David John MarottaDavid John Marotta is the President of Marotta Wealth Management, a fee-only financial planning and asset management firm in Charlottesville, Virginia. He is an oft-quoted writer and speaker on financial matters and his weekly financial column can be found at www.eMarotta.com
Host: What is a custodian?
David Morotta: A custodian is someone who will hold your investments for you. So, normally if you bought a stock, they would send you the stock certificate and you would have to keep it in some safety deposit box and then when you wanted to sell it, you would have to go deliver that to someone sell it.
They keep it in what's called the electronic name and therefore you can buy and sell it, they have it and you can authorize them to buy and sell on your behalf on the exchange and they will go and do that. So, they will hold all of your investments, stocks, mutual funds, bonds, exchange credit funds, in as electronic form called street name and then that allows them to go and make transactions on your behalf.