LPL Financial’s acquisition of Commonwealth Financial Network signals more than just industry consolidation—it could mark a strategic setback for Fidelity, particularly in the custody and clearing space. For registered investment advisors and wealth managers navigating platform choices and partnership dynamics, this deal is worth watching closely.
Commonwealth currently manages $285 billion in brokerage and advisory assets through 2,900 advisors. Importantly, it clears and custodies those assets through Fidelity’s National Financial Services (NFS). LPL, however, has made it clear: it intends to migrate Commonwealth advisors, assets, and clients onto its own platform by mid-2026. That transition could mean a multibillion-dollar hit to Fidelity’s institutional business.
While a Fidelity spokesperson emphasized the firm’s ongoing investment in technology, service, and its position as the industry’s only leader in both custody and clearing, the implications are hard to ignore. “Fidelity is well positioned to help advisors of any size navigate the wide range of options,” the spokesperson said, nodding to the firm’s ability to support broker-dealers, RIAs, and hybrids alike. Still, losing a client the size of Commonwealth would create a meaningful void.
For wealth advisors, this raises a key consideration: the custody landscape is shifting. With larger firms like LPL and Morgan Stanley increasingly bringing clearing and custody in-house, RIAs relying on third-party platforms must be aware of how industry M&A could affect their operations—and their clients.
LPL’s decision to bring clearing and custody under its own umbrella is not just about control—it’s about economics. CFO Matthew Audette noted in a recent analyst call that one of the main benefits of the deal lies in revenue synergies from consolidating clearing. By taking over these operations, LPL expects to boost profitability while creating a more integrated advisor experience.
J.P. Morgan Securities analyst Michael Cho echoed that sentiment in a recent note. “We think a significant portion of Commonwealth synergies will come from clearing as LPL brings those functions and controls in-house,” Cho wrote. He pointed out that Commonwealth has approximately $6 billion in client cash—assets that LPL could monetize more effectively once it’s managing the full stack of services. Cho currently maintains an Overweight rating on LPL stock.
Fidelity, which held $15.1 trillion in assets under administration as of year-end 2024, is the second-largest player in the third-party custody market behind Charles Schwab. But that headline number includes a variety of business lines, including retirement plan services. In terms of dedicated RIA custody, any loss of a large client like Commonwealth will have ripple effects, especially given the revenue-sharing relationships disclosed in Commonwealth’s recent SEC filing.
That filing notes that “a large percentage” of client accounts are held with NFS, and that Fidelity pays revenue-sharing based on assets such as mutual funds. Commonwealth also maintains a secondary clearing relationship with Pershing, a unit of BNY Mellon, but it’s clear that Fidelity has been the primary platform.
For advisors, particularly those in hybrid or broker-dealer models, the logistical challenges of such transitions can’t be understated. Re-papering client accounts, especially for households with multiple registrations, is time-intensive and complex. LPL expects to complete the transition by mid-2026, but advisors should anticipate phased migrations, much like JPMorgan’s approach when it acquired First Republic Bank in 2023. That move caused a temporary outflow of assets from Pershing, the prior custodian, although it recovered in Q4 2024 with $41 billion in net new assets.
This deal also underscores a broader trend: scale is now a competitive necessity. The rising costs of compliance, cybersecurity, and tech innovation are pushing firms to consolidate. For advisors, this raises both opportunities and risks. Larger platforms may offer better tools and margins—but consolidation can also lead to less flexibility and fewer choices, especially around custody and clearing.
RIAs and hybrid firms should be proactive. Evaluate your current custodial relationships, consider how industry consolidation could impact service levels or platform capabilities, and be prepared to adapt. As LPL absorbs Commonwealth and shifts custody in-house, Fidelity’s loss may only be the first of several as other firms look to replicate this model. In a fast-evolving custody market, what benefits one firm may disadvantage another—and your clients' experience may hinge on how quickly and effectively you respond.
