What are financial services custody jobs and how do you get one?

• Global custody jobs keep track of a client’s money, assets, and make sure that all activity that happens is universally recognized.
• Technology is changing custody and making it more proactive – using technology, and especially data manipulation, is now considered a paramount skill in global custody jobs.
• As custodians are expanding their activities and offering services such as risk and compliance to clients, more client-facing roles are developing.

What do financial custodians do?

A global custodian is a financial institution responsible for the safekeeping and reporting of their clients’ domestic and global financial assets. Historically, this meant the actual physical protection of stock and bond certificates, but today, the physical certificates have largely been replaced by electronic records. These electronic records need continuous management to ensure all dividend and interest payments are received. Both the client base and the range of assets that custodians deal with have also evolved in recent years.

Custodians’ client base has broadened from being traditional fund managers and the trading arms of investment banks to encompass hedge funds, alternative asset management firms and the family offices of high-net worth individuals. The assets custodians look after have also expanded range from cash and shares to derivatives, real estate and digital assets such as crypto-currencies. The services provided by big global custodians – State Street, Northern Trust, BNY Mellon, JPMorgan, Citi and others – have evolved with the changing needs of their clients. As the custodian industry moves to a more digital footing, the big custodians are trying to provide extra services to clients beyond the core business of simply settling trades.

What extra services are these? Custodians were traditionally seen as providers of “back-office” solutions and while that’s still the case they have also moved towards the “middle-office,” offering services that go beyond settlement of transactions and into areas like regulatory performance measurement or compliance and risk monitoring.

The result is that jobs in custody today vary between data-driven processing and administration roles and more client-facing jobs where you will deal with the needs of clients.

Brian Allis, a Senior Vice President at State Street, said that “at its heart, securities services is a client facing industry. Client facing roles in custody go beyond traditional sales, relationship management and client service. Roles in product, operations, network management and technology are often client facing. The traditional role of custody provider has transformed over the last three decades from focusing on safekeeping to covering the entire investment life cycle.”

What jobs are there in financial custody?

When you work in custody you’ll be fundamentally working in operations, the engine room for processing client activities. Operations is also known as the back office. Junior jobs in global custody have historically been very process-driven but that is changing, with the most repetitive tasks becoming automated.

“The main job of the custodian is to take away all of the administration and processing work that their fund management clients don’t want to do,” said James Manders, managing director of CassonX, a leading recruitment firm for middle and back-office operations jobs.

Custody covers a broad range of activities but jobs fall into three categories – trade life cycles, fund accounting and administration and distribution processing.

Trade life cycle jobs

These are the classic bread-and-butter roles in custody. They include jobs in trade settlement and confirmation, transaction reporting and asset servicing. Asset servicing covers corporate actions, which includes proxy processing, securities borrowing and lending and the transfer of shares related to corporate spin-offs or acquisitions. 

Fund accounting and administration jobs

The core of global custody jobs focuses on the accounting and administration of client funds in key global custody centers such as Ireland and Luxembourg. Here, the custodian will ensure all income is received into the fund and that the net asset value (NAV) is correctly computed with the appropriate frequency, often daily. Global custodians may also be responsible for ensuring the smooth delivery of additional securities added to the fund and for reconciliations, making sure there are no discrepancies in trading.

Distribution processing jobs

Distribution processing covers client servicing, performance production and client reporting. This area is the most client facing of all custody roles as it involves dealing with the day-to-day information needs of clients. With custodians now looking after the entire life cycle of an asset, State Street’s Allis says client service roles have expanded to match this increased solution set. “Staff in these functions now have an unprecedented opportunity to be involved in every stage of the investment life cycle throughout their career, if they have a curious mindset and an appetite for a steep learning curve. Once they have built their knowledge, they become a critical interface between the client and the provider.”

Prime services jobs

For most large custodians, prime services will make up a significant proportion of the business. Prime services involves providing advice and assistance to hedge fund clients. Within prime services there will be business analysts, assisting the client and introducing appropriate securities services, all with the ultimate aim of improving profitability for the hedge fund.

How custody jobs are changing

Jobs in custody can also be split by functional area rather than high level job categories. These functional areas include client relationship management and sales (e.g. helping to prepare Requests For Proposal (RFP) for prospective clients), product development, delivery, and technology.

What’s common across each of these areas is data and technology. “Data collection, storage and analysis will become the basis for all future service offerings and business models. Technology is changing to support this paradigm shift, as a result investment service providers are increasingly becoming their clients’ investment data custodian. This requires client service staff to become familiar with the processes to source, curate, and analysis data across the entire investment cycle, including custody, for the benefit of their clients seeking operational alpha,” Allis explained.

This is having a big impact on custody jobs and the skillsets custodians require. “The digitization of custody is enabling a far more focused view on value add and differentiated services that are dependent on people to execute. Staff need to be engaged in the end-to-end business process and move away from the traditional functionalized view of custody,” Allis added.

“Custody has continued to evolve into a technology-first business,” Melíosa O’Caoimh, head of Northern Trust in Ireland, explained. “As a result, our hiring practices and the talent we recruit has changed to keep pace with innovation. That innovation also requires us to consider graduates and talent from different backgrounds and offer career paths through the organization that may cross through a number of different related areas and even include an exchange program – for example to our India business, and vice versa.”

Innovation in areas like cryptocurrency and blockchain, along with the automation and digitization of custody processes, is changing the landscape, O’Caoimh said. “This creates different career paths and opportunities for people across our organization, whether they are looking to expand a range of skills or specialize in a particular area. I don’t think there’s ever been a more exciting time to be part of a custodian and fund administrator – the pace of change has been accelerated through the pandemic and we continue to see evolutions in AI and machine learning enabling us to expand roles in other advancing areas.”

Data has become the tool by which custodians can offer higher value services to their clients, and that is redefining many jobs in the sector. “Roles are becoming increasing dependent on solution engineering and data analytics, being able to understand how to translate a clients operating model to a target state operating model and articulating the benefit of the transition is now at the heart of what we do,” Allis concluded.

What to expect in custody when you start as a graduate

If you start your career in custody as a graduate trainee, you may find yourself on a “rotational training program.” These allow graduates to gain experience in a number of different areas over a four- or five-year period, and then specialize later on.

Candidates with technical skills and experience in global custody are highly sought after, as are those with subject material expertise (SME) in individual products such as derivatives.

Meanwhile, Northern Trust recruits candidates from a wide variety of backgrounds, including business and accounting, but also areas such as engineering, hospitality or retail. “Successful candidates are usually positive, resilient, with attention to detail who are open to continuing their professional development with Northern Trust through the various in-house training and support networks provided,” added O’Caoimh.

Career progression in the custody industry

Like banks, global custodians often use the job titles of analyst, associate, Vice President (VP) and Managing Director (MD) to signify different levels in the hierarchy. You’ll start out as an analyst looking at ways of creating solutions for products “from a technical perspective.” As an associate, you’ll have a broader remit and will look at the solution in terms of market practice and servicing the client with roles such as a client operations specialist.

As a VP, you’ll work across different products and will prioritize each one based on client requirements, and as an MD you’ll be responsible for making sure a solution gets implemented by working with all different parts of the business to coordinate the product’s development and launch.

Education and qualifications for custody jobs

By Zeno Toulon 

Educational requirements for custody jobs are similar to operations roles in investment banking contexts, even though the day-to-day activity is very different. For that reason, no degree is really strictly needed, although it won’t hurt to have a finance or business-related background. When we analyzed custody analysts at State Street, we found that finance and law were the most popular degree choices, although the pool of graduate hires by degree subjects was varied.

If you’re in the UK, the Investment Operations Certificate (IOC) from CISI might be useful, as might the diploma in Investment Operations (DIO), from the same organization. Manders also recommends the Investment Management Certificate (IMC) an entry-level qualification that provides a strong foundation for a career in the investment industry.

Pay in global custody jobs

By Zeno Toulon

Jobs in custody aren’t as well paid as directly revenue-generating roles such as sales & trading or investment banking, which pay higher bonuses related to performance, but they offer greater job security and much more reasonable working hours.

“It’s very structured, very corporate, and safe as houses,” Manders said. “If you’re looking for more variety and want to provide a bespoke service to clients, there are a growing number of small and medium-sized custodians outside of the global heavyweight.”

Big banks have outsourced their custody businesses to cheaper regional hubs outside of big cities, and salaries can vary considerably depending on location. As a typical rule of thumb, a graduate in London can earn between $30k and $45k if they work in a trade life cycle or fund administration role, while in distribution that could rise to between $40k and $50k.

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