Custodians and directed trustees play a critical role in the administration, safeguarding and reporting of institutional and public fund assets. As investment portfolios become more complex — incorporating alternative assets, multiple asset managers and heightened regulatory oversight including Department of Labor expectations — organizations must understand the responsibilities of their custodian and how to align those services with their own fiduciary responsibilities and plan administrator needs.

To determine the most suitable custody model, organizations should assess their own internal capabilities, governance structure and regulatory obligations. This approach confirms that organizational needs correspond with the optimal provider. When evaluating potential partners, it is important to take several critical factors into account.

Evaluating customized services and relationship management

Organizations must evaluate whether a custodian fully understands their requirements, not just technical abilities. Considerations include access to a single point of contact, industry specialization, dedicated support for online access and the level of assistance provided to pension plan participants if applicable. Providers with public funds expertise and direct participant engagement capabilities may offer additional value. Custodians should demonstrate full engagement with the organization’s structure and objectives, contributing to operational efficiency and innovative solutions.

Questions for your custodian:

  • Will we have a dedicated relationship manager or single point of contact for all our needs?
  • Is there an industry specialized service team available to provide timely and personalized support?
  • What steps are taken to proactively communicate and address our evolving organizational needs?
  • How do you support plan participants, and what feedback mechanisms are in place?

Assessing size and cost — the balanced approach

The size of a provider is often the first aspect that many people consider when selecting a custodian. It can demonstrate client confidence, long-term stability and the ability to invest in strong infrastructure, rigorous risk controls and operational efficiency. Other advantages could include having more resilient systems, deeper expertise and service models that smaller providers cannot easily replicate. At the same time, smaller providers can often offer specific advantages as well, such as  greater flexibility, personalized service and quicker response times. Their ability to adapt rapidly to client needs and provide customized solutions can be a significant advantage, especially for organizations seeking a more tailored partnership.

While the size of a provider can influence both the breadth of services and the level of personalized support offered, it is equally important that organizations only pay for services they genuinely require. Regardless of whether a large provider offers extensive infrastructure and resources, or if a smaller provider delivers flexible, tailored solutions, fees should be restricted to only those services that are actively in use, and the agreement can be updated as needs change over time. This ensures that the partnership remains cost-effective and responsive, aligning the scale and capabilities of the custodian with the organization’s evolving needs.

As your organization expands through increased assets, new strategies or entry into different markets, you need a partner with the capacity and foresight to grow with you. A partner with meaningful size can continue investing in technology, talent and controls, all of which strengthen the long-term relationship. On the other hand, a smaller partner may be able to provide more attentive support and a closer working relationship, ensuring your evolving requirements are met with agility and a personal touch.  

Questions for your custodian:

  • What specific investments have you made recently to enhance operational efficiency or resiliency?
  • Are there examples of how you have supported organizations through significant growth or strategic changes?
  • How do you balance the benefits of scale with the need for personalized service and dedicated client support?

2025 Fraud exposure across organizations

  • 76% of organizations were targets of payments fraud in 2025.
  • 58% of organizations experienced check fraud in 2025.
  • 74% of organizations were exposed to business email compromise (BEC) in 2025.
  • 30% of organizations were subject to ACH debit fraud in 2025. 

Fuente: 2026 AFP® Payments Fraud and Control Survey Report

Confirm strong and effective security protocols

As fraudulent activity becomes more frequent and complex, custodians need to adapt to safeguard client assets. Your custodian must not only be committed, but also able to invest in technology. Providers should demonstrate that this is a priority and clearly communicate the protective measures they use for your organization, accounts and staff, along with the steps they take to secure their operations and employees.

Equally important is business continuity. Custodians should have robust plans in place to ensure uninterrupted service and protect assets during unforeseen events — such as cyberattacks, natural disasters or system outages. These plans should be regularly tested, updated and communicated to clients, demonstrating a commitment to resilience and reliability no matter the circumstances.

Investment in technology also benefits other areas of service by driving efficiency and enhancing reporting capabilities, improving the safety, transparency and visibility of your assets.

Questions for your custodian:

  • What security protocols are currently in place to protect client assets from evolving threats?
  • How do you ensure protective measures are regularly updated to address new types of fraud?
  • What kind of coverage protects my assets?
  • Can you share metrics or results that demonstrate the effectiveness of your fraud prevention strategies?
  • What business continuity and resiliency plans are in place to ensure uninterrupted service during unexpected events, such as cyberattacks, natural disasters, or system outages?

Understanding core vs ancillary services (what you need and what you don’t)

Core services: safekeeping, asset servicing, accounting, trade processing and the reporting activities required to support these functions

Ancillary services: often include benefit payment services and reconciliation for alternative assets, can also include discretionary investment services for all or some of the investment portfolio

As the range of available services continues to grow, it becomes increasingly important for organizations to evaluate which tools align with their strategy, operational structure and long-term goals. Core custody services form the foundation of a custodian’s responsibilities, confirming that assets are held securely, transactions are processed accurately and information is delivered in a timely and reliable manner.

Many custodians also offer ancillary services — additional solutions designed to enhance the client’s experience or support specific operational needs. While not always essential for every organization, these services can create meaningful efficiencies and improve the overall quality of information and analysis available to asset owners.

The distinction between core and ancillary services is more than a matter of categorization. It ensures that the custodian you select can deliver the fundamental protections you require while also providing optional capabilities that can help you operate more effectively.

Questions for your custodian:

  • Can you provide examples of how your ancillary services have streamlined processes or improved information quality for asset owners?
  • How do you help clients identify which ancillary services deliver the most meaningful operational efficiencies based on their needs?
  • Can you describe how your reporting activities support both core and ancillary services, ensuring timely and reliable information delivery?
  • In what ways do you customize your service offering to align with an organization's long-term goals and operational structure?

Consider commitment to custody business services

As assets under administration continue to rise, the custody market remains concentrated and competitive. Many providers have either exited the custody space entirely or merged into larger firms, resulting in clients being transferred with little notice, disrupting established relationships, fee structures and processes.

It is critical to partner with a custodian that has a proven record and consistently invests in its custody business. Such providers offer stability, long-term alignment and a commitment that extends beyond market cycles. It also makes sure your organization benefits from a custodian familiar with industry complexities and focused on serving institutional clients.

Questions for your custodian:

  • How does your organization manage the risks associated with industry consolidation and the potential for client transitions between providers?
  • How do you ensure that your fee structures and operational processes remain aligned with client expectations and long-term strategies, especially following industry mergers or acquisitions?
  • What investments has your organization made in recent years to strengthen custody capabilities and adapt to evolving market conditions?
  • How do you solicit and incorporate client feedback to improve your custody solutions and maintain strong relationships?

Fulfilling fiduciary responsibility with periodic reviews

As a fiduciary, one of your key duties is to make sure your organization consistently receives excellent service. Managing fees, relationships and quality can be challenging. Because the environment is constantly evolving, it is crucial to regularly assess your providers. A formal review every three to five years is an important part of this process. These periodic evaluations help you compare services and fees, and make sure your custodian still fits your needs, expectations and long-term goals.

Awareness of market trends allows your organization to evaluate whether your custodian is keeping up with industry advancements, investing in innovative technology and improving service or costs through increased efficiency. This ongoing effort strengthens your fiduciary decisions and helps you meet your responsibility to protect and grow the financial health of those you represent.

Questions for your custodian:

  • Can you describe how your fee structures have evolved in response to market trends and client feedback?
  • What processes do you have in place for periodic reviews, and how do you incorporate client input into those evaluations?
  • How does your organization monitor and respond to industry advancements to ensure your custody offerings remain competitive?
  • How do you support fiduciary responsibilities and help clients protect and grow their financial health?

PNC Institutional Asset Management® (PNC IAM) offers a dedicated custody services solution. Our superior service, commitment to risk management and continuous improvement efforts around process, product and technology make us an ideal option with growing consolidation in the institutional trust/custody industry. For more information, contact your PNC IAM representative or visit Custody Services for Efficient Institutional Asset Management.