Fidelity Institutional Wealth Services will be charging more of its small registered investment advisers a $2,500 quarterly platform fee, beginning next month.
The firm will begin charging all firms with less than $15 million in assets under custody a $2,500 quarterly fee.
Previously, the minimum asset level to avoid the fee was $10 million.
Since 2008, Fidelity has required its new RIA clients to have $15 million, but has allowed assets to drop to $10 million before hitting them with the platform fee.
The two minimums were confusing, said Erica Birke, a Fidelity spokeswoman.
“We're just leveling at that $15 million level, just to simplify things for our clients and relationship managers,” she said.
An additional 100 of the firm's 3,200 RIA clients now will face the fee, doubling the number affected, Ms. Birke said.
Like advisers themselves, custodians want larger clients. But the new minimum could risk alienating some Fidelity advisers.
Brian Fenn, president of Carolina Capital Consulting Inc., ended his relationship with Fidelity after the firm dinged him for a platform fee last March.
“We had maybe $12 million with Fidelity, but had a client get divorced so that dropped to $9 million,” he said. “I’d completely forgotten about the minimum.”
Mr. Fenn said he got a $2,500 bill seven days before it was due, even though his contract specified an old rate of $1,200.
“They should have given me a certain amount of time to get” back over the minimum, said Mr. Fenn, who has moved his remaining Fidelity assets to his primary custodian, TD Ameritrade Institutional, where he runs about $190 million.
Ms. Birke stressed that Fidelity wants to help small advisers grow and avoid the fee, either by partnering with other firms or devising growth plans.
“We've had a lot of advisers who were small and are now substantial in size,” she said.
The new fee policy was
reported earlier by the RIABiz website.
