"They need to gather the assets, just like the broker-dealers," Bienfang says of clearing firms. "The correspondent clearing firms really gather assets to make money and compete on service levels, not so much on price."

For advisors, that means an assessment of a clearing firm's staying power may be an important ingredient when choosing a service provider. But even the best assessment may be guesswork. Bienfang notes that before it was acquired by Bank of New York, Pershing was probably considered more of a potential buyer than a takeover target.

"That's an inherent risk, no matter what," he says.

This means the clients of merged clearing firms can count on some teething pains as organizations meld into one another, he says. "You've got a lot of correspondent clearing firms thrust into new relationships, new platforms and into what is in effect a conversion," Bienfang says. "Any time you take away systems and processes that a rep has become familiar with and has established his or her business around, it presents a challenge."

At least one client says the deal was a positive development. Peter Mangan, CEO of Shareholder Services Group-a custodial firm for independent advisors that launched in June-says the merger will result in more services for his clients. Coincidentally, Shareholder Services was considering both The Bank of New York and Pershing for its clearing services as it was preparing for launch, he says. The merger, however, made the decision to use Pershing's services much easier, he adds.

"What it does for us is it provides us with a broader range of products and services," Mangan says.

He says, for example, that Pershing has a much broader selection of features and products in the mutual fund area. The Bank of New York, meanwhile, is stronger in areas such as American Depository Receipts.Those involved in the mergers say their clients shouldn't confront any significant disruptions and claim that, in the long run, the mergers will lead to expanded services. At Pershing, which now has more than 1,100 clients as a result of its merger with Bank of New York, some of the services the deal will bring to its platform are mortgage and trust services, says Jim Crowley, Pershing's managing director. The deal could also open access to the managed account products of Lockwood Financial Advisors, which was also recently acquired by Bank of New York.

"Bank of New York was building a substantial clearing firm both domestically and globally, and they were doing that through a series of acquisitions they started five to six years ago," he says.

Under the deal, Bank of New York's more than 200 domestic clearing clients will be converted to the Pershing platform by October 1, Crowley says. Conversion of the bank's global clearing business onto the platform is likely to follow, he adds. "There are many, many synergies between the organizations."

Crowley feels the price tag required to compete in the clearing services industry, underscored by new federal laws that place greater demands on firms in terms of compliance, will fuel further consolidation in the industry.