Ep. 234: A Deep Dive Into Pershing’s Product Strategy with Sareena Dalla Brookshire

Come on in and sit back and relax. You’re listening to Episode 234 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting. This podcast features interviews, news and analysis on the trends and best practices, all about wealth management technology.
My guest on this episode was Pershing’s Chief Product Officer Serena Dalla Brookshire. Serena has been at Pershing for a year, happy anniversary, Sareena, one year at Pershing. Before that she was at Vanguard where she was Head of Strategy and Planning she was there for six years. And before that, she was at Blackrock where she was VP of Digital. We spoke about a lot of interesting topics, Pershing’s product strategy, of course, how could we forget that and we’re talking to the Chief Product Officer, and they’re focused on four pillars which I’ll let Serena explain to you we talked about new category of software providers at Pershing is working with. We talked about Integrated Technologies, which is one of our favorite topics here on podcast and Pershing’s roadmap for the next 12 months which should be very interesting to all of Pershing’s clients and partners.
But before we get started, let’s talk about tech stacks. At Ezra Group, we’ve seen tech stacks of hundreds of RIAs and let me tell you, most of them are loaded down with tech debt. So you shouldn’t feel too bad about yours. But let’s face it tech debt is like a giant anchor, holding back your business growth. If you want to free your firm for exponential growth, you should run, not walk to our website EzraGroup.com and fill out the Contact Us form. Our experienced team can evaluate your current tech ecosystem, deliver targeted recommendations, optimize your existing systems and operations or run an RFP and help you implement new software to take your firm to the next level. You can take advantage of our free consultation offer by going to EzraGroup.com.

Topics Mentioned

  • Evolving Technology Landscape
  • Provider Models
  • Integrated Technology
  • Modernization Strategy
  • Pershing INSITE Conference

Episode Transcript

Craig: And here we are with our next guest. It is the Chief Product Officer from Pershing, Sareena Dalla Brookshire. Hey, Sareena! Thanks for being here.

Sareena: Hi. It’s good to be here.

Craig: I’m glad we could get onto your calendar. You are a busy person.

Sareena: It’s been a crazy couple of months, but all good.

Craig: The first quarter is almost over. It seems like it shouldn’t be. Time is just flying by.

Sareena: Yes, yes.

Craig: Sareena, where are you calling in from?

Sareena: I am in Jersey City today.

Craig: We’re both in New Jersey! I’m in beautiful Sayreville, just about an hour south of you. It’s a nice cold, clear day here in March in New Jersey.

Sareena: Yes. It doesn’t quite feel like spring yet. I’m hoping.

Evolving Technology Landscape

Craig: They tell us it’s two days away, but I’m not sure. That may be a false hope. Before we begin—again, thank you for being here—can you provide a 30-second elevator pitch in case anybody is living under a rock and doesn’t know who Pershing is?

Sareena: Sure, yes. We are a large broker-dealer custody provider. We do custody-clearing settlement. We are part of BNY Mellon. And we have a history, I think, that’s several decades old at this point.

Craig: Easily. And BNY Mellon, I believe, acquired Pershing from DLJ in 2002.

Sareena: Yes, correct.

Craig: Approximately. That was a big move back then. People didn’t know what was going on with that. They were concerned. But you’ve been in the industry for quite some time. You’re approaching, if I’m not mistaken, your one-year anniversary at Pershing.

Sareena: Yes, I joined a little before our INSITE conference, so [it will be] just about a year in June. Yes, it’s flown by.

Craig: I was at the conference. It was great. I love the INSITE conferences. It’s flown by. Before we jump into the things we’re going to talk about—you were at Vanguard for six years and at BlackRock for three years before that—what’s the difference you found at Pershing?

Sareena: I can probably share why I was drawn to the opportunity to come here as well. I had been in asset management for the past decade. I was intrigued by all that BNY Mellon and Pershing had to offer, well beyond asset management [and] the opportunity to work across the organization—custody, clearing, advisory, and the bank. There was a lot of excitement around the leadership that was also coming in.

Sareena: I’d say some of the biggest differences are: 1) It’s great to be back in New York again [and in] the Jersey City area. 2) It’s nice to have exposure to multiple lines of business within financial services. That’s probably been one of the biggest differences for me.

Craig: There is a lot to look at and a lot to talk about at Pershing. It’s a huge organization. I know we’ve worked with Pershing in strategy consulting for many, many years, and it’s not an easy organization to grasp with everything going on there.

Sareena: Yes. There’s no shortage of things that we’re doing here. It’s an exciting time to be here—an exciting time.

Craig: And that’s all we can ask for—to live in exciting times. We’re going to talk about trends. This is a trends podcast with you, Sareena, and you had a couple of interesting trends you wanted to talk about. The first one was new categories of providers. Can you talk about who those are, how you broke them out, why, and what we should know about them?

Provider Models

Sareena: Yes. As we think about new categories of providers, if you look across the spectrum, there have classically been two models. One is where you have a firm that’s looking to fully outsource platform responsibilities. It’s typically a single provider. The benefit of that is that you get some efficiencies there. It frees up investment capacity and investment capital. You don’t have to tend to it in the way that you would otherwise if you were building from scratch.

Sareena: The flip side of that, though, is that you don’t get as much differentiation when you think about your stack relative to other wealth firms. You can lose some of the control and some of the branding. But what you do get is the benefit of that outsourced, delegated model.

Sareena: On the other spectrum, we have an assembly model, or I think you called it the open source model, where you’re allowed to build and select the best-of-breed providers for you from a technology and an investment product standpoint. You typically have multiple providers. You’re starting to see this in a lot of the bigger shops, where they’re investing in digital product teams and tech teams directly. The benefit is that you get to choose the best of breed: You get to choose the best CRM provider, the best portfolio construction provider, the best financial planning provider, and so on and so forth. That does allow you to create a differentiated tech stack.

Sareena: However, the downside is that there’s a lot of maintenance around that. We’ve definitely seen that as firms have started to adopt this model, there’s a reoccurring tax that comes with this selection, as you have to constantly upgrade and maintain to ensure that all of these integrations make sense.

Sareena: What we’re excited about is that we see an emerging solution, which we’re calling the amplification model. In my mind, it’s the best of both worlds for outsourcing and assembly. That’s where you have a firm that can give you a configurable platform for your technology—configurable enough so you get the benefit of the outsourcing piece—as well as curated investment products so that you have some of the benefits of the assembly piece. As I think about how we’re evolving our product strategy here and our model here, what we’re doing lends itself nicely in that space.

Sareena: And maybe just to touch on some of the benefits here… I think I touched on some of the flip sides of the prior two models. With the amplified model, you get control over your brand. You get to have some more turnkey technology implementation along with some selected choice as well as a curated set of investment products that you have the ability to white label and create model solutions around. You get the best of both, as we see this emerging category expand.

Craig: These are new terms. But they’re old terms. They’re new terms for old ways of looking at things. We would refer to assembly as open architecture, where you can pick any investment manager you like or any technology. We also call it the best of both worlds or the best of breed. Amplification model—that’s an interesting term. Are there specific areas of brand? You mentioned brand amplification. Are there specific aspects of what Pershing is doing to help advisors amplify their brand?

Sareena: Yes. I would say from a brand standpoint, on the custody side, we’ve seen two spectrums of this. We have smaller or middle-[sized] RIA firms that appreciate having the Pershing brand. It gives a level of credibility, establishment, and institutional quality to it. We offer that as an option.

Sareena: We also have clients that want to have us be the wind beneath their wings and have their brand more front and center. We allow for that flexibility too. What we want to offer is essentially that choice so that where you are in the maturity of your firm or brand, there’s the optionality to leverage our brand where it helps and then also promote your brand where it also amplifies what you’re trying to do in the marketplace.

Craig: Where does the new Wove platform fit into the new categories of providers—outsourced, assembly, or amplification?

Sareena: I would say that we’re a collective amplification model, as we think about this opportunity to leverage our advisory platform while at the same time leveraging the best-in-class provider that we have with BNY Mellon Advisors, which is our investment products. The beauty is that there are homegrown solutions on the Wove platform, while there’s also an opportunity to bring in your best-in-breed. It’s a nice blend. But I would say it sits within amplification.

Craig: I thought it was a good move in terms of branding to rebrand Dreyfus as BNY Mellon advisors and with the old TAMP products, Lockwood as BNY Mellon advisors. That makes a lot of sense.

Sareena: It does. We’re excited. There’s great leadership with Stephanie Pierce and others on her team. That partnership is one that we’re excited about and actively working through as we bring those models onto the platform.

Craig: When you talk about models on the platform, it’s not going to be like a TAMP delivery. It’s going to be more of a model marketplace.

Sareena: Correct. Exactly. A model marketplace. That’s right.

Craig: But you offer outsourced middle office services currently through the managed investments. Will that still be working in partnership with Wove or will there be some other arrangement?

Sareena: Outsourced managed investments.

Craig: Outsourced middle office. If I’m a broker-dealer, I can outsource all my trading, rebalancing, and reconciliation reporting to you. I’m always curious about how things are changing because things have to change, and you guys are doing a good job of changing. You’re bringing new technology and new ideas, and that always upsets the apple cart. Not everyone enjoys change. Seeing those differences and how you’re taking the existing applications and existing parts of the business and combining them in different ways, I think, is the way to go.

Sareena: Right.

Integrated Technology

Craig: We’ve got a new category of providers. Another trend we want to talk about is one of my favorites, which is connected and integrated technology.

Sareena: Yes. From a product strategy standpoint, we have our custody platform, NetX360+. We also have our advisory platform, as we just discussed, Wove. As we thought about the pillars there, we’re looking at four things: 1) Modern technology, 2) Interoperability, 3) Flexibility, and 4) What we call intuitive UX, which is consumer-grade-level design.

Sareena: As we think about the benefit of that, it comes down to the fact that we want to build the best platform that allows for connected and integrated technology. We see that on many levels—from the advisors to the investors to the business impact—that interoperability and connected tech is a game-changer when it comes down to productivity and scale for these advisors.

Sareena: [I have] a couple of stats here to share: 57% of advisors want interoperability, and 84% of investors value simplicity and integration over more features. And from a business aspect, this was surprising, 37% of firms see more revenue per employee if they invest in a good tech experience.

Sareena: Some of the data we saw was that this can free up nearly two hours of an employee’s day, which is 100 more hours with this connected technology. The other piece is that we see more and more investor demand as we have our investors raising the bar on experience. They want things to work; they want more self-sufficient self-serve tools. And 65% of affluent investors say they would leave their advisor if a tech-integrated experience is not provided for them. We think this is a huge space for us as we think about integrating our platform across custody and advisory and making it simple for advisors to serve more clients.

Craig: Let me drill down into that a bit. When you talk about integrating custody and advisory, are you saying that NetX360, which is the custody platform, is going to be integrated into Wove, the advisory platform?

Sareena: I think what we’re saying is that we want to be able to have over time a common platform that allows clients to access the custody solution as well as the advisory solution based on who they are, whether they’re multi-custodial or what service or product they need from us. It should not feel like a bifurcated experience. It should be something that, should you need to start in custody and traverse into advisory, is seamless and elegant, [where] the data and the forms carry through. We don’t want to have another disconnected experience based on what you need to do to perform your job based on the persona and the role within the firm.

Craig: If I can summarize: Yes!—you want to merge those two. You want one experience.

Sareena: We want to create a seamless experience, yes.

Craig: At some point, there won’t be a separate NetX360 and Wove. Now I’ve got to task switch. I’ve got to go from here, and I’ve got to go there. You want it to be one, which makes a lot of sense. That’s how NetX360 came about many years ago. We had NetXInvestor and NetXAdvisor, and they merged them together to NetX360. Why not merge these two as well and just keep one platform for everything? That seems to be a good strategy in my book.

Modernization Strategy

Craig: This is a hard question, Sareena. Pershing, being a successful company, you are the third largest provider of custody services in the country, very closely behind two larger competitors, Fidelity and Schwab. You’ve built out these great capabilities. You’re also the largest provider of custody to broker-dealers in the country. You’ve done that because you’ve had good technology, great service, and a good reputation. This lends itself to what we all know as the innovator’s dilemma. Because you are a successful company and because you’ve been doing it for a long time, by definition, your technology becomes legacy. That’s just the anchor that any successful company is going to have. What are some of the things you’re doing? You mentioned four pillars. The first one was modern technology. It’s very difficult to upgrade custody technology. It’s a big iron, as they call it. What are we doing at Pershing to get to a modern technology stack?

Sareena: You’re right. Success is a benefit, but it also forces us to rethink where we want to be in three to five years to continue to build share and loyalty with our clients over time. We do know that service is a differentiator. We know that our technology is a differentiator. As we think about modernization, we’re doing a couple of different things. One, we’re looking at: What does a modern tech stack mean? As we think about moving off the mainframe into the cloud, that’s one big body of work. We’re investing deeply in our data layer. We’re building out more services and APIs. And we’re investing in the experience layer as well so that there are more opportunities to streamline.

Sareena: One of the things we talk about on the custody side is that over time, you’ve built for a power user and for a lot of complexity—are there opportunities to strip out and streamline some of the core journeys and experiences within the portal experience and the broader custody experience? We’re spending a lot of time thinking about our new client account opening. We’re spending a lot of time reworking our asset movement and reengineering there, making sure that what we do is faster, better, and more elegant for our clients as we start to bring new clients on and serve existing clients. But it comes down to modernizing the infrastructure and doing it in a way that is strategic and deliberate.

Sareena: It’s not going to be something that can be done with a silver bullet overnight. As we’ve leaned heavily on research, that’s helped us pinpoint the focus areas to start first, where we have the most bang for our buck, and where we know is most important to our client base—some of the areas I just mentioned already.

Craig: That is excellent. Yes, you want to put the dollars into the areas where you get the most bang for your buck. And those are all areas we recommend our clients look at—data layers and APIs. When you mentioned the experience layer—what is that exactly?

Sareena: Experience layer is essentially the front end. The interface in which our clients are either signing up for new accounts, making transactions on the platform, receiving alerts and notifications—all of those things that should be elegant and seamless and, to the point around interoperable, work wherever you start and wherever you migrate across the different layers of our platform.

Craig: When you mention data layer and APIs, that also supports interoperability. Are there any specific areas that those are supporting that you’re focusing on?

Sareena: I think one of the things that we’re looking at, to speak more high level about this, is building out this broader interoperability platform team, which would touch on a lot of the back-end components around entitlements and data. We use a number of different data cloud providers at this point and continue to expand on that with our footprint there. We’re also looking just from a data standpoint at better analytics in general. But those are some of the things.

Sareena: From a services standpoint, we’re looking at the whole custody suite, where there are the biggest opportunities to look at internal as well as external consumers and then identify patterns of where to invest—the service experience more so. I don’t know if that answers your question.

Craig: Yes, exactly. You also touched on another area. At Ezra Group, we do a lot of work in data warehousing and building out data layers and data lakes for large enterprise RIAs and broker-dealers. And one of the reasons a lot of our clients work with us is because they want better analytics, as you mentioned. Can you talk about which areas of analytics Pershing is focusing on? You guys have a lot of unique data.

Sareena: We do. There are a couple of different data layers. One is the platform piece. We want to make sure that as we are building out the front-end experience, there’s clear articulation and measurement of the funnel, the journey, the fallout, and where there’s friction within the experience. We want to make it fast, simple, and easy. That’s at the front-end layer.

Sareena: I think on the deeper mid-tier and beyond, it’s around performance and resiliency. We’re also looking at different ways to explore the custody, transaction data, and advisory data and figuring out how we can provide deeper insights to different client segments that want to understand how they can either better use our platform or distribute product on the platform or just get more optimization based on their experience within it. Everyone from RIAs to investors to asset managers are some of the clients we think about.

Craig: I got you. You are head of product—the Chief Product Officer—so you have some very, very good information about what’s coming about product strategy and focus areas for Pershing. What can you share with us around what you’re thinking of product strategy? How is it different from the Pershing we used to know? What are we going to see in the future in terms of product strategy and the focus areas that you’re going to be investing in?

Sareena: I touched on the pillars. Modernization is a huge focus area, as I mentioned. That’s not always the most glamorous stuff, but it’s much-needed work to avoid the innovator’s dilemma that you mentioned earlier. We need to make sure that we’re investing there so that we can future-proof ourselves for the long run. There’s a lot of investment there.

Sareena: On the flexibility piece, we’re looking for lots of opportunities within the experience itself—specifically on the custody side—to leverage emerging tech generative AI to help with things like search, to help with more personalization within the experience, and to help with deeper and better reporting and analytics. We know that that’s a huge use case on the site itself. And we want to make sure that there’s flexibility to the offer so that people know what Pershing does and how to work with us.

Sareena: On the intuitive side, this is around: How do we ensure that the experience layer is easy and simple to use? I talked about focus areas around asset movement and new account opening. There are a couple of other areas that we’re looking at within the portal experience itself: A major upgrade to our investor site portal, NetXInvestor, upgrading the platform, investing in collaboration tools, and investing in self-serve tools for investors. We want to create that graduation path as you come in as a self-directed investor through to robo through to advised over time, investing on the investor side, which is driving a lot of the heightened expectations for advisors as well.

Craig: I’m not going to ignore everything you just said, but I want to jump back to something you mentioned, which we didn’t talk about. I want to throw you a little curveball. You mentioned generative AI. Speaking of Pershing INSITEs, a couple of years ago at Pershing INSITE, there was a demo of a chatbot AI. You could talk to the chatbot and say something like: “My client lost their debit card. What do I do?” And it would give you the instructions. It would pull up the account number. It would fill out the form. It would bring you the right form on the screen. It had it all set for you. It became an intelligent customer support person for everything in Pershing. But that was only proof of concept then. Is that something that’s going to be coming live soon?

Sareena: I don’t want to spoil too much, but what I’ll say is that we are super excited about what generative AI can do on the platform. I’ll share some tidbits from our client custody research. We think there’s a huge opportunity to help make our clients more productive and efficient. Everything from what you would see in classic co-pilot-type stuff. We’re exploring what makes sense for the site. That includes things like Q&A agents and things of that nature to better help you identify the data within the site, [along with] advanced search and things like that. But the whole point is to make it a simple way for you to unearth what you need within our experience and also maximize the productivity and value you get from it. We hope to be able to share more at INSITE and beyond, but this is a space that is hot for us, and we are investing some good energy here.

Pershing INSITE Conference

Craig: We’re all Pershing customers. We have a lot of Pershing customers among our client base at Ezra Group, so that’s exactly what we want to hear. We want to hear about good energy coming from our custodian. I like that. Product roadmap 2024. I know INSITE is coming up. I’m going to be there. In Nashville, right?

Sareena: In Nashville, yes.

Craig: I can’t wait to go there and see everyone down there. For anyone here who doesn’t know, where can they find more information about Pershing?

Sareena: We have a very active presence on LinkedIn—feel free to like or follow us there—and Pershing.com, which are two great places to start.

Craig: Fantastic. Sareena, thank you so much for being here! I appreciate it. I know it was tough to get you here with your busy schedule, but thanks again. You did a great job.

Sareena: Thanks so much for having me!

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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