Where AET Fits as a Qualified Custodian for RIAs

American Estate & Trust (AET) holds private and alternative assets for RIAs and their clients, including Reg D private placements, LP interests, private credit, real estate syndications, precious metals, and similar assets that traditional brokerages and banks do not custody. The question we get most often is whether we can serve as qualified custodian for a given advisory account. For SEC-registered RIAs, the answer is uniformly yes. For state-registered RIAs, the answer depends on the state’s own custody rule, the adviser’s registration status, and the specific facts of the account.

This article is informational. It is not legal advice, and it does not substitute for confirmation from the relevant state securities regulator or from securities counsel familiar with your specific registration status and business.

TLDR

• AET is a qualified custodian for SEC-registered RIAs nationwide under the Advisers Act §202(a)(2) bank definition.
• For state-registered RIAs, the answer is state- and account-specific. Custody rules differ meaningfully from state to state, and de minimis and interpretive-relief pathways can change the outcome even where the rule text looks unfavorable. Call us and engage state securities counsel before designating AET.

What a Qualified Custodian Does

A qualified custodian holds an RIA’s client funds and securities in accounts that identify each client, sends account statements to those clients on at least a quarterly basis, and is subject to bank, broker-dealer, or comparable regulatory oversight. The custodian holds the assets, records ownership, and confirms activity independently.

Under SEC Custody Rule 206(4)-2, an adviser has custody whenever it holds, or has the authority to obtain, client funds or securities. Once an adviser has custody, the client assets must be held with a qualified custodian in a segregated account, with limited exceptions.

Why the Push to Use a Qualified Custodian Is Rising

Private assets sit inside advisory relationships more often than they used to. Reg D private placements, LP interests, private credit, real estate syndications, and other alternatives are securities, and when an RIA holds them for a client they fall under the custody rule. Rule 206(4)-2 does include a narrow privately offered securities exception, but only if the security is acquired in a non-public offering, is uncertificated with ownership recorded only on the issuer’s books, and is transferable only with prior consent of the issuer. As a result, most private assets held by an RIA belong at a qualified custodian.

The SEC’s proposed Safeguarding Rule (Release IA-6240, February 2023) would also materially expand custody coverage. The proposal replaces “funds and securities” with “assets,” pulling in crypto, physical commodities, and other non-security holdings, and it tightens the privately offered securities exception. The rule has not been finalized as of mid-2026, but SEC exam staff have already increased scrutiny of custody arrangements for private funds and alternatives.

State examiners are following the same thread. State securities administrators are asking advisers with growing alt-asset books whether their custody arrangements would hold up under either the current rule or the pending Safeguarding proposal, and the answer for advisers holding assets in their own accounts, or with unregulated third parties, is usually no.

SEC-Registered RIAs

SEC Custody Rule 206(4)-2(d)(6)(i) defines a qualified custodian to include a bank as defined in section 202(a)(2) of the Advisers Act. Section 202(a)(2)(C) of the Investment Advisers Act of 1940 defines a bank in the following terms.

“any other banking institution or trust company, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under the authority of the Comptroller of the Currency pursuant to section 1 of Public Law 87-722 (12 U.S.C. 92a), and which is supervised and examined by State or Federal authority having supervision over banks or savings associations.”

American Estate & Trust is chartered as a Nevada trust company under NRS Chapter 669 and is supervised and examined by the Nevada Financial Institutions Division. It fits the trust company doing business under the laws of any State prong. AET is a qualified custodian for any SEC-registered RIA, in any state, holding any type of client asset covered by Rule 206(4)-2.

State-Registered RIAs

State-registered advisers are governed by their state’s own custody rule, and adoption is not uniform. Some states incorporate SEC Rule 206(4)-2 by reference, which reaches AET through the §202(a)(2) bank definition. Others adopted the NASAA model rule and require FDIC-insured deposits for the bank category, which by its text excludes non-depository trust companies. Some kept older pre-2003 safekeeping rules that impose obligations on the adviser without enumerating approved institutions.

If you are a state-registered RIA considering AET, contact us and we can walk through your situation, identify whether your state’s rule reaches AET as written or through an interpretive path, and, where required, help you draft the inquiry to your state administrator. We recommend that you also engage securities counsel in your state to confirm the analysis.

A Note on FDIC Insurance

FDIC insurance protects depositors of a commercial bank against the bank failing while their cash sits in demand deposits. AET does not take demand deposits. What we hold for RIA clients is private and alternative assets, and those assets sit in segregated, client-identified custodial accounts as client property. FDIC insurance has little to no bearing on how these assets are protected.

State custody rules that key off FDIC insurance were drafted for a world of cash and public securities held at a commercial bank. Applying that test to private and alternative asset custody misses the point. AET is chartered under NRS Chapter 669, examined by the Nevada Financial Institutions Division, and holds client assets to the standard of care a fiduciary custodian owes its clients, regardless of what a state’s rule text says about FDIC coverage.

Bottom Line

If you are an SEC-registered RIA, AET can hold private and alternative assets for you today. If you are state-registered, contact us. The analysis is account-specific.