Federations do not reduce trust

A federation is a group, and although I want to say groups are generally less trustworthy than individuals, that's not true either. They are equally unreliable unless you get to know them and assess their trustworthiness the old fashioned way.

It is, however, easier to get to know an individual than it is to get to know a group of individuals, therefore I personally prefer unfederated custodians -- because I can more easily get to know them first and determine their trustworthiness