Custodians Move to $0 Commissions Impacts Advisory Firms

Custodians Move to $0 Commissions Impacts Advisory Firms

Over the past month, large custodians including Schwab, Fidelity and others have eliminated commissions for both retail clients and RIA custody clients.  For some RIAs, especially those that offer services via wrap fees that previously were absorbing these costs, these RIAs need to evaluate whether or not their Form ADV disclosures need to be updated.

Since trading costs no longer need to be considered in factoring in investment allocations, this opens the possibility of portfolio managers moving to a direct indexing approach.  For more on this topic, see WealthManagement.com.