BNY Mellon’s Pershing has become the clearinghouse to acquire a direct indexing technology company, following similar deals made by competing financial services firms like Charles Schwab & Co., BlackRock Inc. and Vanguard Group Inc. earlier this year.
The deal for San Jose, California-based fintech Optimal Asset Management meets a growing client need for greater investment customization, according to BNY Mellon. The technology allows clients to select individual equities in an index, including options to tailor their portfolios for sustainable investments.
“The acquisition of Optimal Asset Management is the latest step in our Pershing X buildout, which aims to fuel growth by helping clients solve the challenge of managing multiple and disconnected technology tools and data sets,” Jim Crowley, Pershing’s CEO, said in a statement.
Pershing X is a recently launched business unit designed specifically to cater to the advisory industry.
“As part of our continued efforts to provide clients with innovative offerings, we’re delighted to now be able to offer Optimal Asset Management’s direct indexing capabilities to our advisory clients within Pershing, as well as to our institutional and retail clients within BNY Mellon’s Investment Management business,” Crowley added.
Terms of the deal were not disclosed.
Direct indexing allows investors to trade weighted baskets of stocks usually built around environmental, social and governance principles and lets them invest in companies that are judged by the client to promote social good.
The strategy currently represents about 22% of the separately managed accounts industry’s total assets, and the growth potential is explosive, according to recent data from Cerulli. The research shows direct indexing currently represents more than $362 billion, but the projected five-year growth rate is 12.4%, ahead of ETFs at 11.3%, SMAs at 9.6%, and mutual funds at 3.3%.
In July, Vanguard acquired the Oakland, California-based platform Just Invest with $1 billion in managed assets, and in May, Charles Schwab & Co. purchased the recently shuttered robo-adviser Motif.
Pershing plans to launch the capabilities through Pershing X, as well as to institutional and retail clients within BNY Mellon's Investment Management business, Crowley said.
Even clients with high investment knowledge can make risky portfolio decisions. Advisors can provide a much-needed reality check.
Newbridge Securities failed to supervise advisors using margin in clients’ accounts, according to Finra.
With plans to retire, the outgoing president of the Texas-based IBD giant will be replaced by the giant RIA's current head of wealth management this spring.
The VIX, or so called "fear index," is shifting higher with increased market volatility, causing wealth managers to ready themselves for anxious client calls.
Canadian bank's capital markets arm reportedly failed to detect representatives' misleading disclosures involving $3 billion of mortgage-backed "sliver bonds" sold over a multi-year period.
AssetMark Group CEO explains why the great wealth transfer, succession planning, and personalization will be key for advisors in the new year.
A trust delivery model not only increases the value of an advisor and a firm but is also a natural addition to any firm’s succession plan.
