Over the last eight years, Pershing has grown its fiduciary assets under custody from a modest $53 billion in 2010 to $615 billion today. This startling growth has been propelled by a number of factors, including the decision of a number of broker-dealers to convert their businesses into the RIA model.
Pershing executives noted that in recent years about 15 B-Ds had converted their businesses to a fiduciary-only format on the Pershing platform. Moreover, that trend appears to be accelerating as 20 more conversions of Pershing firms are also in the works, they said.
Pershing's $615 billion in fiduciary assets, which include assets held at the hybrid RIA arm of many B-D clients, now account for more than one-third of the clearing and custodian firm's total assets. Pershing serves about 800 B-Ds and 750 RIAs.
Pershing Advisor Solutions CEO Mark Tibergien noted there are several factors behind the expansion. Pershing entered the RIA custodial market after Schwab, Fidelity and TD Ameritrade Institutional had already established major positions in the marketplace, so the Jersey City-based firm looked for niches.
It found a huge market among RIAs serving the emerging wealth market—the millions of Americans whose net worth was surpassing the $5 million level, generally seen as the upper limit of the mass affluent but just below the high-net-worth space served by Pershing's parent, BNY Mellon.
Today, the average RIA firm affiliated with Pershing has about $800 million in assets and a clientele with an average household wealth of $5 million.
Bringing some of BNY Mellon's services to these individuals proved a winning formula. BNY Mellon is the world's largest custodian.
Pershing is also capitalizing on changing dynamics in the advisory and brokerage worlds. Last month, it added a newly created RIA firm, Peter Raimondi's Dakota Wealth Management, which launched with $600 million in assets. Four years ago, Raimondi sold his previous firm, Banyan Partners, to Boston Private for $60 million.
Pershing's clearing business is also adding new clients. Earlier this year, one of LPL Financial's largest super OSJs, Independent Financial Partners (IFP), decided to strike out on its own and form its own hybrid B-D/RIA.
IFP's own experience illustrates the migration of B-D assets to the fiduciary space. Its 530 advisors and brokers have $10 billion in discretionary assets, $42 billion in 401(k) and profit-sharing plans and $6 billion in brokerage assets. About 160 of its advisors focus primarily on retirement plans. CEO Bill Hamm says the firm, launched in April, is in the process of building an enhanced platform to grow that business.