Why We Use Fidelity

Quick, what’s the first question you should ask of a prospective investment advisor? Hint: not many people ask it. The question is “Where will my money be?” Or phrased another way: “Who is your custodian?” The answer matters. The custodian safeguards your assets, gets trades executed, keeps tax records, and does most of the invisible work behind the scenes to make sure your account holds what it should. We use Fidelity. Here’s why.

First decision

0121_sWhen I established Osbon Capital in 2005 by far the most important choice I had to make was that of custodian. Schwab in San Francisco is the largest and TD Ameritrade in New York is the upstart. But Boston-grown Fidelity was the clear first choice for our long-term needs.

(Note I made this choice several years before Bernie Madoff helped the entire industry learn why an independent and trusted custodian is essential. For the most part, he acted as his own custodian, bypassing all the safeguard functions a custodian performs. We know how that turned out.)

The custody business is notoriously complicated, expensive and ever-changing. Think safekeeping, cash flow, corporate actions, and transactions. Because of the complexity, only a few firms can afford the investment required.


Technology is a great competitive advantage. Because more has to be done with the same or fewer people and standards keep rising, the tech must be flawless. I don’t know what Fidelity’s technology budget is, but it must be huge. They are not always state of the art in everything but are not behind in anything. In the 11 years I’ve worked with them Fidelity leads the way in cloud integration, risk control and ubiquity (everywhere, all the time).


As much as possible, custodial functions and communication are handled digitally. However once in a while we need the kind of help only a human can deliver. Again, Fidelity has waves of people to help us at Institutional Wealth Services (IWS). I’ve visited their Smithfield, RI campus several times for our due diligence and come away impressed each time. It’s rare when we encounter a really unusual challenge here at Osbon, but when we do, Fidelity knows what to do. IWS sees so many situations, nothing surprises their experts.

Private Firm

We always feel confident that IWS is a focus for Fidelity, not a sideline. Fidelity maintains a solid #2 market share in the RIA space, behind Schwab, a public company. As a private firm Fidelity can make spending and investments decisions based on customer needs, not public shareholder votes.

I believe that private ownership paid off when we most needed it in 2008-09. Osbon Capital sailed through the financial crisis with no slack in service from Fidelity. Based on our service experience there you would never have known there was a disastrous worldwide economic event going on.

What Does Custody Mean For You?

I like many things about Fidelity, but above all I love their rules-based model. Literally nothing gets done there unless it perfectly conforms to their clearly defined and published rules. That sounds obvious and good but it means investor requests can get delayed waiting for a signature, or bounced when a date is missing or something is misspelled. Although occasionally annoying, those rules are your best protection against fraud and mistakes that never need to happen.

We’re very happy with Fidelity and hope you are, too.


John Osbon –josbon@osboncapital.com

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