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Pershing stated that they have entered into an agreement to acquire Optimal asset management, a provider of direct indexing solutions.
Optimal Asset Management offers investment customization through individual stock selections within an index, including sustainable investment options, according to Pershing, a subsidiary of BNY Mellon.
The direct indexing provider’s capabilities allow for customization of portfolios based on values or tax optimization benefits, according to Pershing.
For example, the portfolio may use unrealized losses to offset taxable gains, time transactions to promote long-term capital gains or exclude positions in equities such as those that are concentrated or contrary to the beliefs of the investor, depending on Pershing X President Ainslie Simmonds.
Access to the capabilities of the direct indexing provider will help advisors provide clients with tailored portfolios rather than pooled investment vehicles, Simmonds says.
“Optimal Asset Management will help our client firms’ advisors improve their relationships and grow their businesses,” Simmonds said in a statement.
Pershing believes that the acquisition of Optimal Asset Management will also improve the ability of advisory firms in its network to hire and retain advisors, as it will broaden the investments they can recommend to clients.
The capabilities of Optimal Asset Management will be available to Pershing’s advisory clients and institutional and retail clients of BNY Mellon’s investment management business, according to the CEO of Pershing. Jim crowley.
The acquisition will be part of Pershing X, Pershing’s new consulting platform announced in October, according to the company. Pershing X is expected to support the company’s Wealth Solutions clients – which include brokers, registered investment advisory firms, and trust companies – and will be rolled out from 2022.
Pershing is not the only custodian to move to direct indexing. Charles Schwab piloted a direct indexing program, Schwab Personalized Indexing, and managing director Walt Paris expressed customer demand for personalized investment. Schwab Custom Indexing will be available in early 2022, according to Schwab Asset Management investment director Omar Aguilar.
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