With so many firms offering technology products to advisors and brokers, the latest entry may not seem worthy of much attention.
But when the company that's putting forward the new system is
Wove offers in one package everything from a customer relationship management system — used to upload client data — to model investment portfolios, a trading system, a recordkeeping and accounting.
In an earnings call on Tuesday, BNY Mellon CEO Robin Vince boasted that Integrity — an insurance and financial services firm with more than half a million agents and advisors — has selected Wove as its wealth management platform.
An even bigger "get" has been Lincoln Investment.
This hybrid brokerage and advisory firm with roughly 1,000 planners and more than $46 billion under management already used Pershing to custody much of its client assets. But it still was "self-clearing" trades made for schoolteachers' and nonprofit workers' 403(b) retirement accounts.
"Clearing" refers to the various behind-the-scenes steps that firms must take to complete securities deals and other transactions between buyers and sellers. With all of that business now coming to Pershing, Jim Crowley — the global head of Pershing at BNY Mellon — thinks the Wove system will have a chance to show what it really can do.
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"Given all of the complexities, given all of the changes that are happening in the marketplace, and the pressures in the marketplace around regulation, technology, etc., [Lincoln] felt as if it was the right time to sort of simplify their operating platform and to migrate that business to a single platform," Crowley said.
Crowley said Pershing now provides its services for roughly $2.4 trillion in assets and 7 million investors' accounts, soon to include all of those held by Lincoln Investment's 355,000 clients.
Crowley recently sat down with Financial Planning to discuss Wove, Lincoln Investment's decision to bring all its business over and larger trends in the custody business.
This interview has been edited for clarity and brevity.
Financial Planning: Bringing Lincoln on board sounds like a pretty big transfer of client assets. Do you expect any bumps along the way?
Jim Crowley: As part of our business, we do a large number of transitions. And if you look at our client base, they tend to be larger, more sophisticated financial services or wealth management organizations. So we understand complex, and we understand what it takes to transition clients.
Inevitably, when you do a transition of any size of scale, there are going to be surprises along the way, I wouldn't call them bumps. What happens inevitably is that when you go through a very thorough process, as we do, and you do what we call a mock conversion, or a rehearsal conversion, you find where those sorts of surprises are. And that's just part of the normal routine that, through the rehearsal, we find out where there are opportunities to make improvements. And so by the time it's time for the real show, all of those surprises have been eliminated.
FP: Given your long-standing relationship with Lincoln Investment, was it inevitable that they would choose you for their 403(b) retirement account business?
JC: So what they did over the last — call it eight to 10 months — was a very exhaustive evaluation process, which began with a request for proposal, which they sent out to several providers, including Pershing. And then there was a process to eliminate the other bidders and come to a final decision. And now we find ourselves in the privileged position to be in the planning process, to onboard that business that they've self-cleared.
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FP: How was Wove built?
JC: You sort of step back and think about, what's the technology stack that your unified business is going to run on?
We launched a new company two years ago called Pershing X. And we were building the strategy, doing a lot of that design work, meeting with advisors, meeting with people who run operations, to understand what the real problem was, what advisors and firms were looking for in terms of technology stack solutions. So that work took a year.
And then we put our fingers on keyboards, and we worked for a year through a very iterative process. And then we built a platform. And we partnered with Salesforce, we partnered with Snowflake, we partnered with Conquest [Technologies] to bring cloud technology to the process, to bring data management expertise to the process, to bring financial planning expertise to the process.
So that was a year, and it's not done yet. We're going to continue to invest as we go out into the future here.
FP: What bigger trends does this deal point to in the asset custody business?
JC: I've been in the business for decades, and the complexity that exists in the marketplace right now has never been greater. And the likelihood that it's going to become even more complex is even higher.
So the way that we talk about it here is simplifying complex technologies. Just one area is operating systems, in terms of policies, procedures, how many different custodial relationships I have and how many third-party marketing model management platforms I support.
It's really, really complex for people to keep track of that and operate it all and not have a whole bunch of manual processes and errors as a result. So this notion of simplifying the complex is something that we believe is right in our wheelhouse. It is something that we believe that we can deliver to the marketplace at scale better than anyone else.
And it leads to what we think is the second really important thing, which is creating scale and productivity. Lots of midsize advisory firms would say they get stopped in terms of how much they can grow because of the complexity of their operating platform. So we simplify the operating platform. And now we put them in position so they can become more productive: Spend more time with clients, less time in the swivel chair inputting data into different applications and hoping that it all syncs up. And so this notion of increasing advisor productivity by solving the swivel chair problem, and the idea of scaling their platform by simplifying the complex is our mindset going forward. Because there is enough of all of that in the marketplace that we think the opportunity is tremendous.
