What custody really costs

When Fidelity told independent advisors with less than $100 million on its custody platform that they had until June 30, 2027 to reach that threshold or move their clients elsewhere, hundreds of firms faced a deadline they hadn’t planned for.

Every custodian has to decide who it can serve well and sustainably. But this change puts a new question in front of every affected RIA: What does custody actually cost, and who's paying for it?

Because traditional custodians are “free,” it’s not always standard practice for RIAs to compare custodians on price. But if a custodian charges you nothing, how does serving your firm pay for itself? They earn it back in other ways, like cash sweeps, lending, and payments from fund managers.

Cost is always part of the deal, even when it's not on an invoice. The problem is that when a firm pays nothing directly, its value to a custodian is conditional. There’s a hidden line where the custodian decides whether a firm is worth it.

Moments like Fidelity’s $100 million line make that visible.

If you’re running a firm under $100 million, you probably built it one of two ways: you started it yourself from day one, or you spent years at a wirehouse or broker-dealer and left on purpose.

Either way, you’ve poured yourself into creating a firm that reflects how you want to serve your clients. This is an industry built on relationships, including the relationship you have with your custodian. Being told your firm is too small to be worth a custodian's time dismisses that relationship and all of the effort you’ve put into growing your business.

We know these growing firms well. Some of our best partners launched with us as their only custodian, and many of them are much bigger firms today. We've never had minimums because we've never thought of a small firm as a small opportunity.

If you're below the line at Fidelity, you have three realistic options.

• Consolidate at Fidelity. If you hold assets at more than one custodian, moving more of them to Fidelity may clear the bar, for now.
• Join a larger firm. Enterprise RIAs, aggregators, and corporate platforms offer infrastructure and back-office support in exchange for a share of revenue. You often give up some autonomy too.
• Choose a new custodian and stay independent. This path keeps the business you built yours. It also means choosing a partner carefully: one that wants your business, can help it grow, and plans to be there for the long term.

We've been growing Betterment for more than 15 years, and we're built for the long term. That starts with a single, transparent fee that works for firms of every size. We charge directly for the platform, and our technology keeps the cost of serving each firm low. In other words, we’re built to serve a smaller firm at the same level we serve our largest firms. And it's why we’ve never needed a minimum.

As we’ve grown, we’ve lowered the fee and passed the savings back to the advisors who helped us get here. Our best rate, 12 basis points, used to require $100 million on our platform. Starting January 1, 2027, it’s just $10 million.

That one transparent fee covers everything: custody, commission-free fractional-share trading, portfolio management, tax tools, onboarding, client billing, reporting, the client portal, and a dedicated service team. We also offer high-yield cash accounts and in-house recordkeeping for solo and employer-sponsored 401(k)s, providing RIAs with a unified operational layer.

For a growing firm, that makes the fee more than a cost of doing business. It makes the practice more efficient, and it pays for itself in growth for the firm and better outcomes for its clients.

As a central piece of an RIA’s operations, a custodian has the responsibility to be more than a vendor. We believe a platform fee is the most aligned model because it makes us partners in growth. It also requires us to keep earning that partnership through exceptional service standards and continued platform improvements.

The advisors who choose us want to take on more clients without giving up the attention that won those clients in the first place. They want to spend their time on relationships, not operations. And they want to give clients the experience they'd expect from a firm many times their size, while staying independent and lean.

Whether or not you got a letter from Fidelity, use this moment. Talk to everyone. Ask each custodian what it offers, how it makes money, and what you'd get by working together.

And don't just solve for the business you have today. Think about the firm you want to be running in five or 10 years, and who will help you get there. Whatever size you are today, we have the transition support, ongoing service, and technology to be your growth partner for years to come.

Sarah Levy is the CEO of Betterment, a trusted wealth and savings platform, which includes Betterment Advisor Solutions.