# How to Choose an RIA Custodian: What Custodians Do and What to Ask

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
Address: https://advisoriq.com/practice/guides/choosing-an-ria-custodian/

## 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.

## 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.

## Sources

- Legal Information Institute, Cornell Law School: 17 CFR 275.206(4)-2, custody of funds or securities of clients by investment advisers, checked 2026-10-20: https://www.law.cornell.edu/cfr/text/17/275.206(4)-2
- U.S. Securities and Exchange Commission: Form ADV Part 2: Uniform Requirements for the Investment Adviser Brochure and Brochure Supplements (SEC 1707), checked 2026-10-20: https://www.sec.gov/files/formadv-part2.pdf
- U.S. Securities and Exchange Commission, Division of Examinations: Risk Alert: Observations from Examinations of Newly-Registered Advisers, checked 2026-10-20: https://www.sec.gov/files/risk-alert-newly-registered-ias-032723.pdf
- U.S. Securities and Exchange Commission: Enhancements to Regulation S-P: A Small Entity Compliance Guide, checked 2026-10-20: https://www.sec.gov/files/rules/final/2024/regulation-s-p-small-entity-compliance-guide.pdf

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## Cite as

AdvisorIQ, as of 2026-10-20. https://advisoriq.com/practice/guides/choosing-an-ria-custodian/

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