TD Ameritrade Institutional is known for its open-architecture approach to advisor technology, while Fidelity has taken a more in-house, closed ecosystem strategy. Now Pershing is taking an approach somewhere in the middle.
Pershing announced Wednesday that three more automated digital advice platforms – Jemstep, SigFig and Vanare – are joining Marstone on its NetX360 platform as robo advice options for advisors. Jim Crowley, Pershing’s chief relationship officer, said the deals represent the “intelligent open architecture” approach the firm is taking to empower its advisors with digital technology.
“We’re not going to integrate with every solution on the street,” Crowley said. “We’ll integrate in an intelligent fashion with providers we believe are suitable in many different ways.”
But for a company that custodies and clears for such a wide-ranging variety of financial institutions, building everything in-house didn’t make sense either. Crowley said Pershing has learned through its history that the many differing business models, economics, strategies and personal preferences among advisors require multiple tools.
SigFig co-founder and CEO Mike Sha said his company would focus mostly on the largest institutions that work with Pershing, like banks. Jemstep and Vanare both said they will work to provide custom-built digital platforms that incorporates the advisor's own investment strategies, technology and workflows.
All of the technology will be available through Pershing’s NetX360 platform.
Vanare founder and CEO Rich Cancro said he thinks Pershing’s approach is ideal for both advisors and their clients, as it gives FAs freedom to pick a tool that works best for their firm while also keeping everything tightly integrated.
“[It is] much more scalable; much easier to use,” Cancro said. “But it’s also important to integrate with the best in breed so firms and advisors have choice. Choice is really important.”
Sha agreed, adding that financial institutions don’t have the best track record when it comes to building technology internally.
“Even if they were to build something, they would never really be able to have a solution that fits everything,” Sha said, referring to the wide variety of firms Pershing serves. “They can go out and hand curate the leaders and get the best in breed solutions.
“This is all that we do,” Sha added. “Not just [build] the best solution tomorrow, but hopefully the best solution in two years, five years and 10 years.”
Already in 2016, Pershing has invested heavily into its technology offering for advisors. In February, Pershing added NextCapital to the NetX360 platform and introduced new insights drawn from big data. In March, Pershing integrated Envestnet Tamarac's Advisor Xi technology suite.
"[Pershing] embarked on a digital enablement strategy for more than a year," Crowley said. "It's about the digitization of the business... capture data, digitize it and call it back to use it in an easy-to-use way."
