Custody and Clearing? Let's take a moment to review the parties involved in your investment account, their relationships and their interactions.
Simply put, the Custodian, Clearing firm and Advisor all work for you, the client. For "checks-and-balances" they interact together, but separately. The Custodian physically keeps or has "custody" of your assets (like a bank keeps your money in an account) the Clearing Firm is the one who physically executes a buy or sell order in the account on an exchange, like the NYSE (New York Stock Exchange) the AMEX (American Stock Exchange) or the NASDAQ (National Association of Securities Dealers Automated Quotations) and the Advisor is the one who recommends, or orchestrates, the various investments elements. If you keep your account at a large custodian chances are they also offer clearing as well.
As a registered investment advisor, El Camino Real Financial Advisors does not take physical custody of client funds, meaning without client authorization we do not accept money, checks or securities for deposit into managed accounts and do not distribute funds to third parties. Custodians are registered with the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) and provide a broad menu of products and services to assist advisors and their clients. All custodians generate a separate monthly account statement for clients which details account activities, including holdings and values. All client funds maintained by custodians, except bank deposit programs which are insured by the (FDIC) and are insured by the Securities Investor Protection Corporation (SIPC) go to $500,000 (including cash claims limited to $250,000). Each custodian has additional insurance protection for cash and securities to supplement SIPC coverage. Please see custodian web sites for more information. Custodians are not affiliated with El Camino Real Financial Advisors.
TD Ameritrade, Inc. is the firm that we use to custody our client assets. TD Ameritrade and El Camino Real Financial Advisors are separate and unaffiliated firms, and are not responsible for each other's services or policies. TD Ameritrade does not endorse or recommend any advisor and the use of the TD Ameritrade logo does not represent the endorsement or recommendation of any advisor. Brokerage services provided by TD Ameritrade and TD Ameritrade Institutional, Divisions of TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. Used with permission.