Custodians Do and What to Ask","lead":"As of Oct 20, 2026, SEC Rule 206(4)-2 requires client funds and securities to be held by a qualified custodian (a bank, a registered broker-dealer, a registered futures commission merchant or a qualifying foreign financial institution), and Form ADV Part 2A Items 12 and 14 require you to disclose how you select brokers and any benefits you receive.","as_of":"2026-10-20","facts":{"summary":"What the custody rule requires, what you must disclose about the custodian you pick, the questions to ask in writing, and how to compare without a ranking.","key_facts":["A qualified custodian is a bank or savings association, a registered broker-dealer, a registered futures commission merchant, or a qualifying foreign financial institution.","You must have a reasonable basis, after due inquiry, to believe the custodian sends each client an account statement at least quarterly.","Deducting your fees from client accounts is custody, but if that is your only custody the annual surprise examination does not apply.","Form ADV Part 2A Item 12 asks for the factors you consider in selecting brokers, soft dollar benefits and referrals you receive, and directed brokerage practices."]},"sources":[{"url":"https://www.law.cornell.edu/cfr/text/17/275.206(4)-2","checked":"2026-10-20","label":"Legal Information Institute, Cornell Law School: 17 CFR 275.206(4)-2, custody of funds or securities of clients by investment advisers"},{"url":"https://www.sec.gov/files/formadv-part2.pdf","checked":"2026-10-20","label":"U.S. Securities and Exchange Commission: Form ADV Part 2: Uniform Requirements for the Investment Adviser Brochure and Brochure Supplements (SEC 1707)"},{"url":"https://www.sec.gov/files/risk-alert-newly-registered-ias-032723.pdf","checked":"2026-10-20","label":"U.S. Securities and Exchange Commission, Division of Examinations: Risk Alert: Observations from Examinations of Newly-Registered Advisers"},{"url":"https://www.sec.gov/files/rules/final/2024/regulation-s-p-small-entity-compliance-guide.pdf","checked":"2026-10-20","label":"U.S. Securities and Exchange Commission: Enhancements to Regulation S-P: A Small Entity Compliance Guide"}],"related":[{"title":"Advisor Capacity Calculator: How Many Households Can You Serve?","url":"https://advisoriq.com/practice/calculators/advisor-capacity/"},{"title":"Advisor Fee Revenue Calculator: AUM Fee Schedule vs Flat Fee","url":"https://advisoriq.com/practice/calculators/fee-revenue/"},{"title":"How to Start an RIA: SEC vs State Registration","url":"https://advisoriq.com/practice/guides/how-to-start-an-ria-sec-vs-state-registration/"},{"title":"How to Price Advisory Services: Fee Schedules and Pricing Models","url":"https://advisoriq.com/practice/guides/advisor-fee-schedules-and-pricing-models/"},{"title":"Hiring Your First Advisor or Operations Hire: Roles, Licensing and Structure","url":"https://advisoriq.com/practice/guides/hiring-first-advisor-or-operations-hire/"},{"title":"How to Build an RIA Compliance Program: Rule 206(4)-7, CCO and Annual Review","url":"https://advisoriq.com/practice/guides/compliance-program-for-a-new-ria/"},{"title":"Legal Essentials for an Independent RIA: Entity, Advisory Agreement and Insurance","url":"https://advisoriq.com/practice/guides/legal-essentials-for-an-independent-ria/"},{"title":"Financial Advisor Technology Stack: What You Need, How It Connects and How to Budget","url":"https://advisoriq.com/practice/guides/advisor-technology-stack/"},{"title":"RIA Cybersecurity: Regulation S-P, Regulation S-ID and Practical Controls","url":"https://advisoriq.com/practice/guides/ria-cybersecurity-and-client-data-protection/"},{"title":"Marketing for Financial Advisors: How to Attract Clients","url":"https://advisoriq.com/practice/guides/marketing-for-financial-advisors/"},{"title":"SEC Marketing Rule for Advisors: Testimonials, Ratings and Performance","url":"https://advisoriq.com/practice/guides/sec-marketing-rule-for-advisors/"}],"notes":["Educational, not legal, tax or investment advice.","Practice management content is not eligible for CFP Board CE. CFP Board plans to allow up to five hours of it per cycle once its Q4 2027 changes take effect."],"url":"https://advisoriq.com/practice/guides/choosing-an-ria-custodian/","citation":"AdvisorIQ, as of 2026-10-20. https://advisoriq.com/practice/guides/choosing-an-ria-custodian/","license":"https://advisoriq.com/license/","publisher":"AdvisorIQ, independent education for financial advisors","disclaimer":"Summaries of rules set by designation bodies and regulators, which have the final word."}