A custodial agreement is one where a third party contractually agrees to manage or hold an asset on behalf of the actual owner or beneficiaries in return for a fee.
This is often the case with retirement plans, such as IRAs and health saving accounts, which may be held at brokerage firms or banks, and 401-Ks, which an employer may have designated with an outside financial management or brokerage firm to collect and administer contributions and distributions. Institutionally, custodial agreements are often used when complex portfolios may contain asset classes unfamiliar to the primary managers.
An investment and commercial bank may be handling a portfolio of bonds and stocks, but may also have unusual real estate or art collections, for example, whose maintenance and management requirements are outside of its normal expertise. In those instances, a specialist firm would be contracted to administer those assets within the portfolio and the primary manager’s purview on a custodial basis.
Trustees administering funds for trust beneficiaries are, in effect, also operating under a custodial agreement arrangement. Trustees have a lot of responsibility over trusts and how the trust beneficiaries turn out. Gram Parsons inherited a trust fund, but was a heroin addict. However, as a member of the Byrds, he wound up creating Country Rock, with The Eagles being his most famous musical followers. Bruce Wayne inherited a trust fund and became an obsessed psychopath who would dress up like a bat and pick fights with random street thugs in alleys. Which trustee did the better job under the custodial agreement?
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Finance: What is Power Of Attorney (Trad...2 Views
What is power of attorney?
alright well little old Maybelle blue hair just can't think straight anymore
at least when it comes to managing her considerable volumes of money husband [kitchen oven on fire]
number four was loaded and had a weak heart and well he ate one too many [tombstone and grave]
cheeseburgers Maybelle trusts her grand nephew
Beauregard to make trades on her behalf and has given him trading authorization
to manage her account that is he can make trades without pre-clearing each [Maybelle carries brownie trays]
one with her his status is analogous to having power of attorney in doing
various legal and financial things in life like you might sign over power of
attorney to your legalese proficient uncle to handle negotiating the terms of
your juggling contract because well with your busy schedule you need some help [hand signing power of attorney papers]
keeping all your you know balls in the air and you have the option between
granting general or limited power of attorney like if you want your uncle to
handle all of your finances general POA makes sense but if you only want him to
handle your contracts like in a specific narrow area like at this brokerage
account only with equities or dead or something like that well then a limited
POA would be more appropriate so ya trading Authority is the Wall Street
e-version of power of attorney you might really want to put a few grand into the
stock market but as far as you know the stock market is just a market where they
keep produce you know stocked so you turn over authority to make the actual [Maybelle at the food market]
decisions and perform the actual trades to someone you trust to you know more [Maybelle brings food bag home]
efficiently handle your money because if everything's left up to little old miss
blue hair her entire life savings could end up invested in sweaters for cats Inc [Maybelle dresses her cat in a sweater]
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