MutualFundWire.com: Can Pershing and Lockwood Kickstart FAs' Offerings For Smaller Investors?

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Tuesday, August 30, 2016

Can Pershing and Lockwood Kickstart FAs' Offerings For Smaller Investors?

Jersey City, New Jersey-based Pershing is ramping up the managed investment solutions that its broker-dealer and RIA clients can have their financial advisors offer to small investors. Those solutions include a new series of portfolios, portfolios which Pershing affiliate Lockwood Advisors builds out of ETFs.

Joel Hempel
Lockwood Advisors, Inc
Chief Operating Officer

Watch for unaffiliated strategists like BlackRock, Morningstar, Russell, and Vanguard to begin working with Pershing to offer strategies for small accounts.

"There's a whole universe of people out there," Joel Hempel, chief operating officer of King of Prussia, Pennsylvania-based Lockwood, tells MFWire. "There will be additional solutions that come to market from strategists like that ... We'll be partnering with some of those others."

"You'll see something from us around an ESG [Environmental, Social and Governance] type of offering utilizing strategists," Hempel adds.

As for Lockwood's own offering, Hempel confirms that Lockwood's new WealthStart Portfolios require a minimum investment of $10,000. The series includes six strategic portfolios and six "tax-aware" portfolios, each of which uses five to ten ETFs and all of which are PMed by Lockwood. The portfolios cost 40 basis points all-in, plus expense ratios for the underlying ETFs. (The FAs' own fees are also separate.)

"We want to keep it as a multi-manager type of solution ... We'll be working with some of the large ETF providers" like BlackRock's iShares [profile], Invesco PowerShares [profile], and Vanguard [profile], Hempel says, and the door is open to including mutual funds in the portfolios too. "Today it ended up at all ETFs ... You'll see some of these same ETF providers utilized in other products that we have."

"We're really looking at this as an emerging investor, mass-affluent type of solution," something that can help ultra high net worth advisors working with the younger generations in their clients' families, Hempel adds.

Hempel puts the launch of the WealthStart portfolios in the context of changing technology, demographics, and regulation, notably the DoL's fiduciary regulation that takes effect next year.

"All of that created an opportunity for us to really deliver a series of professionally managed portfolios to a demographic that might be under-served by some," Hempel says.

Pershing already offers Lockwood's AdvisorFLEX Portfolios, a series of 16 wrap portfolios built out of both ETFs and traditional mutual funds. AdvisorFLEX carries a $50,000 minimum investment requirement, and FAs who use them can make changes to the portfolios "within some guiderails," Hempel says. AdvisorFlex, Hempel adds, is "probably [Lockwood's] fastest-growing offering."

"We've delivered mutual fund and ETF solutions already," Hempel says. "We're now taking it down to a $10,000 entry point."

We're excited about what we're doing here. It's relevant. It's timely ... People can get ahead of the curve.