In financial circles, a nominee is an individual or corporate entity who, with trust and permission, holds assets and/or securities in their name on behalf of an investor. In simple terms, the nominee is the legal owner of a customer’s assets, but the customer, or beneficiary, is the true or beneficial owner of the assets. The nominee does not own, direct, or manage the assets. They merely hold the assets for the investor in what is known as a safekeeping or trust arrangement.

The use of a nominee confers several advantages to an investor, especially when it comes to security, privacy, bankability, and convenience. First, a nominee provides an extra layer of protection to an investor’s assets and securities. By virtue of being separate from the investor, the assets and securities held by the nominee are not part of the investor’s estate, which may be subject to creditors’ claims and be subject to fees, lengthy and costly probate proceedings, or even seizure in bankruptcy proceedings. Holding assets via a nominee also provides some security against fraud, as the nominee acts as a protective barrier between the investor and the brokerage.

The use of a nominee also allows for improved privacy for investors and their assets. The nominee will act on behalf of the customer and will handle all of the paperwork associated with each of the transactions, but the details of the customer and their transactions will remain confidential. Similarly, the bankability of a customer's investments is enhanced as the customer's name does not appear on any investment records, making it more difficult for third parties to access the customer’s records.

From a convenience standpoint, a nominee also allows an investor to easily manage portfolios and trade on their behalf. The customer can authorize the nominee to buy, sell, and manage investments on their behalf with fewer legal fees and paperwork. A customer’s investment decisions can also be more quickly implemented, as the nominee can act quickly on the customer’s behalf with fewer restrictions and paperwork.

In closing, a nominee is an individual or corporate entity who, with trust and permission, holds assets and/or securities in their name on behalf of an investor. By utilizing such a third-party financial arrangement, investors can gain a variety of advantages, including enhanced security, greater privacy, increased bankability, and increased convenience. Ultimately, a nominee strives to provide its customers with the peace of mind that their assets and securities held on their behalf are in safe hands.