The ongoing evolution of custody: tips for renewing your custody contract

October 26, 2023

As an investment services cornerstone, custody must constantly evolve to meet industry changes and keep pace with technology. In our fast-paced world, it’s important to understand how it’s adapting and improving, and how your rates are determined so you can make smarter decisions in the future.

Custody is a foundational component of nearly everything we do in the investment services industry. Whether you’re an investment manager, corporation, government entity or not-for-profit organization, you depend on the efficient and consistent performance of your custodian. But how is it changing and what factors are driving its progress?


A continuous state of rapid improvement

Although custody has fundamentally done what it has always done, it’s far from static. In fact, custody is subject to virtually the same trends the rest of the industry faces, such as globalization, the need for new technology, increased regulatory burdens and constant threats to cybersecurity.

Custodians are making incremental improvements to always do the right thing for all their stakeholders. The pace of change impacting the custody industry is unprecedented, and improvements that used to take months or years can now be accomplished in days or weeks.


Adapting to technological advancements

A key area of change is in the technology used to meet the needs of the evolving industry. As regulations shift, such as the T+2 settlement requirement, custodians need to be agile and make enhancements to their systems and processes. Custodians are also developing critical processes and technology to meet heightened standards around anti-money laundering and economic sanctions policies.

It’s more important than ever to keep your information safe, and through a dedication to continual technology improvements, custodians are now able to OFAC scan SWIFT messages in real time. As more and more clients use the SWIFT network, custodians will be able to simplify processes, remove manual touchpoints and more aptly manage and reduce risk.


How client service models are keeping up

As the technology framework evolves, it allows client services teams to be more flexible and efficient. Because of this, the client service model is progressing toward a more personalized experience for clients. If service providers can understand the distinct needs of their clients and business models, they’ll be able to work together to identify targeted enhancements to align systems and processes to meet their needs, both in the short and long term.

Moving forward, the investment services industry will continue to evolve, and as it does, custody will adapt along with it. Custodians will carefully watch the market, listen to clients and partners and plan ahead with an eye for innovation and targeted improvement.


Custody contract renewal

Contracts and agreements need to be reviewed and updated regularly – whether it’s because you’re adding services, or your custodian is changing operational procedures. No matter the reason, renewing is the perfect time to review the costs associated with your investment portfolio and confirm the fee schedule is appropriate.

Enticing pricing is just that, an enticement. When a bid seems too low to be realistic long term, it usually is. And when you don’t anticipate upcoming fee increases to rebalance your ongoing or changing servicing needs, they can often come as a shock.

Staying aware of your portfolio’s makeup – knowing the details of its structure and activity – can help you avoid surprises. 


How are pricing structures built?

Knowing what elements weigh into fee structures can help you look at your strategy and make smart decisions for the future. These are the primary factors that determine your cost.

  1. Do you need a custodian or a trustee?
    This is the most critical aspect of your fee. Trustees require more fiduciary responsibility (reflected in a higher price), custodians require less (reflected in a lower price).

  2. What securities are you holding/ do you need serviced?
    Are you invested in equities, bonds, real estate? A mutual fund, hedge fund or exchange-traded fund? Private equity or debt funds?

  3. How many accounts do you need?
    Are you a single client with one long-term investment account? Or are you a holding company with multiple subcompanies or wholly owned subsidiaries?

  4. Are you involving outside parties?
    Do you have outside managers? Do you have outside advisors or consultants authorizing trades on your behalf and communicating with your custodian? Or are you doing all your work inhouse?

  5. What level of service do you expect?
    Do you require frequent in-person meetings? Reporting customization? Daily confirmations?

  6. Are your securities priced daily through industry pricing sources? Does your custodian have to do manual work to process transactions in private markets?


Why is my pricing changing?

Knowing what elements weigh into fee structures can help you look at your strategy and make smart decisions for the future. These are the primary factors that determine your cost.

  1. A change in investment strategy
  2. Acquiring a company
  3. A change in asset allocations
  4. An initial comparative pricing bid
  5. Elevated servicing demands
  6. Special customization or vendor involvement

Knowing what factors can impact custody pricing is crucial to creating successful investment strategies in the future. That’s why U.S. Bank has a team of experts ready to offer you a tailored solution that meets your needs and allows you to focus on achieving your goals. Visit to learn more about our custody solutions.

Related content

The ongoing evolution of custody: Tips for renewing your custody contract

Bank vs. brokerage custody

5 questions you should ask your custodian about outsourcing

Employee benefit plan management: trustee vs. custodian

Delivering powerful results with SWIFT messaging and services

OCIO: An expanding trend in the investment industry

Protecting cash balances with sweep vehicles

Preparing for your custodian conversion

4 benefits of independent loan agents

How institutional investors can meet demand for ESG investing

How RIAs can embrace technology to enhance personal touch

Look to your custodian in times of change

The benefit of a multi-jurisdictional European trustee

The role of a custodian

An asset manager’s secret to saving time and money

At your service: outsourcing loan agency work

Custody or safekeeping: What’s the right solution for government investments?

Case study: U.S. asset manager expands to Europe

What are alternative investments?

Investment strategies by age

How to start investing to build wealth

5 questions to help you determine your investment risk tolerance

Refining your search for an insurance custodian

What is CSDR, and how will you be affected?

Can ABL options fuel your business — and keep it running?

Collateral options for ABL: What’s eligible, what’s not?

ABL mythbusters: The truth about asset-based lending

Start a Roth IRA for kids

What Is a 401(k)?

How to open and invest in a 529 plan

How grandparents can contribute to college funds instead of buying gifts

Gifting money to adult children: Give now or later?

Investing myths: Separating fact from fiction in investing

Avoiding the pitfalls of warehouse lending

Middle-market direct lending: Obstacles and opportunities

Managing complex transactions: what your corporate trustee should be doing

The unsung heroes of exchange-traded funds

4 questions you should ask about your custodian

Maximizing your infrastructure finance project with a full suite trustee and agent

How to maximise your infrastructure finance project

High-yield bond issuance: how to avoid 5 common pain points

ESG-focused investing: A closer look at the disclosure regulation

European outlook: Trustee experience more important than ever

7 steps to keep your personal and business finances separate

6 tips for trust fund distribution to beneficiaries

Alternative assets: Advice for advisors

The reciprocal benefits of a custodial partnership: A case study

5 financial benefits of investing in a vacation home

7 diversification strategies for your investment portfolio

Can fantasy football make you a better investor?

A guide to tax diversification and investing

Year end tax planning tips

4 major asset classes explained

ETF vs. mutual fund: What’s the difference?

Effects of inflation on investments

Bull and bear markets: What do they mean for you?

4 times to consider rebalancing your portfolio

A beginner's guide to investing

Can you take advantage of the dead equity in your home?

Get more home for your money with these tips

4 ways to free up your budget (and your life) with a smaller home

Is online banking safe?

Key considerations for launching an ILP

10 ways a global custodian can support your growth

Easing complex transactions: Project finance case studies

Interval funds find growing popularity

The benefits of a full-service warehouse custodian

Top 3 considerations when selecting an IPA partner

A first look at the new fund of funds rule

How liquid asset secured financing helps with cash flow

IRC Section 305(c): Deemed distributions and related regulations

Depositary bank and collateral agent

3 innovative approaches to ESG investing in Europe

What type of investor are you?

Understanding yield vs. return

Retirement income planning: 4 steps to take

Retirement expectations quiz

Resources for managing financial matters after an unexpected death

Do I need a financial advisor?

4 questions to ask before you buy an investment property

How much money do I need to start investing?

How do interest rates affect investments?

Financial steps to take after the death of a spouse


Investment products and services are:


U.S. Bank does not guarantee the products, services or performance of its affiliates and third party providers.
Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.