Custodian out to keep assets from straying by offering more vendor choices. Clearing and custody firm Pershing has expanded its separately managed account (SMA) program for introducing broker-dealers to include investment-products from four additional third-party providers. The move comes about a year after Pershing introduced a similarly expanded program for RIAs.

The new "Managed Account Network" program gives brokers who operate from brokerages that clear through Pershing access to investment products and services from FundQuest, Envestnet Asset Management, Morningstar Investment Services and Tercet Capital in addition to Pershing's subsidiary Lockwood Advisors, which was previously available to them.

More open

"Investment professionals are increasingly looking for flexible managed account services to fulfill their clients' needs," says Ron Fiske, Pershing's head of product development. "The open architecture of Managed Account Network will enable our introducing broker-dealer customers to work closely with some of the finest turnkey asset-management program providers in support of their strategic business objectives."

The phrase "open architecture" is often applied to investment platforms that combine proprietary and non-proprietary investment products. Others call that "enhanced" or "hybrid" architecture, however, and save "open architecture" for firms with no proprietary offerings at all.

Early in June 2006 Pershing's RIA custody business Pershing Advisor Solutions launched "Managed Account Direct" featuring SMAs from Lockwood, Envestnet, AssetMark Investment Services and overlay manager PlaceMark Investments.

Alois Pirker, a senior analyst with Boston-based business consultancy Aite Group, says Pershing's move to broaden brokers' choices for SMAs -- at the expense of its proprietary Lockwood platform -- shows that the clearing firm is keen to retain the trust of brokers-dealers and brokers alike.

"With this product launch, Pershing acknowledges that it is unrealistic to believe that introducing brokers will book all their business on a single in-house platform, says Pirker."[This] allows them to follow a true open-architecture approach."

Pershing says it has about $50 billion in SMA assets under administration: $20 billion with Lockwood, $9 billion through its RIA-oriented Managed Account Direct program and another $21 billion or so on SMA platforms selected by the broker dealers themselves.

Jersey City, N.J.-based Pershing is a subsidiary of the Bank of New York. -FWR

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