BNY Mellon Pershing has a new business unit that aims to be one part turnkey asset management platform and one part technology incubator.
Called Pershing X, the unit’s aim is to accelerate the development of a single suite to provide RIAs, broker-dealers and trust companies with everything they need, from software like client relationship management (CRM), financial planning and trading, to investment products and model portfolios. Pershing X will eventually feature multi-custodial support and will be available to advisors who do not custody assets with Pershing, said CEO Jim Crowley.
Ainslie Simmons, a 20-year veteran of the industry who most recently served as executive vice president at PIMCO, will lead Pershing X as president and will join Pershing’s executive committee.
The custodian sees an opportunity to support advisory firms who want to customize the technology and investment experiences they offer clients while reducing the challenges of managing disparate technologies and datasets, Crowley said.
“We’ll be able to be, for lack of a better word, more modular, but at the same time not make it the burden of the [advisor] to figure out how to make it all work,” Crowley said.
The TAMP market continues to grow as advisors increasingly look to outsource technology and investment management. TAMPS had $14 trillion in assets under management and administration in 2020, up from just $2.3 trillion 10 years ago, according to data from Tiburon Strategic Advisors. The analysts predict the market will surpass $16 trillion in 2025.
“The industry is heading in this direction — ‘streamlined,’ end-to-end platforms that offer bundled or modular solutions based on client needs,” Jean Sullivan, head of wealth management at research firm Celent, said in an email. “Pershing’s focus is spot on in terms of leveraging current industry trends.”
BNY Mellon has an existing managed accounts business that Pershing X will expand, but the business will be more than a TAMP, Crowley said. Lending, insurance, banking solutions and BNY Mellon’s own proprietary investment products are all on the roadmap, or firms can simply use the technology and provide their own investments.
Envesnet, one of the TAMP market leaders, has also been adding to the financial products it can offer advisors. It added insurance products in 2019 and has since expanded into lending and trust services.
By offering the functionality embedded into the custodian core technology rather than having to go to a third party, Pershing X can be more efficient than TAMPs, Crowley said. While he wouldn’t give specifics on pricing, Pershing X could potentially be more affordable than a third-party TAMP as well.
Pershing isn’t the only custodian looking to package together better technology, investment management and support for third-party vendors. In November 2020, Fidelity launched its Managed Account Xchange, or FMAX, to offer a deep integration between its custodian and clearing infrastructure, eMoney’s financial planning software and third-party investment products and strategies.
Fidelity declined to comment.
“This is a critical initiative for the industry, and firms are racing to create similar solutions,” Sullivan said.
However, Pershing X’s plan for multi-custodial support could make it a unique proposition in the industry.
“We have a real desire to build a community, an affinity with advisors,” Crowley said. “We don’t have to be the custody for every account that you open, but we do want to solve the big problems that you have. We want to earn the opportunity to get that next dollar when that new account comes along.”
However, Pershing announced a multi-custodial oversight tool in June at the firm’s annual INSITE conference but is delaying the launch until 2022, according to WealthManagement.com. The general release of a new digital onboarding and re-papering tool is also being pushed back. Launching Pershing X, which was conceived as part of Pershing’s initiative to realign the business around Wealth Solutions and Institutional Solutions to better focus on the client experience, is expected to help with delays.