The Duties of a Custodian

As with any financial institution, Creditrust has important disclosures on our website, forms and marketing materials. These disclosures summarize our status as a passive, non-discretionary custodian. Unlike financial advisors or other service providers, we act as an independent third party to investment decisions and transactions.

A custodian’s primary responsibilities are recordkeeping and reporting to the local tax authorities, adhering to its rules and regulations and helping a qualified account maintain its tax-advantaged status. We implement and follow such programs as Anti-Money Laundering (AML) regulations, among others.

Using a qualified custodian like Creditrust helps protect account assets and funds against fraud. It offers a degree of separation between client assets and the investment advisor, fund manager, and so on. Regulators desire this degree of separation as an added layer of investment protection. Furthermore, working with an independent custodian increases transparency and accountability, as we must allow for regulatory oversight and audits.

Unfortunately, Creditrust is often asked to provide investment or tax advice or endorse a specific advisor or investment opportunity. These are things we simply do not do.

While every qualified account is required by law to have a custodian to administer the plan, some have misconstrued this requirement to mean we are able to provide various services that we actually do not. So, to clear up a few common misconceptions, a custodian like Creditrust does not

  • provide investment, tax or legal advice or act as any such advisor;
  • perform due diligence reviews on or recommend or endorse investments, advisors or sponsors;
  • insure an investment; or
  • determine whether a transaction would result in a prohibited transaction.

Promoters and investment sponsors may provide incorrect information about protections provided by a custodian. This is where a team of professionals comes in, as your team can help you spot potential pitfalls in an investment opportunity and avoid fraudulent promoters.

Our firm is more than willing to serve as the neutral third party to any investment decision you make within a Creditrust account. We’ll follow your direction and process the account establishment, investment purchase or sale that helps you meet your investing goals.