Document custody for private investments is the practice of securely storing and managing legal agreements, contracts, transaction records, and other relevant documents. Private investment managers are increasingly seeking document custody services, even when they may not be required by law to engage a third-party custodian for other purposes.

That’s often at the suggestion of investment managers’ legal advisors or at the request of institutional investors in their investment products. These parties recognize document custody as important for how it adds an extra layer of protection by reducing the risk of fraud or unauthorized access. Investment managers also derive other benefits, though. These include comprehensive document management, more convenient reporting, and greater readiness to meet the demands of regulatory compliance and business continuity plans.

Document custody overview

While custodians manage security and access to physical documents, most documents for custody now are electronic. To maintain their integrity and security, a custodian stores these in a secure repository accessible to authorized users through a secure online portal. The documents are protected by advanced security measures such as encryption and multi-factor authentication.

Access control is another important component of security. When documents are stored with a third party, most managers gain confidence because only designated people have access versus the risks inherent in storing electronic files on their own systems. In addition, all access is logged and audit trails are maintained.

Consolidating reporting for marketable and non-marketable securities

As a matter of course, custodians provide reports to investment managers about securities under the custodian’s purview. With non-marketable securities—such as real estate holdings—custodians may be aware of the holdings but unable to include details about them in reports. Because custodians don’t possess critical documents that demonstrate a manager’s financial interest, they can’t report cost basis and other values.

Managers thereby benefit from enhanced reporting that can add both convenience and operational efficiency.

Compliance and reporting requirements

The same strict attention to access, audits and security that reassure institutional investors is helpful to managers in meeting Securities and Exchange Commission (SEC) and other regulatory requirements—and avoid “fire drills.”

Also, there’s a possibility that the SEC’s Custody Rule will be strengthened in the future. In that event, investment managers may need to obtain third-party custody services for key documents to ensure compliance.

Document custody and business continuity

Finally, an additional benefit to managers is mitigation of risks associated with document loss, tampering, or damage. Having copies of critical documents stored securely offsite with a reputable custody provider can be central to an investment manager’s plan to maintain business continuity in the event of fire, flood or other disruption.


Document custody—including electronic document custody— safeguards critical documents and makes them available for review in a convenient, secure way. Investment managers also seek document custody services to enhance operational efficiency, streamline compliance and reporting, and mitigate a wide range of risks, from fraud to misplacement to business interruption due to natural disasters or other unforeseen events.

Learn how UMB can support your firm’s domestic and global custody needs with our comprehensive services and high-touch service model.