Betterment waives charge to win custody enterprise from Fidelity RIAs
The charge promotion runs by means of 2028 as lots of of RIAs custody with Fidelity under its new $100 million asset minimal
Betterment Advisor Solutions is waiving its platform charge by means of Dec. 31, 2028, for RIAs that custody with Fidelity Investments and add Betterment as a custodian. The supply arrives as Fidelity strikes to require present RIA shoppers to maintain not less than $100 million in custody property on its platform.
To qualify, corporations have to be new to Betterment, with no funded consumer accounts on its advisor platform as of Oct. 6, 2026, and should choose in by means of Betterment’s advisor gross sales group by June 30, 2027. That is similar date Fidelity has given RIAs below its threshold to meet the minimum or finish their custodial relationship.
Betterment’s platform charge usually runs from 0.12% to 0.20% a 12 months, relying on a agency’s combination consumer balances. The waiver doesn’t cowl underlying fund bills. Betterment Advisor Solutions, which has no account minimums as a custodian to RIAs, says it really works with greater than 600 advisory corporations. Betterment general manages $70 billion in property, in keeping with the corporate. Most of these property come from the agency’s robo-advisor asset placement app.
The supply’s phrases additionally require advisors to inform shoppers, earlier than beginning any switch, that the charge waiver provides them an incentive to maneuver property to Betterment.
“RIAs of each measurement deserve a custodial companion that helps the place they’re as we speak and the place they need to go. Betterment is constructed to assist corporations at any measurement, and our job is to allow their environment friendly progress. For some corporations we’re the only custodian and for others we’re the house for his or her subsequent technology shoppers,” Betterment CEO Sarah Levy stated in a press release.
Which RIAs Fidelity’s minimal impacts
FINTRX, a wealth management information supplier, recognized 986 impartial RIAs with lower than $100 million at Fidelity, holding a mixed $37.2 billion on the platform.
Of these corporations, 706, or 72%, couldn’t attain the brink even by consolidating property from different custodians onto Fidelity, FINTRX discovered. Another 354, or 36%, use Fidelity as their solely custodian. Some 337 affected corporations, or 34%, handle greater than $100 million in complete property, and 71 corporations, or 7%, sit inside $10 million of the minimal.
A Fidelity spokesperson stated the precise variety of advisors it custodies below $100 million is a “few hundred corporations,” according to WealthManagement.com. “FINTRX stands behind the info, which comes from publicly accessible Form ADVs filed by registered asset placement advisors,” a spokesperson wrote to WM.com. “FINTRX eliminated the publish from its web site till they obtain clarification from Fidelity.”
A PR consultant for FINTRX advised InvestmentNews Thursday that “nothing has modified” relating to its findings, which InvestmentNews considered over electronic mail. “FINTRX checked out all corporations labeled as impartial RIAs which have lower than $100 million custodied with Fidelity. Some solely custody with Fidelity, and others use further custodians,” added the consultant.
Rivals courtroom smaller RIAs
Betterment is just not the one platform pursuing smaller advisors. Altruist, which recently added donor-advised funds with no minimums, has constructed its custody enterprise across the identical market because it now enters possession below Vanguard. Schwab’s RIA custody unit serves greater than 11,000 corporations below $100M in AUM, its govt Jon Beatty wrote in a LinkedIn publish after Fidelity’s minimal enhance.
Joe Kuschman, a Certified Financial Planner and former monetary advisor at Domain Money, stated Betterment’s retail enterprise may give some advisors pause, whilst Betterment intends for its retail app to serve as a pipeline for RIA client referrals.
“I can inform you Betterment has a surprisingly stable providing. They are attempting to lure startup advisors away from Altruist as properly. The foremost challenge with Betterment is that in addition they supply a direct to client robo advisor product,” Kuschman stated. “So whereas I do see some Fidelity people exploring Betterment, there are almost certainly extra compelling affords elsewhere.”
Philip Waxelbaum, CEO of recruiting agency Masada Consulting, sees Fidelity’s minimal as a defensive transfer in opposition to competing custodians, together with Vanguard’s Altruist.
“Most of the RIAs affected apply a number of custodians. They can properly accommodate the Fidelity customary. By setting the next bar the flexibility for brand new gamers [such as] Altruist, and so forth, from getting a trial look-see is stymied,” stated Waxelbaum.”There are many pleasurable experiences for RIAs, IARs and shoppers. Full repapering is just not one in every of them.”
He expects different custody incumbents to comply with. Schwab has already introduced one other enhance this 12 months to its asset minimum for clients to be referred to RIAs.
“Don’t be stunned to see Schwab to comply with on. It is a great management tactic.” Waxelbaum stated. “I feel the triopoly of CS [Charles Schwab], Fidelity and Pershing will take the offensive in stopping any additional assaults on their dominant market share.”
