NextCapital Partners With Pershing to Move Beyond 401(k)s

NextCapital is expanding its enterprise digital advice software beyond the defined contribution space into the world of IRA rollovers and taxable brokerage accounts.

The Chicago-based company announced Tuesday that it selected Pershing Advisor Solutions as its custodian and will integrate into the NetX360.

Like other white-label digital advice companies, NextCapital provides a customizable client dashboard, account aggregation, automated management and optimization for mobile devices. It also allows advisors to plug in their own investment methodology to differentiate themselves from the so-called robo advisors.

The move beyond the 401(k) seems to place NextCapital into more direct competition with companies with other white-label digital advice providers like Jemstep, Vanare, FutureAdvisor and Marstone, which partnered with Pershing in June to launch a robo provider for Pershing advisors. NextCapital co-founder Rob Foregger, who also helped found Personal Capital, another digital advice company that custodies with Pershing, said what sets NextCapital apart is a focus on providing for very large financial institutions.

“A lot of what’s been done in the market today has been focused on small advisory firms,” Foregger said, noting that he believes the larger firms will be the eventual winners in the shift towards digital advice. “Encumbents will win the market. They have large, trusted brands and large distribution and sales forces.”

A spokesperson for Pershing said the NextCapital relationship is similar to ones made with Personal Capital and Motif Investing, but different than Marstone in that it’s not being specifically intended for Pershing clients.

Foregger added that unlike Jemstep, which Invesco acquired, or FutureAdvisor, which BlackRock acquired, NextCapital will forge more partnerships in the future to create a multi-custodian platform for financial institutions. He added that there is room for multiple players in the digital advice market, and that demand will continue to increase in the “post-product” world that a fiduciary rule would create.

“Technology is critical because it allows firms to manufacture solutions: scalable advice,” Foregger said.

Tim Welsh, the president of Nexus Strategy, said that the move into taxable brokerage accounts catches NextCapital up with some of its competitors, and expects more institutions to push white-label digital solutions like this going forward.

“As the wealth management space becomes more and more comfortable with providing automated investing channels for various client segments, we can expect to see more and more of these custodian-robo partnerships to help financial services organizations take advantage of these new technologies,” Welsh said.

TAGS: Technology
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