DENTON, Texas — Feeling pressure from competitors, Pershing is reinvesting in its RIA channel and explicitly committing to an open-architecture technology platform to accommodate new fintech firms vying for space on the advisor desktop.
The clearing and custody firm announced significant investments in two core segments: hiring specialized talent to consult RIA clients on the best technology and opening up their technology platform to bring in more technology options, says the firm.
In a notable first, Pershing announced a partnership with the robo advisor AdvisorEngine. The integration will enable broker-dealers and RIAs that custody with Pershing to use the AdvisorEngine technology. This, in turn, allows advisors — especially those with a mass-affluent clientele — to handle more clients. The deal also allows advisors to utilize both Pershing and AdvisorEngine technology without swiveling between two platforms.
“Forward-thinking firms are adopting new technology to deliver a modern client experience, drive growth, and achieve increased profitability,” says AdvisorEngine CEO Rich Cancro, in a statement. “These outcomes wouldn’t be possible without deep custodian integrations.”
With the increased popularity of open architecture systems, fewer advisors are operating their practices solely based on a single technology stack form a single custodian. Instead, the move gives advisors more choices about the tools that will help them attract clients and ultimately drive more business, says Christina Townsend, head of advisor solutions at BNY Mellon's Pershing.
“We’re really focusing on flexible offerings, not locking advisors into one way of doing business,” Townsend says. “The most successful advisory firms that we work with are starting with who the optimal client is and then figure out the tech.”
For example, the firm is building a solution that will soon support mobile alerts for cash disbursement authorization. Once approved, advisors can send alerts to the client’s cell phone notifying them the money is ready. Clients can log into the NetXInvestor portal and approve the transaction.
Pershing is also bringing on more technology consultants, who work with advisory firms, to help them navigate the increasingly complex arena of advisor technology. “We are using the tools that we have,” Townsend says, citing BNY Mellon’s investment management, banking and wealth management offerings. “We’re getting serious about this business, because there are optimal clients for advisors who have these kinds of needs.”
The custodian did not disclose the amount the firm invested back into its RIA channels. However,
About 50% of net new assets come from breakaway advisors moving from transaction-based business models and the other 50% are takeaways from other custodians, Townsend says.
Pershing has already made up sizable ground on its competitors. Fiduciary assets under custody have soared to $615 billion from only $53 billion in 2010, including assets from RIA and hybrid RIAs.
“The market is shifting toward breakaway advisors,” Townsend says. “We feel that there are advisors out there that we can cater to.”
