BNY Pershing begins custody fees for some RIA clients

BNY Pershing began charging custody fees to certain registered investment adviser clients last year as revenue per asset declined and transaction fees fell toward zero. The change reflects adjustments in how large custodians generate revenue.

Mark Tibergien, who led Pershing Advisor Solutions from 2007 to 2020, estimated the firm’s revenue-per-asset declined from roughly 25–30 basis points to about 8–12 basis points over his tenure. He noted that transaction margins are currently “virtually zero right now,” and custodians are seeking other revenue sources to cover safekeeping, surveillance and rising technology and service costs for advisors.

Ben Harrison, global head of client coverage at BNY Pershing, provided figures for the combined Wealth Solutions unit, which 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. Harrison described Pershing as a top U.S. clearing firm for broker‑dealers and a top-three custodian for RIAs and said the firm uses different pricing arrangements and evaluates relationships individually.

Harrison confirmed Pershing offers more than 500 ETFs from 25 families on a no‑transaction‑fee menu through commercial agreements with asset managers. He also reported $544 million in “investment services fees” for the first quarter.

Smaller advisory firms and mid-sized brokerages report prolonged negotiations over custody and clearing contracts. Independent Financial Partners, a Tampa-based firm with about 300 advisors and $20 billion in client assets, selected Pershing in part for service and long relationships and has not paid RIA custody fees to Pershing, according to the firm’s president.

Independent Financial’s director of finance said fee schedules are negotiated and that custodians often set a required minimum revenue; clients that do not meet the minimum can be charged the difference. Executives at advisory firms said those negotiations can take weeks or months and typically produce multi-year contracts.

Industry consultants and former executives described a widespread decline in custodial margins and said custodians will seek new fee sources. One consultant predicted major custodians may eventually adopt custody fees for RIAs more broadly as profitability is challenged.

BNY has integrated Pershing with other bank operations. In January, the company combined Pershing with BNY Archer Managed Account Solutions into a single Wealth Solutions unit and named a new global head to run the unit. Company executives say the integration aligns custody, managed accounts and distribution capabilities.

Pershing is also testing new business lines. The firm has a beta advisor referral program, BNY Advisor Match, available to select participants. A prior disclosure for the referral program showed an example annual fee of $50,000 and a possible recurring charge up to 0.30% of assets at Pershing or a one-time buyout fee of 0.75% for transfers outside the platform. Pershing has also extended or won relationships with larger wealth managers in recent years.

Industry participants noted the fee changes follow decades of falling commissions and lower fund expense ratios, which reduced traditional clearing and custody revenue. Custodians continue to offer core safekeeping and trade execution while seeking additional sources of non-transaction revenue and negotiating varied pricing arrangements with advisory clients.