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BNY is buying Archer, a leading provider of managed account technology, as the global bank seeks to capitalise on the rush into personalised investing strategies.
The newly rebranded bank plans to use Archer’s technology for its own investing arm as well as sell it to asset manager clients who want to expand beyond pooled funds to individually tailored portfolios of securities, known as separately managed accounts (SMA), or as unified managed accounts for clients that hold both securities and funds.
The $5tn managed accounts market grew nearly 15 per cent last year, and is expected to top $8tn by 2027, according to data firm Cerulli. The products are popular because holdings can be tailored to minimise income tax and to express the owner’s values, such as a preference for using environmental, social and governance (ESG) factors to invest.
The deal is part of BNY chief executive Robin Vince’s efforts to modernise the public profile of the US’s oldest bank. Known for its custodian services, BNY is trying to sell itself as a platform providing a range of services to financial customers.
The separately managed accounts market is highly concentrated with a few large providers; BNY said it hopes to win business from new entrants and from asset managers looking for expert help. Archer, which was founded in 2000, is the largest outsourcing provider in the market, servicing about $600bn in assets, or more than 10 per cent.
“It is a market that all of our asset management clients have been expanding in . . . and Archer has cracked the code,” said Emily Portney, BNY’s global head of asset servicing. “It underscores . . . that we are a solutions business.”
BNY did not give a price for the Archer deal, which is expected to close later this year once it receives regulatory approvals.
Archer’s technology supports 400,000 different investment portfolios for brokers and investment advisers. The software allows customers to follow model portfolios and make adjustments based on their client’s personal preferences. The accounts are often used to offer tax loss harvesting, which lower income tax bills by selling some assets at a loss to balance other gains, and direct indexing, which replicates an index through individual securities holdings.
BNY is already a client of Archer. The privately owned group has averaged a 20 per cent annual growth rate for the past five years, said chief executive Bryan Dori, who, with his top executives, will be staying on after the deal closes later this year. The 185 employees of Archer will participate in BNY’s internal stock ownership programme, which began offering BNY shares to all employees in 2023.
The three biggest separately managed account providers are Goldman Sachs, Morgan Stanley (through its Parametric subsidiary) and JPMorgan Chase. BlackRock expanded its own offerings earlier this year by taking full ownership of SpiderRock Advisors.
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