<PAGE>
 
                                                                   EXHIBIT 10.23

                     ====================================


                     COMMON SECURITIES GUARANTEE AGREEMENT


                      Investors Financial Services Corp.


                         Dated as of January 31, 1997


                     ====================================
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                               TABLE OF CONTENTS
                               -----------------

<TABLE>
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                                                                            Page
                                                                            ----

                                   ARTICLE I
                        DEFINITIONS AND INTERPRETATION

<S>           <C>                                                           <C>
SECTION 1.1.  Definitions Interpretation....................................   2

                                  ARTICLE II
                                   GUARANTEE

SECTION 2.1.    Guarantee...................................................   3
SECTION 2.2.    Waiver of Notice and Demand.................................   3
SECTION 2.3.    Obligations Not Affected....................................   3
SECTION 2.4.    Rights of Holders...........................................   4
SECTION 2.5.    Guarantee of Payment........................................   5
SECTION 2.6.    Subrogation.................................................   5
SECTION 2.7.    Independent Obligations.....................................   5

                                  ARTICLE III
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1.  Limitation of Transactions....................................   5
SECTION 3.2.  Ranking.......................................................   6

                                   ARTICLE IV
                                  TERMINATION

SECTION 4.1.  Termination...................................................   7

                                   ARTICLE V
                                 MISCELLANEOUS

SECTION 5.1.    Successors and Assigns......................................   7
SECTION 5.2.    Amendments..................................................   7
SECTION 5.3.    Notices.....................................................   7
SECTION 5.4.    Benefit.....................................................   8
SECTION 5.5.    Governing Law...............................................   8
</TABLE>
<PAGE>
 
                     COMMON SECURITIES GUARANTEE AGREEMENT


          This GUARANTEE AGREEMENT (the "Common Securities Guarantee"), dated as
of January 31, 1997, is executed and delivered by Investors Financial Services
Corp., a Delaware corporation (the "Guarantor"), for the benefit of the Holders
(as defined herein) from time to time of the Common Securities (as defined
herein) of Investors Capital Trust I, a Delaware business trust (the "Issuer").

          WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of January 31, 1997, among the Trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof 774 common securities designated the 9.77% Common
Securities (the "Common Securities"), having an aggregate stated liquidation
amount of $774,000;

          WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and

          WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Series A Capital Securities Guarantee") for the benefit of the
holders of the Series A Capital Securities (as defined in the Declaration) and
upon consummation of the Exchange Offer, if any, (as defined in the Declaration)
will execute and deliver a guarantee agreement (the "Series B Capital Securities
Guarantee") for the benefit of the holders of the Series B Capital Securities
(as defined in the Declaration), each in substantially identical terms to this
Common Securities Guarantee, except that if an Event of Default (as defined in
the Declaration) has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under this Common Securities
Guarantee are subordinated to the rights of holders of Capital Securities to
receive Guarantee Payments under the Series A Capital Securities Guarantee and
the Series B Capital Securities Guarantee, if any, as the case may be.

          NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Securities, which purchase the Guarantor hereby acknowledges shall
benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
<PAGE>
 
                                   ARTICLE I
                        DEFINITIONS AND INTERPRETATION

SECTION 1.1.   Definitions Interpretation
               --------------------------

          In this Common Securities Guarantee, unless the context otherwise
requires:

          (a) Capitalized terms used in this Common Securities Guarantee but not
     defined in the preamble above have the respective meanings assigned to them
     in this Section 1.1;

          (b) Terms defined in the Declaration as at the date of execution of
     this Common Securities Guarantee have the same meaning when used in this
     Common Securities Guarantee unless otherwise defined in this Common
     Securities Guarantee;

          (c) a term defined anywhere in this Common Securities Guarantee has
     the same meaning throughout;

          (d) all references to "the Common Securities Guarantee" or "this
     Common Securities Guarantee" are to this Common Securities Guarantee as
     modified, supplemented or amended from time to time;

          (e) all references in this Common Securities Guarantee to Articles and
     Sections are to Articles and Sections of this Common Securities Guarantee
     unless otherwise specified; and

          (f) a reference to the singular includes the plural and vice versa.

          "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Common Securities, to the extent not
paid or made by the Issuer:  (i) any accrued and unpaid Distributions that are
required to be paid on such Common Securities to the extent the Issuer has funds
on hand legally available therefor at such time, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally available
therefor at such time, with respect to any Common Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary termination
and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Common Securities as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accumulated and unpaid Distributions on the Common Securities to
the date of payment, to the extent the Issuer has funds on hand legally
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the

                                       2
<PAGE>
 
Issuer (in either case, the "Liquidation Distribution").  If an Event of Default
has occurred and is continuing, no Guarantee Payments with respect to the Common
Securities shall be made until holders of Capital Securities shall be paid in
full the Guarantee Payments to which they are entitled under the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee, if
any.

          "Holder" means any holder, as registered on the books and records of
the Issuer, of any Common Securities.

          "Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to common securities (if any) similar to the Common Securities
issued by other trusts to be established by the Guarantor (if any), in each case
similar to the Issuer.


                                  ARTICLE II
                                   GUARANTEE

SECTION 2.1.   Guarantee
               ---------

          The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim which the Issuer may have or assert.  The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.


SECTION 2.2.   Waiver of Notice and Demand
               ---------------------------

          The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.


SECTION 2.3.   Obligations Not Affected
               ------------------------

          The obligations, covenants, agreements and duties of the Guarantor
under this Common Securities Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:

          (a)  the release or waiver, by operation of law or otherwise, of the
     performance or observance by the Issuer of

                                       3
<PAGE>
 
     any express or implied agreement, covenant, term or condition relating to
     the Common Securities to be performed or observed by the Issuer;

          (b)  the extension of time for the payment by the Issuer of all or any
     portion of the Distributions, Redemption Price, Liquidation Distribution
     or any other sums payable under the terms of the Common Securities or the
     extension of time for the performance of any other obligation under,
     arising out of, or in connection with, the Common Securities (other than an
     extension of time for payment of Distributions, Redemption Price,
     Liquidation Distribution or other sum payable that results from the
     extension of any interest payment period on the Debentures permitted by the
     Indenture);

          (c) any failure, omission, delay or lack of diligence on the part of
     the Holders to enforce, assert or exercise any right, privilege, power or
     remedy conferred on the Holders pursuant to the terms of the Common
     Securities, or any action on the part of the Issuer granting indulgence or
     extension of any kind;

          (d) the voluntary or involuntary liquidation, dissolution, sale of
     any collateral, receivership, insolvency, bankruptcy, assignment for the
     benefit of creditors, reorganization, arrangement, composition or
     readjustment of debt of, or other similar proceedings affecting, the Issuer
     or any of the assets of the Issuer;

          (e) any invalidity of, or defect or deficiency in, the Common
     Securities;

          (f) the settlement or compromise of any obligation guaranteed hereby
     or hereby incurred; or

          (g) any other circumstance whatsoever that might otherwise constitute
     a legal or equitable discharge or defense of a guarantor, it being the
     intent of this Section 2.3 that the obligations of the Guarantor with
     respect to the Guarantee Payments shall be absolute and unconditional under
     any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 2.4.   Rights of Holders
               -----------------

          The Guarantor expressly acknowledges that any Holder may institute a
legal proceeding directly against the Guarantor to enforce its rights under this
Common Securities Guarantee,

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without first instituting a legal proceeding against the Issuer or any other
Person.

SECTION 2.5.   Guarantee of Payment
               --------------------

          This Common Securities Guarantee creates a guarantee of payment and
not of collection.

SECTION 2.6.   Subrogation
               -----------

          The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Common Securities Guarantee; provided, however, that the
                                                  --------  -------          
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Common Securities Guarantee, if, at the time
of any such payment, any amounts are due and unpaid under this Common Securities
Guarantee.  If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

SECTION 2.7.   Independent Obligations
               -----------------------

          The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.


                                  ARTICLE III
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1.   Limitation of Transactions
               --------------------------

          So long as any Common Securities remain outstanding, the Guarantor
will not (i) declare or pay any dividends or distribution on, or redeem,
purchase, acquire or make a liquidation payment with respect to any of the
Guarantor's capital stock (which includes common stock and preferred stock) or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including

                                       5
<PAGE>
 
under Other Guarantees) if such guarantee ranks pari passu or junior in right of
payment to the Debentures (other than (a) dividends or distributions in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
common stock of the Guarantor, (b) any declaration of a dividend in connection
with the implementation of a stockholder's rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Capital Securities Guarantee,
(d) as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock related
to the issuance of common stock or rights under any of the Guarantor's benefit
plans for its directors, officers or employees or any of the Guarantor's
dividend reinvestment plans) if at such time (i) there shall have occurred any
event of which the Guarantor has actual knowledge that (a) is, or with the
giving of notice or the lapse of time, or both, would be, an Event of Default
and (b) in respect of which the Guarantor shall not have taken reasonable steps
to cure, (ii) if such Debentures are held by the Property Trustee, the Guarantor
shall be in default with respect to its payment of any obligations under the
Capital Securities Guarantee or (iii) the Guarantor shall have given notice of
its election of the exercise of its right to extend the interest payment period
pursuant to Section 16.01 of the Indenture and any such extension shall be
continuing.

SECTION 3.2.   Ranking
               -------

          This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to Senior Indebtedness (as defined in the Indenture), to the same
extent and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture, it being understood that the terms of
Article XV of the Indenture shall apply to the obligations of the Guarantor
under this Common Securities Guarantee as if (x) such Article XV were set forth
herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XV, (ii) pari passu with the Debentures
and with the most senior preferred or preference stock now or hereafter issued
by the Guarantor and with any Other Guarantee and any guarantee now or hereafter
entered into by the Guarantor in respect of any preferred or preference stock of
any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common
stock.

                                       6
<PAGE>
 
                                 ARTICLE IV
                                  TERMINATION

SECTION 4.1.   Termination
               -----------

          This Common Securities Guarantee shall terminate (i) upon full payment
of the Redemption Price of all Common Securities, (ii) upon the distribution of
the Debentures to all the Holders  or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Common Securities Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid under the Common Securities or
under this Common Securities Guarantee.


                                   ARTICLE V
                                 MISCELLANEOUS

SECTION 5.1.   Successors and Assigns
               ----------------------

          All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.

SECTION 5.2.   Amendments
               ----------

          Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Common Securities Guarantee may only be amended with the prior approval of the
Holders of at least a majority in liquidation amount of all the outstanding
Common Securities.  The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders apply to the giving of such approval.

SECTION 5.3.   Notices
               -------

          All notices provided for in this Common Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

          (a) if given to the Issuer, in care of the Administrative Trustee at
     the Issuer's mailing address set forth below (or such other address as the
     Issuer may give notice of to the Holders):

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<PAGE>
 
               Investors Capital Trust I
               c/o Investors Financial Services Corp.
               89 South Street
               P.O. Box 1537
               Boston, Massachusetts 02205-1537
               Attention:  General Counsel
               Telecopy:   (617) 330-6033

          (b) if given to the Guarantor, at the Guarantor's mailing address set
     forth below (or such other address as the Guarantor may give notice of to
     the Holders):

               Investors Financial Services Corp.
               89 South Street
               P.O. Box 1537
               Boston, Massachusetts 02205-1537
               Attention: General Counsel
               Telecopy:  (617) 330-6033
 
          (c) if given to any Holder, at the address set forth on the books and
     records of the Issuer.

          All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

SECTION 5.4.   Benefit
               -------

          This Common Securities Guarantee is solely for the benefit of the
Holders of the Common Securities and is not separately transferable from the
Common Securities.

SECTION 5.5.   Governing Law
               -------------

          THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

                                       8
<PAGE>
 
          THIS COMMON SECURITIES GUARANTEE is executed as of the day and year
first above written.

                            INVESTORS FINANCIAL SERVICES CORP.



                            By: /s/ Karen C. Keenan
                                ----------------------------------
                                Name: /s/ Karen C. Keenan
                                Title: Chief Financial Officer