BNY Mellon’s plan to provide private banking services to RIAs is meeting with a decidedly mixed reaction.

The banking giant announced this week that its Pershing Advisor Solutions group and its private banking unit will team up to give advisors access to credit, lending and other banking services.

Advisors are greeting the news with caution.

“It can be a good thing if it’s easier for a client to get a mortgage or a loan,” said Sheryl Rowling, chief executive and founder of Rowling Associates, a San Diego RIA. “But it can also be the opposite. The advisor takes a risk if the client is turned down and disappointed. The decision can taint the advisor negatively.”

Former NAPFA chair Tom Orecchio, a principal at Modera Wealth Management in Westwood, N.J., shared Rowling’s concern about the possibility of disappointed clients. What’s more, Charles Schwab and other custodians such as TD Ameritrade and Fidelity also provide banking services to advisors, Orecchio said.

“You can end up having too much of your client’s assets tied up with just one financial provider,” he said. “If one of them has a problem, you can get stuck because all your eggs in one basket. And just because using a custodian is convenient for the advisor doesn’t mean it’s the right answer. We work with a variety of banks to give our clients the best choice. Advisors have a fiduciary responsibility to help clients find the best solution.”

Advisors are also skeptical of cross-selling, said industry consultant Tim Welsh, president of Larkspur, Calif.-based Nexus Strategy.

Welsh pointed to a recent story in The Wall Street Journal that reported “resistance in the ranks” at Merrill Lynch to cross-selling efforts by parent company Bank of America, citing loan rejections and poorly handled mortgage re-financing.

Welsh said he knew Merrill advisors who refuse to steer clients to the banks’ credit and loan services. “They see it as a big risk that’s not worth it,” he said.

Such concerns are overstated, maintained Dan Inveen, principal and director of research FAInsight, an industry consulting firm.

“Is there a risk for advisors if their client is rejected for BNY Mellon Private Banking loan? I don’t think so,” Inveen said. “You would have to believe that chances are higher for loan approval with Pershing than an external bank as Pershing will likely have a more complete picture of wealth and creditworthiness.”

Inveen believes the private banking offering can benefit advisors and clients as well as BNY Mellon. “Pershing expands its offerings for advisors and improves its attractiveness as a custody partner,” he declared. “The advisor gains efficiencies and potentially greater wallet share by connecting clients to more services without going outside of the Pershing umbrella. Similarly, advisors’ clients can enjoy the convenience of this service integration.”

RIAs will receive “operational efficiencies” by being able to access business development, relationship management, client service and technology from one provider, Pershing Advisor Solutions CEO Mark Tibergien maintained in a statement.

The private banking initiative will be headed by BNY Mellon managing director Bob LaRue, who previously worked at Morgan Stanley Private Bank and Merrill Lynch. He reports to Erin Gorman, managing director of national mortgage sales and New England private banking for BNY Mellon Private Banking.

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