There hasn’t been this much buzz about ticket charges since the Department of Justice settled its long-running antitrust case against Live Nation, the owner of Ticketmaster.

But this isn’t about concerts and the gargantuan markups on the resale marketplace. And the story is much bigger than almost anything else in asset management and financial advice this year: Vanguard is buying the fintech-powered RIA custodian Altruist. From an ETF angle, the deal could affect the platform fees that issuers pay other custodians — or decline to, which can limit their distribution.

“The RIA platforms / custodians could not have been happy to hear of the Vanguard / Altruist arrangement,” said Neil Bathon, managing partner of Fuse Research Network, noting that the deal stands to boost distribution of Vanguard ETFs via its model portfolios. “It is only natural to assume that Vanguard’s core positioning as the industry’s most efficient operator will reflect itself in downward pressure on platform fees.”

Platform Diving?

The shift in popularity of mutual funds to ETFs, along with the advent of dual share classes, has led custodians (and broker-dealers) to reconsider how they are compensated for making products available. Fidelity, for example, charges issuers a 15%-of-revenue fee for shelf space, and those that don’t pay might have their products end up on a list that is subject to a $100-per-purchase charge for investors. Similarly, Charles Schwab is set to reinstitute platform fees on ETFs, the latest indication that free trading is becoming less common. The decisions that Vanguard makes about Altruist, after the acquisition closes later this year, will either reinforce that or pressure other custodians to roll back platform fees.

“We don’t charge any asset/fund manager platform fees or require any form of revenue share from their fees. Remaining open architecture so that advisors can choose the investment products and strategies best for their clients is important to us,” Altruist founder and CEO Jason Wenk told ETF Upside. “I expect Altruist to be the preferred custodian for many asset managers, as they will not be gated with unnecessary platform fees.”

There’s another good reason why Vanguard would avoid charging competitors for shelf space. “Vanguard certainly wouldn’t want to have ETF rev-shares or ticket charges on their own ETFs, and at that point it doesn’t look good (and probably risks outright anti-trust/competitiveness rules) if they tagged all their competitors with costs but exempted themselves,” XY Planning Network cofounder Michael Kitces said to ETF Upside. “They’re already the lowest cost competitor, so if they simply squeeze our custodial rev-shares, everyone’s costs come down, but Vanguard’s are still cheapest, which wins for the marketplace and wins for Vanguard. And they gain the potential for more growth of their Altruist platform, because now all other asset managers might start nudging advisors to check out Altruist so the asset managers can avoid Schwab/Fidelity rev-shares.”

Low, Low Prices: Assuming Altruist continues to operate without platform fees, more RIAs could be lured to Vanguard, but that would happen gradually, said Jeff DeMaso, editor of the Independent Vanguard Adviser. “Switching custodians is a big ask for advisors. In other words, it’ll take time for Vanguard/Altruist to take [market] share from Fidelity/Schwab … and they won’t go ‘down’ without a fight,” he said. “That’s probably a good thing for fund companies and advisors.”