Pershing launches multi-custodial managed accounts service, next-generation integration portal

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At BNY Mellon Pershing’s annual INSITE conference, held virtually this week, the custodian revealed a new multi-custodial managed accounts software for financial advisors and an integration portal for software developers building fintech apps on the Pershing platform.

On Tuesday, Pershing announced new multi-custodial managed accounts that will allow wealth management firms to oversee their business across multiple custodians on a single dashboard with information about portfolio performance, account holdings, and asset allocations. Called Managed Accounts Central, the technology also gives firms the option to outsource their investment advice through Pershing affiliate Lockwood Advisors.

Pershing’s existing managed accounts technology is used by more than 11,000 advisors and houses 1.6 million accounts with over $730 billion in assets, according to the firm. The firm expects the overall managed accounts market to grow from $7.4 trillion in 2019 to $11.6 trillion in 2023, according to data from research firm Cerulli Associates.

“We’re looking at the independent RIA market, the hybrid RIA market. Those advisors, they have choice around where to custody their assets and their clients’ assets,” says Sarah Chain, director of global strategy and product management at Pershing. “And that’s why we really feel it’s important to be able to provide that consolidated hosting experience.”

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Integrations with third-party technology vendors will let advisors move from financial planning to creating a portfolio, calculating fees, providing billing services to generating a performance report without toggling between multiple platforms. Managed Accounts Central will also include investment research and the investment model marketplace Pershing plans to launch later in the year.

“And within that experience, we’ll be able to integrate multiple custodians,” Chain says. “So depending on the choice of custodians that the advisor offers, we would set up that experience to tie in those different custodians. It could be Charles Schwab, it could be TD, Fidelity. It could be others.”

Managed Accounts Central is set to launch in the fourth quarter of 2021 for Pershing clients as well as firms that do not keep client assets with the custodian.

A good use case for the multi-custodial platform are financial companies that are self-clearing, says Ben Harrison, Pershing’s Wealth Solutions co-head.

“They may not need our clearing and custody solutions, but they do need our outsourcing capabilities to help them run their managed business more effectively and that’s where we play a role in that,” Harrison says.

It’s a natural progression from Pershing’s merging of its RIA and broker-dealer earlier this year, Harrison says. And in the past couple of decades, more RIAs, advisors and firms are becoming multi-custodial.

“So there’s two strategies that you can take: one strategy is you can be closed architecture and highly proprietary and only focus on what’s in your box,” he says. “We chose to take a different route, which is to acknowledge the fact that the marketplace is open, that we’re in an environment where investors and advisors have choice. We’re going to lean into that and provide a solution that allows you to be open, but also gives you a considerable advantage to achieve scale and operating leverage.”

The firm is also looking to make it easier for software developers to access Pershing’s custody platform when building new technology. A new portal, NetXServices, lets engineers at both fintech startups and large wealth management firms tap into capabilities such as Pershing’s digital account opening, real-time trading, and portfolio holdings and balances.

NetXServices offers newer ways to build digital integrations as well as traditional APIs and case studies to show wealth management executives what’s available, says Kit Lee, Pershing’s director of technology and head of integration. Demand for integrations have increased three-fold over the past year, she says.

Beyond helping firms develop fintech apps, Pershing hopes NetXServices makes BNY Mellon a more attractive destination for fintech startups, says chief information officer Ram Nagappan. Fintechs have traditionally developed using smaller, digitally native custody and clearing services like Apex Clearing and DriveWealth, but a firm like Pershing can help them mature beyond a startup, Nagappan says.

“Every startup is not going to be small forever, they are going to grow. They want to grow,” Nagappan says, adding that NetXServices signals a larger culture shift for the custodian. “Maybe 10 years ago, [Pershing was] only going after the big companies. That is not true anymore. Anyone can come in and be innovative.”

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