BNY Pershing, the giant clearing and custody firm, is gingerly introducing new fees based on assets to its registered investment advisor clients, including a charge on customers’ cash held in accounts of RIAs, according to industry sources.
Executives stressed that Pershing is being selective and does not have a one-sized fits all fee schedule for clients, and that the firm is making the fee increases to RIAs on a case-by-case basis.
“This will be discussed when the new contracts come up,” said one executive who spoke privately to InvestmentNews about the matter. “But eventually the fee increase is supposed to hit everyone. They don’t want to ruffle any feathers regarding select clients.”
Fee increases to RIAs or broker-dealers from service providers like Pershing are tricky because firms don’t want to alienate clients. At the beginning of the month, Pershing also introduced a series of technology improvements for client firms, which can be costly.
According to industry news websites, the new fee will be based on RIAs’ assets.
RIAs will be charged five basis points for all assets below $500 million and then decreased from there, according to reporting from CityWire.
Firms with assets from $3 billion to just below $5 billion will be charged four basis points, with fees dropping sharply from there.
“We have several different pricing models configured for our clients, including clients that already have asset-based pricing,” a Pershing spokesperson wrote in an email to InvestmentNews. “We are doing some fundamental adjustments to simplify and streamline our pricing.”
Pershing is the leading firm for clearing services to broker-dealers, but that market has diminished steadily since the 2008 credit crisis. Large enterprises, particularly LPL Financial Holdings, are buying broker-dealers that formerly used Pershing to clear trades and put their financial advisors on their own platforms.
Meanwhile, Pershing’s custody business, which counts clients such as Sanctuary Advisors, has been fighting against the two largest players, the Charles Schwab Corp. and Fidelity Investments, respectively, for a bigger share of customers’ RIA assets.
A subsidiary of The Bank of New York Mellon Corp., BNY Pershing provides trading and clearing services to and works with some of the largest independent broker-dealers in the industry, including Osaic and Cetera Financial Group.
“Pershing is trying to do some ambitious things, particularly in technology, but it’s lost a lot of broker-dealer clients to LPL,” said one another senior industry executive, also speaking privately about the changes at the clearing and custody firm.
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