Did you know that a Third-Party Custodian is your first line of defense for your investments? 

A traditional custodian is a trust company, bank, broker-dealer or similar financial institution responsible for holding and safeguarding securities. 

However, an Independent Third-Party Custodian provides an important layer of protection between you and your investment advisor’s firm. 

This means an advisor cannot dip into your account for personal use. 

Also, the third party custodian sends out client statements independently, making it impossible for someone to cover up withdrawals and report false performance on these statements. 

Sometimes Self-Custody goes wrong. 

For example: Do you remember the case of Bernie Madoff? Bernie Madoff self-custodied his client’s assets. This enabled him to go to the client’s accounts at any time and take out money. Then he created and mailed false statements to hide withdrawals and state bogus performance. His clients lost their life savings to a person they thought had their best interest in mind. 

Some advisors may tell you their firm is quite sizable, it is too big to fail so self-clearing and custody don’t matter. Think again…

Lehman Brothers had $691 billion in assets when it filed for bankruptcy and MF Global had $41 billion when it filed for bankruptcy. 

You need a third-party custodian that can be your first line of defense. 

Zhang Financial utilizes third party custodians to safe guard clients’ assets. 

They utilize the custodial services of LPL Financial, TD Ameritrade, and Charles Schwab; all leaders in the brokerage industry.

 “If an adviser tells you that you don’t need [a third party custodian], end the meeting and leave immediately. This is a deal-killer and should raise many red flags.” – U.S. News

*Source: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2011/09/01/6-question s-to-ask-your-financial-adviser