Q&A: BNY Mellon and Pershing on the rise of alternative investments (2024)

At its INSITE conference, BNY Mellonrevealed a combined offering with Pershing that gives advisers access to the complete range of features from all of BNY Mellon’splatforms, such as BNY Mellon Investment Management and BNY Mellon Advisors. Alternative investments were also highlighted at the event from BNY Mellon.

Investors are turning progressively to their financial advisers for assistance with all aspects of their investing demands as their needs get more sophisticated.

As a result, BNY Mellonis giving advisers a comprehensive, streamlined solution by integrating these services, allowing themto devote more of their time to their clients.

BNY Mellon and alternative investments

Also highlighted at the INSITE conference was the rise of alternative investments.Lisa Lewin, director for Prime Services at BNY Mellon’s Pershing, spoke on how alternative investments are becoming increasingly accessible through a range of sub-strategies and product structures designed to satisfy both advisers and ultra-high-net-worth investors.

Lisa Lewin: I think BNY Mellon and Pershing are uniquely positioned to be at the forefront of this theme that we’ve seen continue to develop over the last several years because we service both the wealth management channel and alternative investment clients.

So because of this unique position, where we work with both client types, we have been able to see the interest and the demand grow on both sides. And one of the things that we’ve observed with this trend is an increased interest from advisors in allocating to alternatives, and everything that we hear from this client base is that this interest is only growing. They’re interested in increasing their allocations for their clients to alternatives.

We’ve also seen our hedge fund and alternative manager clients really look to grow their presence with this investor segment for a few reasons. One, they recognise the growth potential because the advisor market is a large market in terms of assets and significantly growing. So there’s the growth potential. It’s also an opportunity for our hedge fund and alternative manager clients to diversify their asset base with a different investor segment than they’ve traditionally targeted.

PBI: Is this shift happening sector-wide or is it a certain demographic?

LL: We’ve really seen this sector-wide. Some of the data that we’ve looked at says there’s currently about 1 trillion today in the adviser market that’s invested in alternatives. This pool is projected to reach up to 100 trillion by 2030 from the data we’ve looked at.. And from that number, we’ve seen that 90 to 95% of advisors across the market are looking to increase their allocations to alternatives. So we feel that’s pretty significant in terms of the interest across the entire advisor channel.

PBI: Alternative investment is a wide definition, is there anything in particular people are interested in?

LL: The alternative investment bucket is wide. It can include hedge funds, private equity, private credit and real estate. We’ve seen interest in a number of different strategies within this alternative investments bucket. It really depends on the specific investment needs. People are looking for diversification from your traditional kind of stock and equity exposure. They’re looking for spreads returns. All of these things are dominant where we’ve seen interest in terms of a particular strategy.

It depends on the specific liquidity needs for the underlying clients of these advisors. Private credit or private equity is going to have less liquidity than a more traditional hedge fund-type vehicle. So I think that also plays a role. But we’ve certainly seen interest in a number of different strategies across that alternative investment.

PBI: Is this coming from a place of interest or a place of demand?

LL: I think it’s both actually. It is almost like one feeds the other because people are demanding higher returns. They’re looking for other areas to find these returns and so that’s driving their interests in these alternative strategies.

PBI: Where does BNY Mellon Pershing come in?

LL: I think we help in a number of ways. First and foremost is our INSITE Conference, which is happening next week, and we’re actually hosting a panel on the topic of the democratization of alternatives. We are going to have a mix of both alternative investment managers and representatives from the advisor community talking about this topic specifically. So they’ll be presenting their views from both sides.

From the adviser side, it will be about why their clients are interested in alternatives, and how they’re helping their clients access alternative structures. And from the alternative manager side, they’re going to be sharing their views and perspectives on how they are helping advisors, whether it’s through new product creation, different education initiatives, or making these types of investment opportunities more accessible to their clients.