Fidelity’s $100M RIA Custody Minimum Sparks Custodian Fight
Updated: 17 hours ago
Betterment and Schwab chase the RIAs Fidelity is dropping, as Kalshi opens stock perpetual futures and HSBC reportedly cuts 70% of UK advisers.
FatTail Weekly
Week of October 2 to October 9, 2026
A concise briefing on the technologies, companies and ideas changing how people invest, trade and manage wealth.
The Week's Big Picture
Fidelity told its smallest independent advisors they're no longer welcome. At the same time, the rest of the custody business tried to take advantage by collecting the shrapnel. Every RIA on Fidelity's platform now needs to house $100 million in client assets there by June 30, 2027. To the rescue came Betterment, waiving its custody fee through 2028 for Fidelity firms while Schwab, Axos and Altruist recruited in the open.
Meanwhile, trading moved further outside the regular session. The joint venture of OKX and NYSE owner ICE filed to run round-the-clock trading in 63 tokenized US stocks, Securitize put Apple, Nvidia and Tesla tokens on Solana, and Kalshi opened the first US stock-index perpetual future.
Then, advisories got their clearest look yet at what AI does to headcount, with M1 launching a fiduciary AI advisor that has no humans behind it and HSBC reported to be cutting about 70% of its UK financial advisers. Schwab and the AI-first platforms gained this week, leaving small RIAs and salaried bank advisers exposed.
Note: What follows is an AI-generated summary of this week's top industry developments.
Top Developments
Fidelity's $100 Million Custody Minimum Sets Off a Rush for Its Smallest RIAs
Long story short: Fidelity confirmed that every RIA custodying with it must hold at least $100 million in client assets on its platform by June 30, 2027, extending a threshold that had applied only to new firms. Rival custodians moved within days, led by Betterment, which on October 6 offered Fidelity firms its custody platform with no platform fee through 2028.
The juicy bits:
Fidelity says a few hundred firms are affected, under 1% of its clearing and custody assets, mostly multi-custodial.
Fintrx estimates about 1,000 affected RIAs; AdvizorPro data puts the figure near 1,150.
Betterment normally charges 12 to 20 basis points; Fidelity firms must sign up by June 30, 2027.
Schwab says it has no asset minimum and more than 11,000 client firms under $100 million.
Axos is pitching every Fidelity advisor; Altruist, which Vanguard agreed to buy, is recruiting on LinkedIn.
The FatTail take: Fidelity has decided small RIAs are not worth the cost of serving, and its "few hundred firms" is the smallest count anyone has published. Schwab is the clear winner, because it can take these firms with no minimum and no special offer, while Betterment is buying share with a waiver that expires in 2028. Every advisor under $100 million should read this as notice that custody is now priced by firm size, and should line up a second custodian now instead of waiting for the June 2027 deadline.
Source: WealthManagement.com · The Daily Upside · AdvisorHub
OKXICE and Securitize Push Tokenized US Stocks Toward Round-the-Clock Trading
Long story short: OKXICE, the joint venture of OKX and NYSE owner Intercontinental Exchange, notified the SEC on October 4 that it plans to run 24/7 trading in 63 tokenized US stocks under the SEC's innovation exemption. On October 8, Securitize launched tokenized shares of Apple, Nvidia, Tesla and other US companies on Solana and said it expects them to trade on OKXICE and on NYSE's planned digital platform.
The juicy bits:
OKXICE trades run through permissioned Uniswap v4 pools on X Layer, paired with USDC, USDG or USDT.
Only identity-checked wallets holding a non-transferable "soulbound" token can trade or provide liquidity.
The notice warns token prices may differ from the underlying shares, especially outside regular hours.
Issuers get 30 days to object; Decrypt reports Cerebras did, so its tokens are excluded.
Securitize tokens are one-for-one security entitlements; Jump Trading provides liquidity and RQD handles custody.
The FatTail take: Tokenized US stock trading is now an ICE project, and the crypto-only venues hoping to own it are the losers of this filing. The weak point is pricing: a liquidity pool trading Nvidia at 3 a.m. on a Sunday has no primary market to anchor it, and OKXICE admits as much in its own notice. Cerebras proves issuers will use the objection window, and if a handful of large companies follow, these venues end up trading an incomplete list that no serious investor will treat as a substitute for the real market.
Source: OKXICE notice to the SEC · Decrypt · CoinDesk
Kalshi Opens the First US Stock-Index Perpetual Future
Long story short: Kalshi launched a perpetual future on the MerQube US Large Cap Index on October 6 after CFTC approval, giving US traders a leveraged contract with no expiry on the 500 largest US companies.
The juicy bits:
Trades from 6 p.m. ET Sunday to 5 p.m. ET Friday and clears through Kalshi Klear.
Finance Magnates put available leverage at 15.3x at publication; Kalshi can change it.
Exposure is synthetic: no dividends or votes, with a daily funding payment set at 4 p.m. ET.
Kalshi self-certified a second, total-return version, US500T, with the CFTC on October 5.
CME is suing the CFTC over its May approval of Kalshi's bitcoin perpetual, calling it a swap.
The FatTail take: Kalshi has turned itself into a leveraged futures venue for retail, and it is now selling equity index exposure straight into CME's core business. A contract that never expires removes the moment a leveraged trader has to stop and decide whether to roll, which is exactly why it will trade heavily. CME's swap argument is the main obstacle left, and the CFTC has now sided with Kalshi twice.
M1 Launches a Fiduciary AI Advisor With No Humans Behind It
Long story short: M1 launched M1 Advisor, an AI financial advisor offered through its reactivated SEC-registered RIA, M1 Advisory Services, and free to clients through 2027, WealthManagement.com reported on October 7.
The juicy bits:
Advice is non-discretionary: the AI answers and recommends, and the client decides whether to act.
It covers M1 investing, cash and borrowing accounts, plus outside 401(k)s, IRAs and loans via Plaid.
Models come from Google, OpenAI, Anthropic and Amazon under an internal governance process.
M1 reports $14 billion in client assets and more than 400,000 clients; the RIA manages about $1.85 billion.
M1's help center still says the assistant's output is not financial or investment advice.
The FatTail take: M1 has put a fiduciary label on a chatbot and is giving it away, which sets the price of basic advice at zero for anyone with an M1 account. The fiduciary claim and the help center's "not financial advice" disclaimer cannot both stand, and M1 should fix that before an examiner asks which one is true. Betterment and Wealthfront now have to explain what their fee buys that a free AI advisor from a registered RIA does not.
Source: WealthManagement.com · M1 help center
HSBC Reportedly Cutting About 70% of Its UK Financial Advisers in an AI Push
Long story short: HSBC plans to cut roughly 70% of the financial advisers in its UK wealth business and about half of its managers and specialists as it shifts toward AI, the Financial Times reported on October 7.
The juicy bits:
Departures are expected by the end of October; HSBC is consulting staff on the changes.
HSBC has not disclosed UK wealth headcount or how many roles are affected.
HSBC UK targets £100 billion under management by 2028, up from £62 billion at end-2025.
Human advice will be kept for clients with more complex needs, ITV reports.
HSBC said it is "continuing to evolve to deliver more digitally-enabled products and journeys."
The FatTail take: HSBC is promising a 61% rise in managed assets while removing seven in ten of its financial advisers, and that plan only works if the AI tools do the advisers' jobs. The exposed clients are the affluent customers just below the "complex needs" line, who are about to be told that a digital product is advice. Every bank wealth unit with a cost target will cite this decision, and its advisers should assume they are next.
Also Worth Knowing
The CFTC published an advance notice of proposed rulemaking on October 5 for a federal framework covering leveraged and margined retail crypto trading, including a new "crypto asset market" category of designated contract market, though Chairman Michael Selig said the agency cannot require crypto to trade on CFTC-registered platforms without Congress. CFTC release 9307-26 · The Block
Alto, a Nashville self-directed IRA custodian, agreed on October 6 to buy Forge Trust from Charles Schwab, which completed its Forge Global purchase in March, creating a platform with more than $20 billion in retirement assets and over 60,000 self-directed IRAs holding private-market assets, pending South Dakota approval. InvestmentNews
Altruist added donor-advised funds through Endaoment on October 6 with no account, balance or grant minimums and fees from 50 basis points against a typical 60 to 65, and the assets can sit in any model on its marketplace, including personalized indexing. WealthManagement.com
Betterment Advisor Solutions launched unified managed accounts on October 6, letting RIAs hold Betterment, third-party and custom strategies as sleeves in one account with tax-loss harvesting across them, and named direct indexing as a planned sleeve type. Betterment release (PR Newswire)
Morningstar Wealth said on October 6 that six model portfolios mixing public and private investments, built with Apollo, Franklin Templeton and J.P. Morgan Asset Management, will reach advisors through Envestnet's Fund Strategist Portfolios program this month, with no fees or minimums disclosed. Morningstar and Envestnet release (Business Wire)
Wealthfront reported on October 6 that platform assets slipped 0.4% in September to $100.5 billion and investment advisory assets fell 1.1% despite $338 million of advisory net deposits, while funded clients rose to 1.54 million. Wealthfront investor relations
What We're Watching
Perpetual futures are moving from crypto into US equities through CFTC-regulated venues, and the open question is how quickly they reach mainstream brokerage apps. Kalshi's US500 contract went live on October 6 with a total-return version self-certified the day before, Robinhood has announced crypto perpetuals through Bitstamp, and the CFTC opened a rulemaking on leveraged retail crypto trading in the same week. CME's lawsuit arguing that Kalshi's perpetuals are swaps is the main legal obstacle, and a ruling for Kalshi would leave little to stop other exchanges listing perpetuals on stock indexes. The signals to watch are a decision in CME's case, a retail broker distributing Kalshi's US500 contract, and the first single-stock perpetual filed with the CFTC.
Frequently Asked Questions
What is Fidelity's new $100 million custody minimum for RIAs?
Fidelity now requires every RIA that custodies with it to hold at least $100 million in client assets on its platform by June 30, 2027, a threshold that previously applied only to new firms. Fidelity says a few hundred firms are affected, under 1% of its clearing and custody assets, while Fintrx estimates about 1,000 and AdvizorPro data about 1,150. Betterment responded on October 6, 2026 by waiving its custody platform fee through 2028 for Fidelity-custodied RIAs that sign up by June 30, 2027.
What is OKXICE?
OKXICE is a 50-50 joint venture between crypto exchange OKX and Intercontinental Exchange, the owner of the New York Stock Exchange. On October 4, 2026, it notified the SEC that it plans to run 24/7 trading in 63 tokenized US stocks under the SEC's innovation exemption, using permissioned liquidity pools on the X Layer blockchain. Only identity-checked wallets can trade, and the notice gives no launch date.
What is Kalshi's US500 perpetual future?
Kalshi's US500 is a perpetual futures contract on the MerQube US Large Cap Index of the 500 largest US companies, launched on October 6, 2026 after CFTC approval. It has no expiry, trades from 6 p.m. ET Sunday to 5 p.m. ET Friday, clears through Kalshi Klear and uses a daily funding payment instead of a settlement date. Holders receive no dividends or voting rights because the exposure is synthetic.
What is M1 Advisor?
M1 Advisor is an AI financial advisor that M1 offers through its SEC-registered RIA, M1 Advisory Services, free to M1 clients through 2027. It gives non-discretionary advice on M1 investing, cash and borrowing accounts and on outside accounts linked through Plaid, and the client decides whether to act. It runs on models from Google, OpenAI, Anthropic and Amazon, with no human advisors behind it.
How many financial advisers is HSBC cutting in the UK?
HSBC plans to cut roughly 70% of the financial advisers in its UK wealth business, along with about half of its managers and specialists, according to a Financial Times report on October 7, 2026. HSBC has not disclosed how many roles are affected. Departures are expected by the end of October 2026 as the bank moves more of its wealth service to AI and digital tools.
Comments