Fidelity's $100M RIA custody minimum lands amid long-short SMA curbs

Fidelity’s decision to end custody for RIAs with under $100 million on its platform comes as the industry’s largest custodians have increasingly sought to limit their exposure to long-short separately managed accounts amid surging demand for the tax-efficient strategies.  

Fidelity’s new $100 million custody requirement extends a minimum that previously only applied to new RIA relationships. In the background of Fidelity’s changing custody economics is its decision in May to institute higher fees for some advisors using long-short SMAs after first blocking advisors from opening new long-short SMA accounts in December 2025. 

“[Fidelity] has been very clear on profitability, and the smaller RIAs are just not profitable. The larger RIAs are more profitable, easier to work with, and have a higher ticket per client,” Gabriel Shahin, founder of California-based RIA Falcon Wealth Planning, told InvestmentNews Monday. 

Shahin took his analysis a step further, suggesting Fidelity’s $100 million RIA asset minimum could also help curb the custodian’s exposure to long-short SMA demand. Long-short SMAs grew rapidly because they offer significant tax benefits to wealthy clients, while the strategies can also tightem additional leverage, margin and operational demands for custodians. 

“I also heard from another custodian, the smaller RIAs are doing more unique type investments that are offering AQR or structured notes and products, [which] offer more risk to the custodians and also less revenue,” said Shahin, referring to the AQR Capital Management hedge fund whose strategies are offered through long-short SMAs to RIAs. Falcon Wealth Planning, which manages about $1.96 billion, custodies roughly $1.1 billion of that with Fidelity, according to the firm's latest Form ADV filing.

From diversifying to consolidating

Fidelity has been encouraging advisors to diversify long-short SMA providers and will support transfer steps. Schwab has made multiple raises this year on its asset minimum for long-short separately managed accounts, most recently last month from $1 million to $10 million, while also capping RIA’s long-short SMA allocation to 30 percent. 

“We don’t want an advisor coming to our custodian only for long-short strategies − hence [Schwab’s] 30 percent cap,” Ehren Stanhope, chief investment strategist of Franklin Templeton's Canvas, told InvestmentNews in May. “Because my sense is that custodians want the whole household; I’m sure that there’s greater profitability and efficiencies associated with that.” 

Firms that do not meet $100 million in custody assets have been asked to meet the new minimum or discontinue their custodial relationship with Fidelity by June 30, 2027, a spokesperson for Fidelity wrote to InvestmentNews. Fidelity’s squeeze is a tactic to draw advisor assets held on other custodians, said Mike Watson, EVP of competing RIA custody platform Axos Securities.  

“They're [Fidelity is] using this as an opportunity to try to get firms to consolidate assets with them. Many of the firms that have less than $100 million with them have additional assets that are held elsewhere,” said Watson.  

Rival pitches smaller RIAs

Axos has about $50 billion in custody assets from RIAs and hybrid firms, said Watson. “My sales team is all over this. They're contacting every single one of these firms right now to have a conversation,” he said of advisors with under $100M on Fidelity. 

“Based off the conversations that I've had with firms that fit into that particular camp, they're not happy with [Fidelity’s raise] because there's reasons why people have multiple custodial relationships,” said Watson. “Many times it’s led by their clients’ desire to be to be someplace else. Sometimes that's mandated by their employer.” 

Concurrent Investment Advisors, a platform RIA with nearly $30 billion in assets under management, counts Fidelity as its lead custodian with upwards of $20 billion held on the platform. Advisors with under $100 million on Fidelity could join Concurrent to bypass the minimum mandate, but Concurrent CEO Nate Lenz describes a fit as possible but unlikely. 

“That universe of advisors tends to fall below the space that we play in, that kind of sub $100 million range. If there's an opportunity for one of those firms to plug into us, and they could benefit from our added resources, we would certainly explore it,” said Lenz. “But that tends to fall a little bit below our target advisor range.”