Pershing and Fidelity making it easier for advisers to use model portfolios

Custodians introduce technology to help advisers outsource investment management to third parties

Oct 14, 2019 @ 2:14 pm

By Ryan W. Neal

Custodians are introducing new technology to make it easier for financial advisers to use model investment portfolios with clients.

BNY Mellon Pershing announced on Monday a new digital portal for managing and delivering model portfolios, while Fidelity Clearing and Custody Solutions is bringing customizable models to Fidelity AMP, its adviser-facing digital advice platform.

[More: Enhancing financial advice with model portfolios]

Financial advisers are increasingly outsourcing portfolio management by selecting third-party model portfolios. Assets under management for model portfolios has grown 19% a year since 2016 to nearly $3 trillion, according to a new study by Broadridge Financial Solutions.

"Demand for model portfolios continues to rise, as advisers increasingly look to scale their business and focus on delivering added value to clients," said Sarah Chain, director of global strategy and product management at Pershing, in a statement. "One of the primary pain points for investment managers is the time they spend replicating models for different clients."

Pershing's Manager Gateway is the successor to its Manager Workstation and includes an updated user interface to improve an investment manager's day-to-day workflows. The tool provides access to account details, billing, transactions and performance reports, and includes a workflow that will make it easier for advisers to build and maintain models, Ms. Chain said.

"Manager Gateway simplifies the client service experience so that model providers only need to enter models once before they're automatically routed to investment professionals," she said.

[More: New sources for data on model portfolios could help increase adviser adoption]

Pershing plans to phase in the new model workflow in the fourth quarter of 2019 and expects to complete the migration by the middle of next year.

Fidelity's update to AMP allows advisers to create investment models tailored to an individual investor's risk tolerance and defined asset allocations.

Like Betterment's recent update to its white label robo-adviser, the idea is to give advisers more control over the portfolios that are managed automatically.

"Digital advice solutions help advisers meet investors' varied, evolving needs, and Fidelity AMP hits the balance of digital and human elements that advisers have said they're looking for — allowing them to collaborate with investors on financial planning and evolve alongside those clients," said Gary Gallagher, Fidelity Institutional head of investment and managed solutions, in a statement.

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