Pershing announced it is adding NextCapital to a stable of digital solutions that it is providing custody for including Motif Investing and Personal Capital.
Unlike Schwab or Fidelity, however, Pershing will not be coming out with its own branded robo advice solution, says Ben Harrison, head of business development and relationship management at Pershing Advisor Solutions.
"We're in a rapidly evolving marketplace right now," Harrison says. "There are a myriad of tools and solutions that a variety of providers are bringing to the industry. It is an exciting time to be in this business and to be able to offer choice to clients."
The collaboration with Pershing follows the firm's strategy to power many of the name brands in financial services, says Rob Foregger, co-founder of NextCapital and formerly Personal Capital. The partnership, he adds, allows NextCapital to expand beyond the defined contribution market.
"We believe digital advice is going to be a giant market in the next decade, and who's going to win? The incumbents, with their large installed client bases, trusted brands, and sales and marketing teams," Foregger says.
"Most of these firms don’t have in-house digital advice capabilities, and we believe there is an opportunity to grow with these large financial services partners to drive digital advice into the market," he says.
The digital advice space continues to see large financial firms expanding their footprint. In addition to automated advice solutions from Vanguard, Schwab and Fidelity, asset managers including BlackRock and Invesco have made strategic robo advisor buys to develop institutional offerings.
"All of the industry understands that clients are moving digital,” says John Michel, CEO of CircleBlack, which offers its own account aggregation and wealth management platform.”And then the question is what is the right way to play, based on their business model?"
Foregger adds the industry had moved beyond the robo vs. human advisor debate. "How do you create the right human-computer partnership to digitally enable practices, either the multi-million firm or the boutique advisor? That's clearly the trend."
The open architecture approach adopted by Pershing to offer advisors multiple digital solutions could become more appealing, Michel says, especially for advisors with multiple provider relationships.
"For both clients and advisors, we see more choice and more transparency as the answer to the market," he says.
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