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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteWhat is the difference between custodial and non-custodial platforms? It comes down to who holds your investments and who has the authority to obtain or move them—not which company supplies the app. In a non-custodial software arrangement, assets stay with a separate custodian and the software provider lacks authority to take possession. A custodial arrangement gives a provider or adviser possession or relevant authority over client assets. To answer “Does my investment platform hold my assets?”, check the account agreements, permissions and actual asset flows; a platform’s marketing label alone does not settle the question.
This comparison focuses on the U.S. SEC custody rule for investment advisers. It does not determine the treatment of a particular provider, every asset type, state laws or non-U.S. regimes.
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What counts as custody?
Under the SEC adviser custody rule, custody means holding client funds or securities directly or indirectly, or having any authority to obtain possession of them. The SEC’s 2003 rule release puts the test this way: “An adviser has custody of client assets, and therefore must comply with the rule, when it holds, ‘directly or indirectly, client funds or securities or [has] any authority to obtain possession of them.’” SEC, 2003 custody rule release.
Physical possession is not required for custody to be relevant. An adviser may have custody when it has authority to withdraw assets even though a third-party custodian holds them. Conversely, access to account data, preparation of instructions or trading support does not, by itself, establish that a provider has withdrawal authority. The SEC says the analysis depends on the facts and arrangement; authority to withdraw upon instruction can constitute custody. SEC custody rule FAQ.
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“Non-custodial” is therefore a description to verify, not a legal conclusion. Review who can initiate or approve withdrawals and transfers, what the contracts authorize, and where the assets actually sit.
How the two arrangements differ in practice
| Question | Non-custodial investment software arrangement | Custodial arrangement |
|---|---|---|
| Who holds the assets? | A separate custodian holds the funds or securities; the software provider lacks authority to obtain possession. | A provider or adviser holds assets directly or indirectly, or has authority to obtain possession. A third party may still physically hold the assets. |
| Can the adviser or software provider move or obtain the assets? | Not if the arrangement is genuinely non-custodial; inspect permissions and agreements to establish this. | Possession or relevant authority, including withdrawal authority, can bring custody into the analysis. |
| Who sends account statements? | The separate custodian may send statements directly to clients. Confirm who sends them and how often. | For an SEC-registered adviser with custody, the rule’s statement provisions and their applicability matter; the SEC guide describes a reasonable basis, after due inquiry, for believing the qualified custodian sends statements directly to clients quarterly. |
| Who handles compliance and records? | Responsibilities depend on the adviser’s role and the actual arrangement; software does not itself resolve regulatory duties. | An adviser’s custody may trigger qualified-custodian safeguards and related obligations, subject to the rule’s requirements and exceptions. |
| What does the client experience? | Software and custodian may divide onboarding, trading, transfers and support. These details vary by provider and are not determined by the custody label. | The custodian and adviser may have different roles in account servicing and asset operations. Confirm which party handles each task. |
The SEC custody rule is the basis for the regulatory distinctions in this table; the client-experience rows are due-diligence questions, not claims that one model is better. SEC custody rule release SEC small-entity compliance guide.
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What custody can mean for an SEC-registered adviser
Qualified custodian and account structure
The SEC rule generally requires an adviser with custody of client funds or securities to maintain them with a “qualified custodian,” such as an eligible bank or registered broker-dealer. The rule also addresses account arrangements and client notification when an adviser opens an account on a client’s behalf. The exact application depends on the rule and the circumstances. SEC custody rule release.
Statements and examinations
The SEC’s small-entity guide describes a reasonable basis, after due inquiry, for believing that the qualified custodian sends quarterly account statements directly to clients. It also describes annual surprise examinations and exceptions, including specified fee-deduction and audited pooled-vehicle circumstances. These provisions do not mean that every adviser with any form of custody always has the same examination duty; applicability and exceptions need to be assessed for the adviser’s situation. SEC small-entity compliance guide.
Operational authority and edge cases
Withdrawal authority, fee deductions and transfers can affect custody analysis. SEC materials also discuss narrow, fact-specific treatment of inadvertently received assets. These examples are not a substitute for reviewing the rule, applicable guidance and the adviser’s actual documents. SEC custody rule FAQ.
How to check whether a platform holds your assets
- Identify the legal entities. Find the company providing the software, the adviser (if different), and the named custodian in account-opening materials.
- Locate the account and asset records. Check whose name appears on the account and which entity holds the funds or securities. For an adviser subject to the SEC rule, determine whether the custodian is a qualified custodian and how the account is structured.
- Inspect permissions, not just features. Review whether the adviser or software provider can withdraw, transfer or otherwise obtain possession. A dashboard, data connection or trading function does not answer this question on its own.
- Check statements and notices. Confirm which entity sends account statements directly to you and what notices you receive. Adviser custody can bring statement and other requirements into play, with exceptions and applicability details.
- Map the operational responsibilities. Ask who handles reconciliation, recordkeeping, transfers, trading instructions and support, and who is responsible for any applicable compliance obligations.
- Resolve uncertainty with the adviser and custodian. Ask for the relevant agreement or written explanation of asset flows and authority. If the answer remains unclear, seek advice from a qualified professional familiar with the applicable rules.
SEC custody-rule proposal announced in October 2026
On October 1, 2026, the SEC issued Adviser and Regulated Fund Custody Rules; Crypto Custody Rules (Release IA-7023 / File S7-2026-35). It is a proposed rule addressing adviser and regulated-fund custody, including crypto custody, as well as related reporting and recordkeeping—not an adopted or effective rule on the information available at that date. The SEC says comments are due 60 days after publication in the Federal Register; the cited announcement does not give a calendar deadline. Check the SEC’s page for its current status and publication details. SEC proposal, Release IA-7023 / File S7-2026-35.
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