Can a family choose its own custodian while working with a multifamily office?
Often, yes. A family may be able to keep its preferred bank or brokerage firm as custodian while the multifamily office provides advice, reporting, and coordination. The choice depends on the office’s service model, technology, agreements, and ability to work with that custodian. Ask about restrictions, fees, account access, and reporting before signing.
The family may have a choice
Some multifamily offices can work with a custodian selected by the family. This is sometimes described as an open architecture model. For example, DFO says it works with major global private banks that act as custodians while the office serves as an external manager. DFO
A family may prefer its current bank because of lending relationships, trust services, access to certain investments, service history, or familiarity with the bank’s systems. Keeping the existing relationship can also reduce the work involved in moving accounts.
The choice depends on the office’s operating model. Some offices have a limited custodian list because their reporting tools, trading connections, billing process, or investment platform are built around those firms. Others may accept an outside custodian if the account supports the services the family wants.
What the custodian and office each do
The custodian holds the family’s cash and securities. The multifamily office may provide investment advice, manager selection, consolidated reporting, bill payment coordination, family governance support, or other services. Separate companies can provide these roles.
For registered investment advisers with custody of client assets, the SEC custody rule generally requires client assets to be maintained with a qualified custodian. The SEC identifies banks and registered broker dealers among the institutions that can qualify, subject to the rule’s requirements. SEC Investor Bulletin
The SEC also explains that qualified custodians maintain client assets in accounts held for the client or for clients as an agent or trustee. Account statements and the legal account arrangement should make clear who holds the assets and who has authority to give instructions. SEC Custody Rule
And family offices only care about the medium and long term, really. So they're looking for others that are playing a medium to long term game to work with.
Questions to ask before choosing
Ask the multifamily office whether you may use your current custodian, which custodians it supports, and what services may be limited if you choose an outside firm. Request a written explanation of trading authority, account access, reporting, fee billing, cash movement controls, and the process for changing custodians.
Ask whether the office or a related company receives compensation from the custodian or receives other economic benefits. Review the office’s Form ADV and client agreement for custody arrangements, conflicts, and additional fees. Confirm that the custodian sends statements directly to you and that you can compare those statements with the office’s reports.
A family often can choose its custodian, but the choice should fit the office’s systems and the family’s service needs.