Crucial Topic.

Custodial wallet is a type of wallet that requires a third party to takes hold of private keys on behalf of every user.
Which makes asset more secure, because only the third party and the user knows the private key.
In a case where there is missing asset, the private key must have been shared to someone outside the third party and user.

As for Hardware wallet, just misplacing it could put the user at risk, because no third party to help checkmate the security.