For anyone trying to understand the wealth management industry, in general, and the clearing and custody business, in particular, the most important concept is likely basis points.
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That’s industry-speak for hundredths of a percentage point. And those numbers speak to how most wealth management firms and their service providers do business by collecting their share of basis points out of the fees paid by clients. With traditional commissions and fund expense ratios falling off a cliff in recent decades, service providers like giant custodian BNY Pershing are trying to adapt to a much different industry with drastically lower margins.
In fact, Mark Tibergien, who was CEO of Pershing Advisor Solutions, the company’s registered investment advisory firm custody and services unit, from October 2007 to June 2020, told Financial Planning that, over his tenure, the firm’s revenue-per-asset tumbled. The number dropped to about a third of its previous size to between eight and 12 basis points by the time he left from around 25 to 30 when he started at Pershing.
So it’s not surprising that Pershing began charging at least some of its RIA clients a custody fee last year for the “services that help them run their businesses more effectively and efficiently,” Tibergien said in an interview. Since transaction fees have fallen to “virtually zero right now, in terms of margins” and profits are falling across the board for custodians, companies like Pershing are finding new sources of revenue, he said.
At the same time, they’re trying to maintain their traditional safekeeping, surveillance and operational duties for advisory firms while meeting the growing service and technology demands of financial advisors and their clients.
“I’m not sure that advisors truly appreciate the value that a custodian brings to the relationship. I think it’s viewed as a necessary evil, because they’re not going to hold the assets themselves,” Tibergien said. “The fact that they deliver all these other services comes with a price. The client is already paying, in most cases, for the custody. The question is whether the advisors should be paying.”
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What information is available on fees
Representatives for BNY Pershing said the company doesn’t disclose its revenue-per-asset figures publicly, so they were unable to verify Tibergien’s numbers or share the current level for that metric. When asked for many kinds of figures and an interview as part of FP’s continuing series on the services, fees and business models of the wealth management industry’s custodians, BNY Pershing responded in an even slimmer fashion than Fidelity Investments’ thin disclosures in the second feature in the series.
Ben Harrison, the global head of client coverage at BNY Pershing, answered a series of questions in an email. But the company didn’t even list the number of its wealth management clearing and custody clients or provide the amount of assets it is servicing across the business.
Instead, Harrison stated that the firm’s Wealth Solutions unit, which BNY created in January by combining Pershing with BNY Archer Managed Account Solutions, had $3.3 trillion in assets under custody or administration and 8.6 million average active clearing accounts at the end of the first quarter. (At the end of 2025, BNY’s last quarterly earnings with Pershing’s standalone figures said that its assets under custody or administration had grown 11% to $3 trillion from the prior year and its revenue climbed 9% to $2.93 billion).
“While we do not disclose the specific number of clients or accounts by RIA and broker-dealer segments, we are the top U.S. clearing firm for broker-dealers and a top-three RIA custodian,” Harrison said. “$1B+ firms are our optimal client — they come to BNY given our unique collection of highly correlated businesses that can provide a single solution for our wealth manager clients.”
Citing BNY’s announcement of the combination of the two units and the appointment of Adam Vos as the global head of wealth solutions in charge of it, Harrison said that the company’s executives “believe that our clients view this combination as strengthening our capabilities to better serve their evolving needs by adding Archer’s market-leading distribution and managed accounts expertise to deliver fully integrated, end-to-end solutions across the entire wealth ecosystem.”
He did confirm that, just like Charles Schwab and Fidelity are increasingly charging so-called shareholder services fees for fund companies whose products are available to investors on their platforms, Pershing uses “commercial arrangements with asset managers to maintain no trading costs” across more than 500 ETFs from 25 families on its no-transaction-fee menu.
Asked about Pershing’s mix of business among the traditional sources of clearing and custody revenue between those asset-manager fees, transaction charges and cash interest and lending businesses, Harrison said the firm “has a diverse group of wealth intermediary clients, a varied revenue base and durable client mix and business model that continues to position us for future growth.” But he said that the firm doesn’t disclose any figures that are more specific than the $544 million in “investment services fees” it generated in the first quarter.
When asked about the timing of the new BNY Advisor Match referral program that will send potential clients to participating RIAs, he said that it’s in the beta phase “for select participants” and the company will provide further updates “as we continue to test and gather feedback.” (A disclosure filing earlier this year by BNY Advisors, formerly Lockwood Advisors, listed an annual price of $50,000 and a recurring charge of up to 0.30% of assets at Pershing, or a one-time buyout fee of 0.75% for those transferred outside the firm.) And Harrison provided no specific pricing schedule for the starting rates of any transaction fees or RIA custody rates.
“After evaluating the solutions we offer, last year we introduced changes to better reflect a fair value exchange and simplify how our clients work with us,” Harrison said. “We evaluate each of our relationships individually and we do not have a one-size-fits-all model. We have several different pricing models configured for our clients, including clients that have asset-based pricing. Our pricing models are tailored to accommodate specific client needs. We believe BNY Pershing provides significant value through our comprehensive platform scale, advanced technology, and deep regulatory and compliance expertise — all backed by the financial strength of BNY. We remain committed to investing in the things that are meaningful for our clients — service, platform and dependability.”
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Bargaining power and big, shifting businesses
That customer service embodied by the impression that Pershing “seemed to want the business more, honestly,” drove Tampa, Florida-based Independent Financial Partners to select the firm over rivals like Fidelity’s National Financial Services as its clearing vendor, according to Chris Hamm, Independent Financial’s president and chief operating officer. The firm dropped LPL Financial to start its own brokerage in 2019.
Pershing is just one of four RIA custodians used by the firm, though. Since Independent Financial aims “to enable advisors where they want to be enabled,” the firm is open to exploring other potential clearing firms and it “couldn’t exist without these multiple relationships” with RIA custodians, Hamm notes. While he said he wasn’t necessarily suggesting other clearing and custody firms are “not nice,” the firm’s relationship with Pershing’s team is driving the continued collaboration.
“I feel like they’re more of a people business,” Hamm said in an interview. “They just have a lot of people that have been there a long time that are really nice to work with.”
As a firm with about 300 advisors and $20 billion in client assets, Independent Financial hasn’t had to pay Pershing any RIA custody fees. But an “investors pricing overview” document on Independent Financial’s disclosures page lists other transaction or advisory fees with Pershing and other custodians. The negotiations with any clearing or custody firm over their rates could take weeks or months, and they usually lead to agreements lasting for a least seven years, according to Hamm and Oscar Mejia, Independent Financial’s director of finance
“If I were a broker-dealer looking for a custodian, the big, important thing to do is focus on the negotiation of the scheduling, the negotiation of the fee structure,” Mejia said. “That negotiation is probably the biggest point, because you’re going to be living with that pricing structure for years.”
And those negotiations are playing out much differently these days, compared to the times that the impressive profits for the custodial arms of Schwab, Fidelity and Pershing were “dominant in the appearance of these parent companies,” according to Tim Welsh, founder of Nexus Strategy, a consulting firm he launched after stints with Schwab Advisor Services and Merrill.
The industry has shifted from the times when Tibergien would appear on conference panels to trade jabs with David Canter (formerly of Fidelity) and ex-head of Schwab Advisor Services Bernie Clark. Each of the three largest custodians are benefitting from “the power and inertia of the custodial model” reflected in the fees they debit from client accounts and service teams that have the scale and staffing to respond to advisors’ requests quickly and effectively, Welsh said.
That raises the barriers to entry for any competitive upstarts. Regardless, all three firms must tread carefully to avoid competing too directly with their advisory firm clients through other parts of their businesses while simultaneously trying to find new revenue streams. Despite a pledge by Clark in the past not to do so, Welsh predicted that Schwab will “absolutely have to” follow Pershing’s example by imposing an RIA custody fee at some point.
“They’ve been so demoted into these corporate structures because they know their profitability is being challenged and will continue to be challenged,” Welsh said. “Where did the headliners go? They all left, and there’s no longer a face of these custodial businesses because they’re going to have to resort to profit maximizing.”
Welsh described Tibergien as “the greatest RIA salesperson on the planet Earth,” and, a half dozen years after stepping down from his post at Pershing, Tibergien said he doesn’t think the company receives “enough credit for having grown into being a meaningful competitor for Schwab and Fidelity” with the largest RIAs. BNY CEO Robin Vince “has embraced Pershing as a valuable entity of the company,” according to Tibergien, who said he didn’t know the reasoning behind the shift in BNY no longer reporting Pershing’s standalone numbers each quarter.
“Pershing is valued as an asset of the enterprise, but I think that they’ve done more to try to meld the entities, rather than allow the entities to be standalone companies,” Tibergien said. “The truth is, when you’re in a large enterprise like a big bank, you have both internal constituents and external constituents that you deal with.”
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What’s old is new
And that pairing with a big bank still sets Pershing apart from other large custodians, Tibergien said, echoing a sentiment shared by executives at his former firm.
Earlier this month, Vince and other BNY leaders attended the annual BNY INSITE conference (formerly known as “Pershing INSITE”) outside Denver. Despite some de-conversions of clearing and custody business in recent years due to the shutdown and sale of First Republic to JPMorgan Chase and other M&A and recruiting wins for rivals like LPL, Pershing has notched some notable new business and extensions of existing relationships with firms like Osaic, Lincoln Investment Planning, Sanctuary Wealth and Northwestern Mutual.
Pershing has “accelerated our investment in serving the larger, growing wealth managers in the marketplace,” Harrison said. “We provide brokerage custody and clearing, RIA custody, integrated bank and trust custody, lending and banking solutions, investment solutions, trade execution and global market access. Our clients also benefit from BNY’s extensive enterprise solutions including lending, bank custody, investment products and OCIO capabilities.”
The negotiations around every firm’s specific fees in exchange for those services revolve around the size of the potential business — especially for brokerages, according to Mejia. And that requires some careful thought about the full range of fees.
“There is a minimum amount of revenue that the custodian is going to need, and they’re going to charge you the difference if you don’t meet that minimum,” Mejia said.
But the competition for RIA business that is leading to so many advisory firms choosing to use several custodians at once is creating a much different operating climate for advisors who leave the larger wealth management firms for new pastures, Hamm noted.
“We recruit a lot of advisors that come out of those worlds,” he said. “The cost to the advisor can really be managed a lot better, and it’s not this broker-dealer that’s going to try to create all this margin.”
On the other hand, the pricing differences between clearing and custody firms often wind up being “negligible,” although the fees tend to be “more expensive for smaller advisors” who can’t leverage as many client relationships as a bargaining chip in negotiations, Tibergien noted. The rising trend toward using multiple custody firms just represents a new phase in a recurring cycle.
“When I started on the custody side, we had advisors who had as many as 40 different custodial relationships,” Tibergien said. “So our challenge was to consolidate those as much as possible, both to make it more efficient for the RIA, but also to make the economics work for us.”
