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February 25, 2021

BNY Mellon’s Pershing Advisor Solutions have received a lot of new energy by marketing themselves to small registered investment advisors who are open to changing their custody relationships after TD Ameritrade sold Charles Schwab Corp. last year. Pershing’s new RIA depot manager said in an interview.

Pershing prepared for the late 2019 event by lowering the minimum asset requirements for RIA customers from $ 250 million to $ 100 million. The small RIA market was an integral part of TD Ameritrade’s business and many of these consultants were concerned that they could lose service priorities within the larger Schwab business.

In an effort to reassure TD’s RIA customers, Schwab hired the detached architect of TD’s small business strategy to demonstrate his commitment to the sector. However, Pershing said that integration problems and his own marketing skills have borne fruit.

“There is a tremendous amount of volume and volatility in the marketplace, which weighs on service and other areas. We believe we are really well positioned to take advantage of it,” said Ben Harrison, who has been Head of Pershing Advisor Solutions last march. “We have absolutely seen a significant increase in the valuation of options by companies and we have a very healthy and robust pipeline for the RIA core market.”

Pershing’s RIA customer assets exceeded $ 900 billion by the end of 2020, up from around $ 800 billion in late 2019. “In the midst of a pandemic, we’re really, really feeling good about it,” said Harrison.

A Pershing spokeswoman said that approximately 25% of the custodian’s new advisor clients in 2020 came from RIA practices that were below the $ 250 million asset level, including existing RIAs and former brokers migrating to the RIA business model.

Pershing served 726 RIAs valued at more than $ 800 million when Harrison took over the management of the business last year from Mark Tibergien, his longtime director of custody. That is way behind industry leaders Schwab, Fidelity Investments and former TD Ameritrade, and the Pershing spokeswoman declined to provide an updated number of her RIA clients.

Tim Welsh, a former RAB official from Schwab who runs the consulting firm Nexus Strategy, said he had no doubt Pershing and other custodians were turning to hay because of service issues that Schwab recognized in the early days of TD Ameritrade’s integration do.

“Consultants will forgive a lot of mistakes, but if they have to wait to get in touch with you, that’s a deal breaker,” he said.

For their part, Schwab officials underline their commitment to small RIAs. The discount brokerage pioneer currently serves 4,500 RIA clients with assets of less than $ 100 million. Most of the assets are held solely with Schwab and not with multiple custodians, Bernie Clark, head of Schwab Advisory Services, said at the company’s “Winter Update” conference for analysts month.

Harrison says Pershing is benefiting from the desire of even small consultants to work with multiple custodians, as well as industry consolidation. He said increasing Pershing’s addressable market by expanding its minimum investments means more “at-bats” with small RIAs.

Mike McNitt, a former BMO Harris Bank broker who started Highview Capital Management as a Pershing-backed RIA in Northbrook, IL, in March 2020, agrees. He and his two partners did their first due diligence with Schwab, Legacy TD Ameritrade and Fidelity, preferring TD Ameritrade before considering Pershing “late in the game”. They felt their clients would be more comfortable with the Bank of New York name and were also concerned that they would have to reorganize accounts after taking over Schwab.

“They are really hands off, and I mean that on a positive note,” said McNitt, noting that Pershing has stopped promoting proprietary banking products. “When we need them, they are ready to go, but they let us run our business the way we want.”