Fidelity sets $100 million custody minimum; Betterment waives fees through 2028

Betterment Advisor Solutions will waive its platform fee through the end of 2028 for advisory firms that custody with Fidelity and sign up by June 30, 2027, according to promotion terms the company posted this morning, and the opt-in window closes the same day Fidelity has told firms with less than $100 million on its custody platform to reach that level or start looking for a new home for their clients' assets. The terms landed less than a week after Fidelity's letters began circulating.

The discount is full freight: Betterment will forgo 100% of its asset-based wrap fee on client assets a firm moves onto its advisor custody platform, running from the day the firm opts in through Dec. 31, 2028. Standard pricing is 0.20% a year for firms with less than $10 million on the platform and 0.12% for firms between $10 million and $100 million, with larger relationships negotiated individually. By the company's own arithmetic, a firm that moves $50 million and opts in this month skips about $60,000 a year, roughly $135,000 across the waiver's life, while an $8 million solo practice saves about $16,000 a year; no asset minimum applies.

The eligibility clause carries more weight than the discount. Any advisory firm that custodied assets with Fidelity as of Oct. 6 and holds no funded client accounts at Betterment qualifies, whatever its size and whichever custodian it intends to keep, meaning a firm well above the $100 million threshold that parks a single strategy at Betterment earns the same terms as a firm Fidelity has released. For the larger shop, Betterment is buying the second-custodian slot, the position from which a challenger gets to make its case for the rest of the book later, and one that Fidelity's minimum gives no firm a reason to hand over voluntarily.

The same week brought Altruist's addition of donor-advised funds to its platform at 50 basis points, another challenger custodian widening what it offers the firms it wants to win; the challengers beneath the two large custodians are building product and buying switches at the same time, and the currency in both cases is the platform fee.

The terms carry the usual hedges: the waiver does not touch fund expense ratios inside client portfolios, applies only to accounts on the advisor custody platform rather than Betterment's retail offering or Betterment at Work, cannot be stacked with other Betterment fee discounts, and touches one line in a firm's cost stack. A custody conversion runs on staff hours, account repapering and client conversations, none of which appears in a fee schedule, so the waiver is worth taking where the operations bench can absorb the move and less obviously decisive where it cannot.

Sarah Levy, Betterment's chief executive, cast the platform as a fit for either path: "RIAs of every size deserve a custodial partner that supports where they are today and where they want to go," she said in the statement announcing the offer.

Fidelity's explanation, through a spokesperson, is consistency: the firm said it was extending to existing relationships a minimum it had recently set for new ones, though it has not said how many firms received the notice, and the letter reached the industry because Alex Chalekian, founder and chief executive of Lake Avenue Financial, posted a copy on LinkedIn.

The population Fidelity is sorting is the one acquirers shop in, and a $100 million custody floor functions as a clearing event for the deal pipeline: a firm holding $60 million with no credible route past the threshold by mid-2027 faces a decision it did not choose, and Betterment has now attached a price to one branch of it. Grow, sell, or move, and the discount only prices the last of the three.

For Betterment, the waiver is customer acquisition spending dressed as a discount, and the payback period is deliberately back-loaded: because the fee is forgone in full through the end of 2028, the moved assets generate platform revenue only from 2029, and the second-custodian clause lets a firm collect the discount while leaving most of its book where it is. Betterment has spent the year automating the account transfer, a push first reported in September; the waiver is the price now attached to using it, and whether that is underwriting or overspending turns on how many eligible firms eventually consolidate custody, which the terms do nothing to require.

Scale gives the offer its context: PWD's records list Betterment at $69.5 billion in regulatory assets and 794 employees as of Oct. 3, figures that include the retail robo business that built the brand, and show Betterment Advisor Solutions, the smaller line, with six appearances and the most recent on Sept. 28. A firm with that much behind it and a small custody business to grow can treat two years of waived fees as marketing spend rather than a pricing decision.

The two clocks stop together on June 30, 2027, and the benefit ends 18 months later; for a $50 million firm the offer is worth about $135,000 against a conversion it has to run on its own time and its own operations team, which is the comparison every sub-$100 million principal will now be making, letter or no letter.