#ItzOnWealthTech Ep 23: How to Turn Competitors into Frenemies And Help Clients Succeed with Christina Townsend

“The days of reading a user manual are gone. There isn’t even time to watch a YouTube video. You have to find alternative ways to get people to use your technology.”

— Christina Townsend, BNY Mellon | Pershing

Christina Townsend is Head of Platform Strategy at BNY Mellon | Pershing Advisor Solutions. Her team works to develop, implement and support strategies, solutions and platforms for wealth managers, RIAs, multi-family offices and trust companies. She also is responsible for relationships with consultants and vendors supporting these market segments.

Prior to her current role, Christina led the Managed Investments product and transition teams and served on the Managed Investments Executive Committee. She also oversaw the product strategy, roadmap and implementation of clients’ managed account solutions.  Christina serves as the North America co-chair of BNY Mellon’s Women’s Initiative Network and on the BNY Mellon WIN Operating Committee.

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This episode of Wealth Management Today is brought to you by Ezra Group Consulting. If your firm is evaluating new technology or looking to improve your current wealth platform, you need to contact Ezra Group. Don’t spend another day using technology that doesn’t offer an elegant user experience. Your advisors and clients deserve better and you can deliver it to them with the help of Ezra Group.

Topics Covered in this Episode

  • What Christina is doing now as Head of Advisor Platform Strategy [03:54]
  • What Pershing is doing to enhance the options RIAs have for custody [05:57]
  • The controversy around B2B only and Pershing’s emphasis on their position [09:42]
  • How Pershing helps broker-dealers and other firms understand what the requirements are for picking a custodian [11:33]
  • How Christina sees technology offerings as becoming a table stakes part of the custody business [13:35]
  • Discussion around how Pershing decides which new companies to integrate with, or how they are going to expand their current integrations [17:52]
  • Pershing’s new integration portal, and how it’s going to help clients and third-party vendors with integrating either in or around NetX [20:58]
  • The best practices Christina is currently recommending to Pershing’s clients to encourage the adoption of new technology [24:51]
  • What Pershing means when they say advisor-led experiences, and how they are helping advisors to create them [33:44]
  • Discussing how Pershing works with other firms and vendors to make various types of workflows seamless [39:10]
  • What Pershing saw about the digital account opening process years ago that other vendors didn’t see [42:03]
  • How Pershing navigates competing with firms that they are also cooperating and working with [46:26]
  • How Pershing is leveraging big data to help advisors [49:07]

Companies & People Mentioned:

Other Resources

If you are interested in more information about some of the topics Christina and I discussed, these blog posts would be useful:

wealth management consulting

Complete Episode Transcript:

Craig: Thank you for joining me on the Wealth Management Today podcast. I’m here with my guest, Christina Townsend, Head of Advisory Platform Strategy at BNY Mellon’s Pershing. Hey Christina.

Christina: Hi Craig, thanks for having me.

Craig: I’m so happy to have you here. We’ve been trying to coordinate this for a long time, so I’m glad our schedules finally aligned.

Christina: Me too!

Craig: And you’re so busy, you are running around like crazy doing a lot more speaking. I’ve been catching you at all my favorite conferences.

Christina: Yes, it’s been a pleasure. 20 years with the company and definitely on the speaking route now. And it’s summertime, so also trying to get a little vacation in.

Craig: Well, if you can build your vacation around our conference travel, then it’s all good.

Christina: That’s right.

Craig: I’ve got so much to ask you about Christina. This is our first podcast conversation and we have known each other for a long time, I think 11-12 years since I first started at Pershing as a consultant. And you’ve been there longer. So we’ve been through the industry together for quite some time.

Christina: That’s right. I’m thrilled that you have a podcast now!

Craig: So am I! And your role has been changing, I’m happy to see that Pershing has been moving you up the ranks, which is fantastic. So what are you doing now as Head of Advisor Platform Strategy?

Christina: It’s quite a title, but let me break it down in terms of the team and responsibilities I have. I’m specifically focused right now on our RIA custody business has, as you know we service a large variety of different types of clients here at BNY Mellon’s Pershing. So right now my focus is on the resident investment advisor channel, and my team and I are focused on a few things. One is the strategy for the business – how do we continue the growth and the great growth that we’ve seen? Our focus is on both technology and more traditional product offerings. I recently built out a team of technology consultants, my team has ownership for a lot of the relationships with the third-party technology providers that our clients use, and we’re focused on what products our clients need to grow their businesses. So great opportunity, great team. As I said, I’ve been at the company for a long time. I’ve been in this role for about a year working for Mark Tibergien, and so far it’s been a wonderful ride.

Working for Mark Tibergien

Craig: Mark is an interesting guy. I don’t know him as well as I’d like, but we cross paths a lot. So what’s it like working for Mark?ria custodian services

Christina: Mark is an absolutely fabulous leader. I’ve known him for a long time, it’s a pleasure to be on his team; it’s a great group of individuals. He is focused on the growth of the business, but more importantly, encouraging his team to develop in their own right. So it feels great to have someone like that standing next to me.

Craig: Yeah, he’s been in the industry a long time and has a lot of great insights. I like reading his articles and hearing him speak; he seems to have a very strong grasp on where the RIA business is going. That leads me to the next question. So Bank of New York Mellon’s Pershing has been very strong in the broker-dealer custody, but lagging behind in RIA. So I’m glad to see that they’re investing and moving into the space more. I think it’s always great for RIAs to have more options in custody. So what is it that your group is doing to enhance that? (See The Indispensable Advisor by Joe Duran)

Christina: It was probably about 10 years ago that Mark joined the organization and we restarted our efforts around the RIA custody business. And as you mentioned there’s a number of great players in the space, so we’re focused on our optimal clients. We find great alignment with a number of RIAs that we’ve seen tremendous growth, as you said, in our advisory assets. We’re up over almost 700 billion in RIA assets at the firm, and we’re proud of that. When we talk about our business, it’s about understanding our optimal client. We’re focused on growth-oriented firms, RIAs who are focused on growing their firm and creating an enduring business. We are focused on firms who are professionally managed or those who want to have the management structure to create a firm that’s going to last a lifetime, or maybe more. We differentiate on a number of things, and we’ll get to talk a little bit about some of the things we’re doing in the technology arena, but we differentiate as a business to business provider; we don’t have a retail offering, so it’s about putting our client’s brand first and foremost. That’s number one.

Christina: The second thing is we’re (as you mentioned) part of the BNY Mellon enterprise, and that gives our clients a number of solutions that help them grow their business and meet the needs of their complex investors and clients. Global capabilities and private banking; there’s lots of things that come with our enterprises that we give to clients, and we’re focused on how our clients want to consume technology from us and how they want to create experiences. So that’s a big part of our investment. It’s been a wonderful ride and it’s an exciting time. You probably heard at our INSITE conference when we were out sweating in Arizona in June, that the enterprise has made a significant capital investment in specifically the wealth and advisory business. They see great growth, they see the same trends that we all see, and that’s allowing us to invest in a number of things, including human capital and people, client experience related initiatives, and a lot of technology. So it’s an exciting time.

A B2B Custodian

Craig: You mentioned the INSITE conference and I want to get to that, but before that you were talking about how your assets have grown up to 700 billion, which puts you right up there with all the other names in RIA custody. And you also mentioned you’re B2B only, and there has been some controversy with other custodians where they’re competing with their clients. There’s also been some back and forth with other custodians who we won’t name, whose customers have been a little pissed off that they have maybe gone back on that. So are you emphasizing that because of some competitors maybe not doing such a good job with that message?ria custodian services

Christina: I don’t think so. I raise it because it’s foundational to the way that we’ve had our business model for a long time. We respect our competitors, and to your point there’s a number of them who’ve been out there for you a long time; we have great respect for everything they do. I think everything that we focus on when it comes to solutions for our clients fundamentally are built in terms of delivering it to the advisory firm. Their clients are their clients to us; we only work with financial intermediaries, and always have. So it’s a part of who we are. And when we talk about some of the technology initiatives that we’re working on, they are advisor-led. Everything is built from the perspective of offering it to the advisory firm and then allowing them to determine the experience for their clients.

Craig: Indeed. There was so much going on at the INSITE conference, I wrote a long blog post about that (which people can find on WMToday.com). It was a lot of interesting stuff, I liked the breakout sessions. The one I was in was a with Piper Jaffray and talking about how they chose Pershing as their custody firm. As a consultant, I’m always helping companies make these kinds of decisions and understand the requirements. So how does Pershing help broker-dealers and other firms understand what the requirements are, in order to pick a custodian?

Christina: From a business development point of view, whether that’s new perspective clients, broker-dealers or investment advisors, or even existing clients who may want to expand their relationship with us if they’re acquiring a firm, we take a consultative approach. At the end of the day, you want both firms to be happy and to find a real, true partnership. So to your point about being a consultant, we like to think that we go through a thoughtful process to understand where they want to go, where their business is going, and what are the capabilities that we have today and the ones that we are investing in in the future, to hopefully find that perfect marriage. I think spending a lot of time on that up-front sales process that doesn’t go deep into requirements may leave both parties not totally fulfilled. So we spend a lot of time on that. And we’ve recently hired a number of different folks, including some technology consultants onto my team, because we understand that the landscape of clearing custody and the landscape of technology, there’s so many choices and options. The firms that we work with are just getting more and more complex, more sophisticated; there’s consolidation amongst firms, so they need to be thoughtful about selecting a partner. It’s about being detailed in the beginning, and then hopefully finding the ground with which you’ll work going forward.

Technology Consulting from Custodians

Craig: I always find it interesting how much custodians are getting into tech and how you’ve got your own technology consultants. How’s tech? I’ve seen it grow and grow, you think it’s your business is custody but you’re offering all of these tech services. So how do you see the technology offering as becoming a table stakes part of the custody business?ria custodian services

Christina: I was having a conversation the other day with a prospect, talking about how we would be having this conversation years ago. And I said, the way that our clients want to consume technology from a clearing custody provider has evolved. So let me explain how we think about this. At the forefront, we are a custodian and we’re responsible for the safety and security of the assets. However, we also use technology to deliver solutions. But the shift that we’ve seen, and since you and I met we’ve seen such a tremendous change, where there used to be clients of ours who would come to us and say, “We want whatever you have; whatever your technology is, it’s probably sufficient. There’s not a lot of choice out there, so just invest in making your platform, your proprietary offering, as great as it can be. And that’s sufficient.” And then a few things began to happen. We saw all of the fintechs coming into the space, and we saw more and more choice related to the traditional product and technology offering. So more CRMs, more planning, more reporting. (See 7 Mistakes to Avoid in a Request for Proposal (RFP) Process)

Christina: Then we started to see more firms wanting to invest in their own proprietary technology, coupled with every time I turn around, I see new capabilities that are powered by technology that I didn’t even know existed. Like the digital assistant on my phone, it connects to my CRM, right? There’s all these things that are happening. So we decided to take a step back and look at our clients and say, how do you want to consume technology or consume your clearing custody from us, and what type of experiences do you want to create? And what we found were three clear categories. We saw people that we refer to as adopters; these are clients who want to take what we have, they want to take it off the shelf and they want to use it, and that’s sufficient for them. And then we saw the emergence of the integrators; the integrators (typically the RIA firms fall into this category) want to look at different types of technology and they want to pick the best of breed providers, and the expectation of us as a custodian is to integrate with those providers.

Christina: And then the third, which is typically the larger firms or the firms who are just coming to market, is digitally-forward firms. They want to build their own technology; their own client portal, their own advisor workstation, and they expect us to integrate. The reason why this is important for us, aside from understanding our clients, is when we invest in technology we have to think about meeting these different needs. So a large part of what you heard about at INSITE was capabilities that we’re offering to the firms who want to use our technology, more digital experiences, advisor led experiences, and more straight-through processing automation. However, the second piece of our investment is an integration, and that is critical to meeting the needs of the second two segments. Integration so that we can integrate with third-party technology providers, and integration so we can integrate with our own client’s proprietary technology. So we’ve seen a dramatic shift, and honestly, we’ve changed. Four or five years ago, we were more focused on the proprietary offering. We have changed our tune and are much more focused on intelligent integration and focused on meaningful integrations for the types of clients that we serve.

Integration Partners

Craig: Integrations is something I do a lot of work with, especially with my larger broker-dealer clients. Obviously your clients are driving a lot of your integrations, and NetX has always been known for a strong group of integrations that are available on the NetX platform. So how do you decide which new companies you can integrate with, or how you’re going to expand your current integrations?ria custodian services

Christina: Well, there’s a process. It’s an art and it’s a science all at the same time. A highlighted list of why integration is important, one of the things that you heard at INSITE from the main stage, our CEO Jim Crowley talked about how for our RIA firms when we told them at our elite advisor summit we hold once a year, we asked them what’s your highest priority in terms of tech, and they answered integration amongst everything else. So it’s clear from a number of different angles why the investment there is so important. We are doing a number of things, and this leads to how we make decisions around integration partners. We are investing in the next generation of our API store; we had an API store and we are going to be launching the next generation of that API store, because we want to give both our clients and technology providers access to integrate with us. So that’s a big part of our investment. (See 16 Knockout Concepts from the InVest Conference 2019)

Christina: The other part of our investment is around technology assessments. You probably saw the press release at INSITE around technology assessments that we have available to our clients, where if they’re trying to select a CRM system or a planning tool, it asks them a set of questions to get them to think about how they’re going to select a provider. But to your question, obviously we can’t integrate with every single firm out there or at least integrate equally. And of course integration, we could have a whole two-hour podcast on the definition of integration, but it’s a generally understood term. I would say that what we are focused on is studying number one, who our clients use. So we know all of the technology that our clients are currently using across the standard value chain of CRM planning and reporting. So it’s looking at who our clients are using, number one. Number two is us out there studying for ourselves. A lot of the great players who’ve been around for some time, some of the new players, and determining where we think there’s going to be someone who would be great to work with.

Christina: And the third is, we’re studying the dynamics of our clients and their clients, and looking at trends to determine what is going to be the next space that we need to integrate into driven by those trends. Obviously planning is talked about at length; financial planning has been around for a long time, holistic wealth planning, goal-based planning as an example was a trend that everyone looked at and then said, either you have to have your own proprietary tools or you have to integrate in order to meet what you can foresee as the needs of your clients. So it’s a three-legged stool that we are always looking at as we’re determining our integration partners

Craig: At the conference it was announced that you’re launching an integration portal. How is that going to help clients and third-party vendors with integrating either in or around NetX?

Christina: The next generation of this API store or the integration portal was born out of two pieces. One was our clients wanting to give us feedback on how best they could integrate with us, and many of our great partners and third-party tech vendors giving us feedback. And some of the feedback was based on integration can be through API, it can be through data, files, it can be through components; there’s a lot of ways you can integrate with us. And the API store, in its first iteration, was focused on easy access API. So this next generation store is going to be focused on offering every type of integration that we offer, through a single portal, meeting some of the desires of our partners and clients.

Christina: The second part of it is more self-service tools, additional on-demand training, and simplification of the store itself; making it as easy to use and as efficient as possible, as we’ve seen tremendous growth in the number of users who want to have access and integrate with us. So we’re excited to bring it to market. The other thing that’s important is we formed an integration advisor council, you probably do this with your clients, we do with our clients. We always have client advisory boards to give us feedback on how we’re doing and for sharing ideas. We decided why not do that with third-party providers who aren’t necessarily clients, but we share clients in common. So we kicked that off in 2019, we had our first in-person meeting in June at the conference, and it was a wonderful conversation. It’s helping drive our roadmap for future integrations.

Craig: An advisory council, that sounds interesting. That can be helpful, because they’re the ones who know where things are going, how your integration capabilities are working, and how they can be expanded.

Christina: Exactly.

Craig: I want to take a little break from this episode to talk to you about one of my favorite sponsors, the Invest in Others Foundation. Invest in Others is a non-profit, you can find them at investinothers.org. They look to raise money and give out awards to charities that are sponsored by financial advisors, so it’s financial advisor’s favorite charities and charities that they spend a lot of time supporting. Invest in Others looks to get sponsorships from the industry and funnel that money to advisor’s favorite charities. I like this non-profit, I think you should take a look at it. Again, that’s investinothers.org. They have a couple other programs: one is a Grants for Good program, delivering money to different needy organizations and needy groups. They’re also starting a corporate awards program, which is going to be a little bit different but still within the industry and another way for financial services and wealth management corporations to help donate money to people in need. I like Invest in Others, I think you should take a look at them at investinothers.org.

Invest In Others

Technology Adoption Best Practices

Craig: I would imagine that tighter integration is working at a client, the better the advisor experience and the better the advisor experience, the more likely they are to adopt those technologies. So what kind of best practices are you recommending to your clients to encourage adoption of new technology?

Christina: Well, this is one of my favorite topics, so I’m glad you brought it up! I have to use some personal, real-life examples here, because it draws such clarity to what I see as a big challenge to your point, around getting the return on the investment that you’re making in technology. So I’m sitting in my car the other day, I’m driving, my husband’s in the front seat and I had my two small children in the back seat in their car seats. I’m backing up and I have contorted my body completely, I’m practically in the back seat with my kids as I’m backing up out of our driveway. And my husband was like, what in the world are you doing? And I said, I’m backing up. And he’s like, I haven’t been in the car with you for a while, why are you doing this to yourself, why aren’t you using the camera? And I’m like, oh, the camera! He’s like, we’re paying for the car that has the technology so you can see without having to twist your neck around backwards and you know where you’re going, why aren’t you using the camera? And then we had a whole discussion around did I know the camera was there, or if I did know, why am I not using it? (See Why Technology Cannot Replace Likability for Advisors: Josh Brown Ritholtz)

Christina: And I see the same thing play out over and over when we’re talking with clients around their focus being too much on what’s the new technology, what’s the new thing that my friend down the street’s talking about, what did I just go to a conference on, what did I just hear? And it’s chasing the shiny penny, which we all do. I mean I have a coffee maker that makes 72 different types of coffee because I thought it sounded great, and I still use it only to make my regular cup of coffee every morning. So it’s human nature, right? But the challenge is you’re spending all this money then on technology, and you are not seeing the return. So what we see the most successful firms doing is thinking about this in two parts. The first is, you have to know the capabilities that you have at your fingertips, right? Once you buy something, you have to know what you have. So in my example, I need to know that I have the camera, I need to know that I can make 75 different versions of a cup of coffee. In a spreadsheet, you have to know that there are shortcuts to do simple things. So the first piece is understanding what you have.

Christina: The second piece, which is even more challenging, is once you know what you have in front of you, how do you change your behavior to use it? How do I actually use the camera instead of turning around? How do I actually use those shortcuts that now I know exist, rather than just going back to the way that my brain has become programmed? And there’s some great best practices that we’ve seen firms use that have been successful. The first is in terms of knowing what you have at your fingertips and what you’re paying for, we advise firms to actually give the responsibility to someone. It doesn’t have to be someone whose whole responsibility is technology, but give someone ownership of a certain piece of technology or a function, and enable and empower them to be the advocate for that technology within the company. And it is a stretch assignment, right? How many people these days are trying to retain talent? Their employees want to see a career path, right? So let them go to the conference, let them work with other firms who may use the same technology, give them some time to read blogs like yours that talk about nuances and new things that are coming out with technology, and have them be the person who reports that back into the organization and hopefully increases people’s knowledge of what the tools have today. I just can’t say enough about it.

Christina: You and I both know, the days of reading a user manual are gone. I almost don’t want to watch a YouTube video on how to do something, because it takes too many minutes. So you have to find alternative ways to get people to know what technology you have. Then we focus on how do you change behavior. I think you and I have both had this situation where, in the case of the spreadsheet, you know that you can add up a column with two clicks, but you’re still going back and doing it the old way. And I think this is the hardest part. I tell firms that whatever you’re going to spend on investing in technology and the actual build, double it or triple it when it comes to the investment in time and money to change people’s behavior to actually use the technology. There’s no one size fits all answer, but you have to understand that you need to describe to people what the change in behavior needs to be; you have to describe to them what the benefit to the business is going to be. Are you opening accounts faster, are you reducing risk, or are you creating a better client experience? Then you have to celebrate successes. The best way to do it is to prompt someone; if you want them to do something, put a prompt up and make sure that they are using the technology. It’s a fascinating topic,, and one that I think we need to spend more time talking about.

Communicating With Advisors

Craig: Agreed. That’s another issue we deal with a lot with my consulting practice, with my teams that go out when we help firms with integrations or with rolling out new technology is, is teaching them that they need to consider their advisors just like they would with their clients; when it comes to marketing and when you have new technology, that needs to be explained to them. Why we’re using this, what changes in behavior you need to have, and how is it going to benefit you. Rather than just rolling it out and demanding they use it, or expecting them to use it and find out they don’t. If you think of your advisors like your clients, if you were to roll a new product to your clients you wouldn’t just throw it out there and expect clients to rush to it, you would have a plan to explain to them why it’s beneficial, and you would keep reinforcing that over time. Because human nature is that people tend to avoid new things. So you need to explain it to them over and over again, until they get the hang of it.

Christina: That’s right. And when we go to conferences and things like T3 and we see all of the technology that’s out there, it’s not just that there’s new firms – the firms that have existed for a long time, the pace with which they’re introducing new features, is so rapid. We used to talk about when we first met and were working on projects together, it’d be like, oh that’s six months out on our road map, it’s 12 months, it’s 18 months. Now there are projects that are being done in an agile way, and they’re being delivered next week and the following week. So to keep up with all of the new, cool tools is a great thing. It’s also challenging for firms who don’t have someone who it’s their full-time job, just to be monitoring all of the new capabilities for the tech stack that they have in place. (See The Velocity of Technology Change is Increasing: What Can Advisors Do To Keep Up?)

Craig: Right. One interesting statistic that I heard at the INSITE conference was 50% of Pershing advisors said that building a superior client experience was important to them. And my initial reaction that was, only half of all advisors feel that a superior client experience is important?! I know you guys are working a lot and you mentioned the advisor led experience. So what do you mean by the advisor led experience, and how are you helping your advisors to create those?

Christina: Yes, I agree with you. If you’re not working on client experience, what are you working on? And the reality is that there’s other great things to be focused on, like risk, resiliency, security, and all of those wonderful things. But we’ve definitely seen a shift from firms being focused on thinking and equating technology means automation, technology means efficiency, to now thinking technology is also an enabler of experience. And given the fact that all of our expectations around client experience and our day-to-day lives are exponentially ramping up, it’s an important topic. And of course, clients need to think about their client experience and how they want their clients to feel from many different perspectives, not just technology. We have a firm who studied their clients and realized that a lot of them were focused on adventure travel. So they added to their value prop that they work with them on adventure travel, right? So there’s things that are well beyond or in addition to technology, but we believe that technology is definitely critical to helping create a scalable, amazing client experience. So the advisor led part goes back to what I was saying a little bit earlier, that our clients are advisory firms and everything we do is built it around them and the experience they want to deliver for their clients.

Christina: We do our best when we’re in the background and it’s their brand forward, it’s them. The only thing is of course the client’s going to the statement, because of the safe-keeping of the assets, and it’s going to say, BNY Mellon | Pershing. What we’ve heard from our clients is that although they’re in the forefront, they want to look great in front of their client; they want to have everything be digital, let’s say (not for every market or client segment, but for some). An example is sometimes when you want to move money, you call your advisor, check wire, what have you, but you need a letter of authorization. If it’s third-party, we all know in the old days that was a piece of paper with an ink signature. Then we moved a little bit forward and we had e-signature, so you could use DocuSign or some other technology to do an esignature.

Christina: What we’re doing now is the ability for the advisor to initiate that request on behalf of their clients, still keeping them at the center of the relationship. But we’re building the digital interface so that the client receives a text message that tells them that there’s an approval that needs to take place and they can digitally approve that transaction. So we’re focused on things and capabilities that make the advisor look tech-forward and digital, even though it’s powered by us. The experience though is the client’s getting a text from their advisor; this isn’t something where it is initiated by the client, it’s still keeping the advisor at the center of the relationship. And there’s other things we’re doing to continue to make sure that the advisor feels like they have control over their client’s experience. Within our client portal we have the ability for the advisor to nickname or group accounts for their clients, and the advisor can see what the client is seeing in real-time through our portal. I’m using these as examples to show what we have and what we’re building, all with keeping the advisor at the forefront, which goes back to the advisor led experiences. (See Why “Build It And They Will Come” Doesn’t Work With Advisor Technology)

Christina: We’re also focused on account opening. No matter how many years, I mean gosh Craig, you and I were drawing on a whiteboard about how to open a new account 12 years ago, and it still is a focus area. We’ve seen a great increase in the number of advisory firms and clients who want to use an esignature, which is tremendous because it’s been out for how many years now? But we’re finally seeing year over year, double the amount of accounts that are being opened with an esignature. We’ve had it forever but the adoption is ramping up, which is great to see. And now we’re taking things to the next level; how do you open multiple accounts across multiple registrations with a dynamic application that requires only one signature electronically? We want to continue to take those custody functions and up the game.

Onboading Workflows

Craig: Speaking of account opening, I wrote an article a while back on one of your big clients, Advisor Group, and how they built out a fully electronic, paperless account opening process built on IFS’ workflow with Pershing custody. So how do you guys work with firms like IFS and other vendors to make these type of workflows seamless?

Christina: So back to these different types of clients and how they want to create experiences, we’ve seen an uptick in number of firms to, whether it’s themselves or they want to hire a third-party, but they want to not just focus on the client portal, they want to actually look at the processes like account opening or asset movement or whatever, and they want to take it straight through, remove all human interaction, and they want to make it completely digital. So we approach those initiatives first and foremost with the consulting, sitting down and making sure we understand; there’s whiteboards, there’s stickies on the whiteboards, it’s making sure we understand their vision front to back. With account opening, we always ask questions around what other things do you want to do as part of account opening? Sometimes people think it’s just getting the account open, but we all know that it’s funding the account, it’s getting the online access set up, it’s setting the account up for the checking capabilities, right? (See Advisor Group’s eQuipt is a Quantum Leap in Onboarding Technology)

Christina: All of these other processes are part of onboarding that client. So we map the whole thing out, and then we map out our solutions to the journey. In the example that you mentioned, and there’s a number of other examples and clients that we have who everything is through APIs, every account, every registration type, everything is sent to us via API. The documents are submitted through APIs, and the reality is unless there is a human that needs to intervene based on an order item, the account is opened straight through. And we have more firms who never actually see our account opening system, because they have and wanted to build their own experience and they want to connect. So it goes back to the integration topic.

Craig: Build their own experience and connect… I’ve heard that before.

Christina: Yes.

Digital Advice Partners

Craig: So moving on from account opening, I know Pershing has always been very forward-looking on technology and NetX has been on the cutting edge when it comes to integration and building on new functionality, more so than maybe some other custodians have been. The digital advice vendors had the account opening processes down, and I think they led the industry when it came to electronic account opening. Early on you started working with digital advice vendors like Jemstep and Marstone to help them understand your APIs and get integrated, so they could do these types of seamless, completely electronic account openings. So why did you guys do that? What did you see that other vendors didn’t see?

Christina: It goes back to when you look at various trends, if you believe in them you want to try to stay ahead and you want to be a first mover, or the upfront to deliver solutions ultimately to your clients. So we saw simultaneously technology tools advancing, we saw firms taking what consumers expected out of their Amazon experience and their Uber experience and applying it to finance, and we saw this concept of a digitally-enabled advice to try to offer solutions, in my view, to more and more investors across all types of net worth, regardless of how much money you have, to be able to have a tool that from an economic perspective allows you to invest and save. So we saw these trends happening, we saw some of the great firms that you mentioned coming out with robo solutions, and we wanted to ensure that we had those as an option for our clients to leverage. As a result, we’ve seen varying degrees of people wanting to utilize these solutions. (See WealthSimple Tries to Breakout of the Canadian Market with $100 Million from Allianz)

Christina: I think the firms who’ve been most successful adopting a robo solution or adopting that technology are the ones who aren’t doing it because it’s the cool thing to do or they’ve heard about it, they actually have a business need or a serious strategy around targeting another segment of clients, or the next generation of clients. It is led with a business strategy, and then they’re using the robo platform to deliver. Those have been the most successful firms; the firms that are more challenged are those who just say, I want to go buy robo, right now my target market is ultra-high net worth, super sophisticated, I have a small number of clients, everything is customized, but I heard about this robo thing and I want to do it. Without a real business plan, the technology is not going to solve it for you. You have to think about that.

Craig: You’re making a good point. And speaking of Jemstep and Marstone, I’ve had Simon Roy, the CEO of Jemstep and Margaret Hartigan, CEO of Marstone, on my podcast and we talked about this very thing, about how advisors and broker-dealers and banks want to get into the space, but they don’t understand how to implement it. Simon made a good point, “It’s not just slap your on my logo on my robo and go,” there’s a lot more to launching a digital advice channel than just the logo and the technology.

Christina: That’s exactly right, I like that. We should get him a t-shirt or a mug that says that for the holidays. I will say that the thing that the robos have done for our industry is they created some slick technology that has become the standard for experience when it comes to using technology and financial services. And I think what we see as an advisory firm, whether you’re looking at the next generation of your clients or you’re looking at the next generation of your employees, is that attracting talent and retaining talent within the financial services industry is tough. We have to be thinking 5-15 years out, and the people who are going to want to come work for you are going to expect a technology stack that’s pretty advanced. I think we focus a lot on attracting clients, but I think we need to also be focused on advisory firms attracting talent, and having a digital, modern experience for those people coming to work at your firm is important. (See #ItzOnWealthTech Ep 19: Why The “Slap Your Logo On My Robo” Business Model Doesn’t Work Any Longer with Simon Roy from Jemstep)

Turning Competitors into Frenemies

Craig: Let me shift gears a second to “co-opetition.” Every industry has this, but I think it’s especially so in our industry, where firms have to work together and they also compete. I know you guys have seen this as a custodian who also offers tech. You also have your own turnkey asset management platform, so you’re competing with firms that you also have to partner with. Looking at some of your biggest integration partners, mainly in the financial planning arena, would be MoneyGuidePro, eMoney, and new newcomers like Advizr, and now they’ve all been bought up by competitors: MoneyGuidePro bought by Envestnet, eMoney bought by Fidelity, Orion Advisor Services bought Advizr. So how do you guys navigate that kind of minefield, where you’re competing with firms that you’re also cooperating with?

Christina: I read an article the other day about frenemies, and that’s kind of what you’re describing, right? In terms of friends and enemies all at the same time. And I agree with you, to be working with a firm like BNY Mellon, whether you’re looking at technology or asset management or anything, it’s rare to find someone who doesn’t have some element of the co-opetition happening. We look at that from a number of different perspectives, right? And as you said, the landscape is changing, so just because you know your landscape today, then another acquisition happens and it’s like chess pieces on a chessboard, right? What’s going to happen next? So we take the approach of number one, studying the marketplace and looking at what folks are doing. We are also focused on thinking about where are we going to be, with both traditional and non-traditional competitors. So where are we going to be when Amazon enters financial services, right?

Christina: We have to think about the non-traditional competitors. But ultimately what it comes down to is we have to deliver solutions for our clients. And our clients may very well, in the world that we live in, use multiple providers, for clearing, custody, technology, what have you. And we believe being more on the open side than on the side of closed is ultimately going to serve our clients best, and have the best working relationship between us and other firms. We have sit-downs with them and we talk about things; it’s not some secret. We talk about it, and we ultimately have to figure out what’s right for our clients to grow, and therefore ultimately us.

Craig: I know you do sit-downs; I’ve facilitated some of those.

Christina: There you go!

Craig: Some are more comfortable, and some are less comfortable than others. We’re running out of time and I have so many more questions. Let’s talk about big data and the use of data – we’re drowning in data. Jeff Marsden from Xtiva was speaking at your conference and he said we’re drowning in data, and firms just aren’t keeping up and they’re not organizing and not leveraging it efficiently. Also Catherine Keating, who happens to be the CEO of BNY Mellon’s wealth management business, said that, “Big data has created a new frontier in wealth management by predicting customer preferences.” How is Pershing leveraging big data to help advisors?

Christina: The data question, right? Who owns the data, where’s the data, how much data, is the data secure? It’s a constant topic of conversation. When we think about data, and for anyone who is thinking about data, we think about it from the perspective of first we’d get data, and we used it to report on what happened. There’s lots of looking back using data, and that’s been around for some time. Then we started to use data to say why did something happen, what can it tell us? Then we continued to transform and it became more predictive, what will happen based on the data? Then ultimately even more predictive and actionable, what should I do? So it’s what happened, why did it happen, what will happen, and then what should I do? And we’ve seen a progression, including with our own tools across that spectrum.

Christina: We’re focused on things like giving advisory firms business insights. As an example, we have a money in motion capability within our platform that looks at ACATS and it gives information around where accounts are coming from, where accounts are going to, and helping advisors spot trends within their firm. So those are the things like why did it happen and what can I do? What will happen? A lot of different predictive pieces, but one that looks at not just… we hear about the predictive ones around is this client going to leave or is there going to be attrition? That’s some predictive pieces. We also have things like what we call opportunity view, which shows an advisor across all their clients which clients hold securities that are harder to borrow out in the marketplace. And if they want to lend those securities they can, and then we compensate the client.

Christina: So it’s a way for the advisor to get a higher yield on the client’s portfolio. I share that because I think data has multiple different ways it can help an advisor and a client, and we’re focused on those tangible examples to help the advisory firm grow, to understand their clients, and where possible, to help them create better returns and ultimately better results for their clients. So I think it’s an interesting topic and one that, thinking about BNY Mellon and Pershing, how much data we sit on, there’s incredible things that we have done and a lot more that we still have to do.

Craig: Christina, we’ve talked all the way through our time. As always, it goes by too fast.

Christina: That’s exactly right. I’ve enjoyed it, we’ll have to do it again!

Craig: We will definitely do it again! Thank you so much and thanks for everything you’re doing. I’m proud of, from remembering you 12 years ago to where you are now, it’s great to see what you’ve accomplished. You’re definitely a role model and hopefully we can support you any way possible, and we look forward to talking more in the future.

Christina: Excellent. Thanks so much, Craig.

Craig: Take care, Christina. Cheers.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com