What BNY's Wove move tells custodians about RIA tech priorities

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• What's at stake: Custodians often build "all-in-one" portals designed to capture RIA workflow, but independent firms usually like choosing their software vendors.
  

• Expert quote: "Advisors will always unbundle the bundle. You're independent for a reason, so you want the technology to be independent." — Tim Welsh, Nexus Strategy

One of the industry's largest custodians is folding a technology desktop it launched more than three years ago further into BNY Wealth Solutions after a corporate reorganization.

BNY Pershing is rolling the financial advisor Wove desktop into its megabank parent company's Wealth Solutions technology infrastructure under Adam Vos, the firm's global head of wealth solutions. Earlier this year, BNY combined its managed accounts business and Pershing together into the Wealth Solutions and appointed Vos as its chief, while moving former BNY Pershing Global Head Jim Crowley to the role of executive vice chair of BNY. 

The move illustrates how registered investment advisory firm owners think about their technology. While custodians would love for their RIAs to work from their one platform, those independent advisors value the freedom to build their own tech stacks.

Representatives for the company described the latest update on Wove as a change in execution that is part of its continuing strategy in recent years toward integrating all of BNY's services as one firm.

"BNY is focused on building a more connected, flexible set of capabilities for advisors and investors," Vos said in an emailed statement. "We are well positioned to advance innovations that support a comprehensive wealth ecosystem and strengthen our role as a long-term wealth solutions provider for clients."

The fight for RIA assets

The representatives for the company said Vos was not available for an interview. Without getting specific on the timeline for the transition of Wove into the broader Wealth Solutions movement, they said that it is underway. They didn't answer the question of how much BNY had spent on developing and promoting Wove directly.

Since today's advisors rely on vendors such as custodians and software firms for their customer relationship management, reporting, billing, trading, rebalancing and any number of data and investment needs, their technology decisions or related moves by large corporate enterprises in the wealth and investment management marketplaces carry huge weight. RIAs of all types that had registered with the Securities and Exchange Commission at the end of last year collectively spanned almost $177 trillion in assets under management.

Wove started in 2023 as part of a series of products and services developed by the custodian's previous Pershing X technology arm under the leadership of Pershing X President Ainslie Simmonds, who has reportedly been one of several executives leaving the firm in recent months. Simmonds, who didn't respond to a LinkedIn message seeking comment, had described Wove in the press release unveiling it as going "beyond just having integrations" to create "interconnected experiences for advisors." 

Executives like Crowley later credited Wove for helping Pershing win relationships with RIAs and other wealth management companies like Lincoln Investment Planning.

While BNY's earnings no longer reference Pershing specifically, Chief Financial Officer Dermot McDonogh devoted part of his answer to an analyst's question on the company's call earlier this month to delivering "kudos to the team for a really strong quarter" based on the seven new clients and $48 billion in net new assets for Wealth Solutions. Rather than being "the old Pershing business," McDonogh said the company views the clearing and custody firm as being part of the "new Wealth Solutions business" that spans almost $4 trillion in assets under custody or administration.      

"Clients are coming to us. They like what we have to offer, and so we're partnering a lot with big RIAs," McDonogh said, according to a transcript by Motley Fool. "We signed several clients to long-term contracts. So we like the business. We kind of feel we're a big player in the business. We have fresh leadership in there, taking a fresh look at things and kind of coming up with different strategies."

The latest episode

Rather than a management reshuffling, though, the transition of Wove into the larger Wealth Solutions unit reflects only the latest failed attempt by a custodian to nudge independent advisors into embracing their proprietary software over the available alternatives, according to Tim Welsh, the founder of consulting firm Nexus Strategy. 

In a LinkedIn post late last month, Welsh said he was "somewhat sad (proud?)" to have predicted five years ago that Pershing would fall short of the goal of winning new software business for its affiliated services over outside vendors, just like the similar previous efforts by its larger custody rivals in Fidelity Investments and Charles Schwab. Writing in an op-ed for industry publication ThinkAdvisor when Pershing had only unveiled the X technology development arm that would eventually build Wove, Welsh said those ideas simply don't appeal to independent advisors who enjoy choosing their own technology vendors and maintaining their existing software relationships without disruption.

"These custodian technology initiatives will always be challenged by default because all are based on a proprietary technology strategy designed to aggregate an advisor's business on the sponsoring custodian's platform," Welsh wrote. "It is a popular strategy for attempting to lure business through their technology pipes, build a competitive wedge, and again, attempt to control the advisor desktop. While this looks great on PowerPoint, it fails to recognize the underlying tenets of the RIA marketplace."       

Speaking in an interview from Financial Planning's ADVISE AI conference in Austin, Texas, last week, Welsh said Wove simply represented the latest episode in which "custodians have always been trying to bundle in technology offerings" so that advisors log into their desktop each morning and "use the portal for everything." While some may suggest that Altruist is moving toward that goal through its technology, Welsh argued that the firm's pending sale to Vanguard shows that advisors' adoption of that company's tools hadn't reached the level necessary to continue operating independently of a well-capitalized parent company. 

"Advisors will always unbundle the bundle," Welsh said. "You're independent for a reason, so you want the technology to be independent. Those are just structural factors that have not changed for 35 to 40 years."

BNY CEO says advisors' brand preferences have shifted

Regardless of those dynamics and the latest phase of its reorganization, however, Pershing has built one of the biggest custodians in the business in those decades. On BNY's call, CEO Robin Vince pointed out in response to an analyst's question about the fight for custody of RIA assets that wealth management "has always been a competitive industry and always been a competitive business." Connections with other areas like banking, asset management and AI, as well as the appeal of a name like BNY as one of the oldest and largest financial institutions in the country, are driving more appeal among advisors in that environment, according to Vince.

While representatives for the firm said no further documentation or evidence of the trend was available, he said that advisors are embracing BNY's name over that of Pershing.  

"It's not by coincidence that we've been evolving the name," Vince said. "In fact, interestingly, when I used to talk to clients of Pershing three years ago, they would say, 'Oh, please, the Pershing brand is really strong. Please keep the brand.' And now when I speak to those same clients, they say to me, 'Oh, please, BNY, it's a much more useful brand for us running our businesses when we're talking to clients because of the power and strength of that brand, and we want to access the rest of the company. We don't just want the traditional services from Pershing. We want the full breadth of BNY delivered through Wealth Solutions.'" 

Introductory bullet points created by AI with editorial review.