Chartered Investment Manager (CIM) Practice Exam · Question
What is the 'custodian's' role in a discretionary portfolio management arrangement?
The custodian is a financial institution responsible for holding a client's securities and other assets in safekeeping. They also handle settlement of trades, c
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Question: What is the 'custodian's' role in a discretionary portfolio management arrangement?
Answer options:
- To provide investment advice and execute trades for the client. ✅ To hold and safeguard the client's assets (securities and cash).
- To determine the client's asset allocation and rebalance the portfolio.
- To market new investment products to the client.
Correct answer: To hold and safeguard the client's assets (securities and cash).
Explanation: The custodian is a financial institution responsible for holding a client's securities and other assets in safekeeping. They also handle settlement of trades, collection of dividends and interest, and provide statements, separate from the investment manager who makes the investment decisions.
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