Fidelity extends its $100 million minimum to existing RIA custody clients

Fidelity's explanation for pushing its smallest advisory clients off its custody platform arrived in two parts, and the second is worth reading twice. The first, as Nexus Strategy's Tim Welsh describes it, is that the firm regularly reviews its business and client relationships "to ensure they align with our long-term strategy." The second, in an email from a Fidelity spokeswoman to RIABiz, is consistency: Fidelity set a $100 million asset minimum for new advisory firms joining the platform, she wrote, and is "now extending that criteria to existing custody clients for consistency."

A minimum for new entrants is a price; applied to firms already on the platform, the same number becomes a deadline, and RIABiz reports that deadline as a short letter on Fidelity stationery to what the outlet estimates could be hundreds or thousands of advisors, "likely small, state-registered firms." RIABiz describes Fidelity as the Boston No. 2 RIA custodian, which is the framing the letter's recipients will recognize: the platform with the least to lose at the small end of the book, and the least patience for it.

Michael Kitces, in a Zoom interview tied to this week's XY Planning Network event, called the decision "outright bizarre," which fits the venue: XYPN is a membership group for mostly small RIAs, some of which custody assets at Fidelity. "They just gave a hard 'no,'" he said, adding, "It seems like a bizarre decision to cut off the next generation of advisors." Alex Chalekian, founder and chief executive of Lake Ave. Financial, was among the advisors who posted the letters on LinkedIn, and he was blunter about the outcome: "I have a feeling this decision by Fidelity is going to backfire."

Welsh's white paper, prepared after Nexus Strategy tipped RIABiz to the story, makes the narrower point about how the news was delivered: the only reason given is the long-term-strategy language, with "no mention of cost, service, or what the affected firms have contributed over the years." That omission is the first thing an advisor ten years into a custody relationship notices.

None of the three disputes the arithmetic underneath. Kitces has said for years that the custody model is broken, and RIABiz reports Fidelity has long been among the least tolerant of serving small firms for precisely that reason. Welsh is more specific about where the model starts working, saying it performs better with $1 billion RIAs "and much better." If $1 billion is where the arithmetic turns comfortable, $100 million is a line drawn well below it, which suggests the threshold is administrative rather than economic — a service-level cut as much as a profitability cut. Fidelity's stated reasons—strategy and consistency—do not speak to cost at all.

What Kitces found strange was less the direction than the instrument. Past Fidelity minimum moves, he notes, came with a fee option for advisors determined to stay put, and RIABiz's earlier coverage attached a figure to that path: an annual $10,000 custody fee that was to attach to a wider swath of small RIAs. Whether the current recipients were offered the same choice is not in the reported account.

Where those firms go next is the part the letter cannot answer. Custody competition at the top of the market is fierce; in late September, PWD reported that a billion-dollar RIA left Schwab for Altruist while Schwab's arrangement with Anthropic amounted to buying queue position rather than a better model. Whether a competitor wants a sub-$100 million book at today's prices is a question each will answer privately, and for some of the affected firms the likelier landing spot is a sale. Today's acquirers are paying for integration capacity, deal cadence and post-close operators more than for assets alone, so a small book with an eviction notice attached does not sit naturally in that queue; the data on this cohort is thin enough that the sale path is a question, not a conclusion.

RIABiz's headline pairs the letters with a Fidelity deal involving Savvy announced the week before, and one source wonders whether the transaction adds to the story, though the piece does not spell out the link and nothing in the reported account connects the two events.

Kitces' "next generation" line is an option-value argument, and it is the one that will outlast the news cycle. The sub-$100 million firm custodied in 2026 is a candidate to be the $1 billion firm of some later year, and the recipients of Fidelity's letters map closely onto the small, growing membership group where Kitces was speaking this week. Shedding them saves a cost line that Fidelity has not quantified and gives up a pipeline whose value is, by definition, unquantified.

The tell is checkable, and it is narrow: whether those firms were offered the annual fee that past Fidelity minimums came with. If they were, this is a repricing of the smallest relationships. If they were not, $100 million is now the floor the small end of the RIA industry has to clear to keep a seat on the No. 2 custody platform — and the firms that cannot clear it are about to find out what they are worth to somebody else.