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Pershing to Buy Direct Indexing Firm Optimal Asset Management

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What You Need to Know

  • The software will provide advisors with customized indexing solutions.
  • The direct indexing market is expected to grow from $350 billion in assets under management in 2020 to $1.5 trillion in AUM by 2025.
  • Over the past year, Vanguard, BlackRock and Morgan Stanley have acquired firms specializing in direct indexing.

BNY Mellon Pershing is joining the growing number of financial firms acquiring direct indexing providers.

The firm announced it has entered into a definitive agreement to acquire Optimal Asset Management, a direct indexing solutions provider whose software will provide advisors with customized indexing solutions for investors seeking tax optimization and personalized portfolios.

Those expanded capabilities for more personalized investment planning can also help advisors acquire new clients and retain existing ones, according to Pershing.

“Optimal Asset Management meets a growing client need for greater investment customization by selecting individual equities in an index solution, including options to tailor their portfolios for sustainable investments,” according to the Pershing news release.

The Optimal Asset Management acquisition will form part of the recently launched Pershing X unit, tasked with designing and building innovative solutions for the advisory industry and delivering a comprehensive all-in-one set of capabilities for Pershing’s Wealth Solutions clients.

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The acquisition “is the latest step in our Pershing X buildout, which aims to fuel growth by helping clients solve the challenge of managing multiple and disconnected technology tools and data sets,” said Jim Crowley, Pershing’s CEO, in a statement.

Optimal Asset Management’s direct indexing capabilities will be available to advisory clients of Pershing and to institutional and retail clients within BNY Mellon’s Investment Management business.

Pershing did not disclose the terms of the pending acquisition or its expected completion date but noted that the acquisition is part of an expanding direct indexing market, which is expected to grow from $350 billion in assets under management in 2020 to $1.5 trillion in AUM by 2025, according to Oliver Wyman/Morgan Stanley.

Over the past year, Vanguard, BlackRock and Morgan Stanley have acquired firms specializing in direct indexing.