Fidelity to Raise Custody Asset Minimum to $100M
Fidelity Investments’ custody business is raising its minimum threshold to $100 million for all RIAs, according to a letter sent to some advisors.
Firms on the Fidelity platform that fall below that minimum have until June 30, 2027, to meet the new requirement or start the process of moving off the platform, according to a letter shared on social media by an advisor and confirmed by the company.
Fidelity, which runs a clearing and custody solutions business that includes National Financial Services LLC, had already set the threshold for new advisors to the platform at $100 million, after a previous threshold of $15 million was set in 2008, according to industry watchers. Now, existing clients who have less than $100 million in client assets by the summer of next year will have to exit the platform.
“At Fidelity, we regularly evaluate our business model, brokerage platform and client relationships to ensure they align with our long-term strategy,” the firm wrote in the letter posted on LinkedIn.
If an advisor needs to move off the platform due to a lack of assets, the Boston-based Fidelity wrote that it would remain “committed to servicing your needs during this period of transition.”
Fidelity is the second-largest RIA custodian after Schwab, which has no publicly reported minimums for RIAs to custody with the firm.
“We recognize that change requires thoughtful planning, and Fidelity has committed to providing firms with time to evaluate their options,” a Fidelity spokesperson wrote via email about the change.
Fidelity has taken other steps to move away from serving smaller firms in the custody business in recent years, including in 2013 setting a mandated $2,500 quarterly fee for firms with under $15 million in client assets on the platform.
Schwab, for its part, has been raising the thresholds for advisors to join its client referral program as it seeks to manage those clients itself. Fidelity runs a similar referral program, though with fewer participants than Schwab.
In a LinkedIn thread about the new minimum, Altruist CEO Jason Wenk jumped in to assert that Altruist could serve advisors who need to leave Fidelity and questioned whether the threshold would remain at $100 million. Wenk is currently hammering out the final steps to sell his firm to the asset manager Vanguard, a move announced earlier this year.
Tim Welsh, president and founder of Nexus Strategy, also raised the idea that thresholds would continue to rise in a white paper he wrote on Fidelity’s move as part of a series on the realities of the custody business.
“Every RIA is exposed,” Welsh wrote. “A $500 million firm is safe today. The question is what the threshold will be in five years, and what your custodian will do to your clients’ cash in the meantime.”
The RIA consultant and industry speaker went on to alert smaller RIAs of the lift needed to find a new custodian.
“Nine months sounds generous until you account for what a custodial move involves: new account paperwork for every household, re-establishing transfers and standing instructions, rebuilding technology integrations and explaining to clients why their statements are about to change,” he wrote. “All of it lands on small firms with the fewest people to absorb it.”
