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Bain's $74 million in RQD is aimed at international clearing more than at the RIAs Fidelity is dropping
RQD's $74 million Bain-led raise was focused on international clearing, Datos Insights analysts say, as Fidelity moves to drop smaller RIAs. Fidelity's July 2027 cutoff at $100 million held with it gives a lift to an RQD adviser business of roughly 50 clients.
The Investor · Invest desk
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What happened
- Fidelity is the second-largest custodian for registered investment advisers, according to American Banker.
- New York-based RQD Clearing is among the custodians that still accept RIAs of any size.
- RQD chief revenue officer Michael Lanyon declined to name a baseline fee, saying only that talks with advisers start from a 'low basis-points formula'.
- Lanyon joined RQD in December 2023 after serving as global head of sales for Apex Fintech Solutions' clearing business.
- Datos Insights analysts William Trout and Gregory O'Gara say Interactive Brokers is a more relevant comparison for RQD than the large custodians.
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Why it matters
- decision RQD now has to choose how much of a round that Datos says was focused on international clearing to put behind an adviser business that Fidelity has just sent new demand.
- constraint With RQD's asset base undisclosed and its pricing schedules private, an adviser facing Fidelity's deadline can only compare RQD's cost with rivals' by opening a negotiation.
- cost Vanguard's reported $4 billion for Altruist is about 54 times RQD's round, so RQD is chasing advisers with far less capital than recent deals in this field involve.
Fidelity's test is money held at Fidelity [1]. An adviser that spreads assets across custodians can stay by moving more of them in before July 2027 [1]. One whose whole book is under $100 million has to grow past the line or leave [1].
For the advisers that leave, the incumbent alternative is Interactive Brokers. According to William Trout and Gregory O'Gara of Datos Insights, it has served this segment, including advisers "priced out by legacy minimums," for two decades and "already has significant scale and resources behind it" [12].
RQD's money came before Fidelity's announcement [3]. Trout and O'Gara noted that Bain's investment focused on RQD's international clearing business, and that the adviser work described by RQD chief revenue officer Michael Lanyon is "a separate, third line of growth" [14]. The press release pitched RQD as "the institutional-grade alternative to both legacy clearing platforms and newer brokerage infrastructure providers" for global investment firms [15].
Lanyon said RQD is "still in what I would describe as our early infancy" with RIAs and other U.S. wealth managers [7]. His pitch is cost. "There is an opportunity to find the right blend of economics and say, 'Can we do this at the lowest cost possible?'" Lanyon said [9]. The Datos analysts expect a different factor to decide the outcome: how far RQD can provide "relationship-driven service and support for fund distribution" [16].
I think Fidelity's cutoff sends RQD demand for a business line its new capital was not mainly raised to build [3][14]. The strongest case against that comes from the same analysts. "Fifty RIA clients is too small a sample to draw firm conclusions, but the segment being described is real," they said [12]. They also argue that IBKR "remains a self-directed, low-touch platform, even within its advisor business," while Lanyon's background is in high-touch sales [13]. If RQD starts reporting U.S. advisory clients well past its roughly 50 [4], or says the Bain money is paying for RIA service staff, that view is wrong.
What to watch
- Whether Fidelity spells out how it will count the $100 million, for instance whether assets across affiliated advisory entities are pooled.
- Whether Interactive Brokers, which Datos says has served this segment for two decades, moves to court the advisers Fidelity drops.
- Whether Vanguard completes the reported $4 billion purchase of Altruist by the end of the year.