Fidelity apparently has bigger fish to fry.

The financial giant shocked many in the advisor community last week when it told RIAs that, beginning June 30, 2027, they must hold at least $100 million in client assets on Fidelity’s platform to continue using it as a custodian. The threshold previously applied only to advisors newly joining the platform, but will now extend to all firms. “We recognize that change requires thoughtful planning, and Fidelity has committed to providing firms with time to evaluate their options,” a spokesperson said.

And now, we have an idea of the potential impact of the change.

AdvizorPro data identified about 1,150 RIAs across the country that could be affected. For many smaller firms, that means finding a new custodian, a potentially disruptive process that comes as other major industry players are also raising thresholds or changing their offerings. “To essentially terminate long-standing relationships with good clients, it’s surprising and disappointing,” said Dagan LaCorte, a managing member at L&L Partners Wealth Management. “I’ve been with them for 20 years.”

News to Me

While many advisors received notice about the change, others say they didn’t.

“It seems that everyone in the world knows that this is happening except me,” said Stuart Ruff, founder of Ruff Choices Investment Management. “I’m not anywhere near that [$100 million], and I never will be.” Ruff has used Fidelity as a custodian for about 15 years and said he will likely have to make a switch next year. “It’s not something that I want to spend time doing, but sometimes you’re in a situation where you have no choice,” he said, adding that he doesn’t expect the change to affect client retention.

Disruption Junction. Fidelity’s decision is not an isolated event, but rather the “latest string in custodian chaos,” according to Tim Welsh, founder of consultant Nexus Strategy. “We’ve never seen this many anti-RIA announcements,” Welsh said, adding that changing custodians is one of the biggest disruptions an advisor can face:

• Next year, Charles Schwab will raise the minimum asset level for clients eligible for referral to its Schwab Advisor Network to $5 million. The company also doubled the minimum assets for RIAs participating in the program from $250 million to $500 million earlier this year.
• A Schwab spokesperson previously told Advisor Upside that the change reflects where the program is already headed, adding that more than half of SAN’s net flows come from clients with at least $10 million.
• Altruist, often viewed as a preferred custodian for breakaway advisors, is being acquired by Vanguard, a deal Welsh described as Altruist being “gobbled up.” Meanwhile, BNY Pershing is retiring Wove as a standalone platform and folding its technology into its broader wealth-solutions business, Wealth Management reported.

It all marks a significant shift occurring in the custodian industry, Welsh told Advisor Upside. “Everyone used to think Schwab and Fidelity were their friends,” he said. “Now they’re not.”