All eyes are on Pershing LLC's new technology platform to see whether it will fulfill its promise to offer advisers full integration with third-party technology vendors.
Called NetX360, the platform consolidates into a unified offering Pershing's NetExchange Pro for commission-based firms and NetExchange Advisor for fee-based advisory practices, as well as a managed-account offering and Pershing Prime Services.
NetX360 provides advisers features such as a household view of accounts, the ability to monitor compliance better and, eventually, access to offerings from more than 50 other vendors.
“This looks like a pretty compelling start — especially if [Pershing] can follow through and deliver on the promise of all these third-party applications,” said Sean Cunniff, research director in the brokerage and wealth management practices at The Tower Group Inc. of Needham, Mass.
The first clearing and custody firm that can connect customer relationship management applications, account aggregation,
portfolio management and performance-reporting tools is going to have an extremely appealing offering, he said.
Another analyst praised Pershing for attempting to build a more open environment than WealthCentral, the platform launched by Fidelity Institutional Wealth Services of Boston last year.
“That flexibility — if Pershing can carry it off — is a good thing,” said Alois Pirker, a senior analyst with Aite Group LLC of Boston. Broker-dealers and advisers are “craving integration.”
However, the industry has not been able to offer dozens of vendor choices on one platform and provide, for instance, the ability to group accounts by households, he said.
The project took two years to complete and required hundreds of technologists. “We've had 500 of our 2,000 technology associates focused exclusively on this project,” said Suresh Kumar, chief information officer of Pershing in Jersey City, N.J. He declined to provide the development costs.
Five hundred advisers participated in the beta test of NetX360.
BREAKAWAY BROKERS
Beyond efforts to transfer its 100,000 users and 5 million accounts to the updated platform, Pershing expects NetX360 to attract wirehouse brokers to the firm.
An estimated 7,500 to 9,000 such brokers with $500 billion to $800 billion in combined assets would consider “leaving for venues that are more independent,” according to “The Who, Why, Where and How of Breakaway Brokers,” a report released last month by TowerGroup.
That report was written by Mr. Cunniff.
Through the new platform, advisers have access to an upgraded interface that relies on “tabs” in the same way that web browsers such as Internet Explorer and Firefox do. By using those tabs, advisers can have multiple accounts open at the same time.
In addition, advisers have more leeway to personalize the system's look and feel. A home page, for example, can be filled with the adviser's choice of dozens of dashboards — miniature interfaces that can be used to display anything from market indexes to stock quotes.
Also, users gain access to a “message center” that displays e-mails or platform-related announcements. Another enhancement allows advisers to group accounts by households, rather than dealing with individual accounts.
DOUBTS RAISED
At least one adviser doubts that Pershing can back up its promises.
“If they can get everything to work together on one platform, that would be phenomenal,” said Ralph G. Adamo, president and chief executive of Integrity Wealth Management, a Newport Beach, Calif., firm that manages $212 million.
“My anticipation is that it will fall flat on its face. But if they fool us and do something that no one has pulled off before, I can tell you that there would definitely be a rush to that platform.”
Despite the doubts, better integration between the operational side of separately managed ac-counts and the platform will be warmly received.
“What we want from Pershing is to very easily see client accounts, so that is a big draw for us,” said Ben Valore-Caplan, a principal with Syntrinsic Investment Counsel LLC in Denver, which plans to be live on the system next month. “The main thing we've been asking for is for them to make it more intuitive, user-friendly and attractive.”
Previously, Syntrinsic was forced to license allocation tools, performance reporting and CRM from vendors, but the firm will consider switching to the new platform if it is good, Mr. Valore-Caplan said.
The lack of new trading features on NetX360 means that WBI Investments will stay on Pershing's original system, said Gary Stroik, an adviser at the Little Silver N.J., firm, which manages $270 million in assets.
New trading functions are planned for September, said a spokesman for Pershing.
TD UPGRADING VEO
For its part, TD Ameritrade Institutional is completing the rollout of Veo, a revamped adviser desktop, which will be completed by the end of the month, though 3,500 advisers are already on board with the technology, said Jon Patullo, director of technology platform management for the Jersey City-based custodian. It spent a total of $150 million on technology in 2008.
Pershing's latest efforts are just the latest example of a firm trying to gain an edge, according to a clearing industry veteran, who asked not to be identified.
“Pershing and National Financial Services [LLC, Fidelity's clearing arm,] have pretty much grown in a parallel way ... It's just like what Fidelity did with Streetscape — the one who offers the most complementary system wins. When Street-scape came out, Pershing wasn't on the desktop enough. [NetX360] is shouting loudly, "We're ahead of you!'”
A spokesman for Fidelity declined to comment on the platform.
E-mail Davis D. Janowski at [email protected].
