How AdvisorEngine, Smartleaf and BNY Mellon’s Pershing Integrate for Modern Trading and Rebalancing
Joseph Konrad

By: Joseph Konrad on August 12th, 2019

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How AdvisorEngine, Smartleaf and BNY Mellon’s Pershing Integrate for Modern Trading and Rebalancing

If you’re an operations leader at a wealth management firm looking to modernize your trading and rebalancing - you’re in luck.

AdvisorEngine has gone live with a new and ambitious trading integration:  an end-to-end trade support cycle that leverages Smartleaf’s model-driven rebalancing capabilities with BNY Mellon’s Pershing technology - combined with AdvisorEngine know-how. AdvisorEngine integrates across multiple custodians, enabling advisors to embrace innovation without disrupting their business.

This four-party integration starts with an advisor who wants to use model-driven rebalancing to add value for account holders. If the advisor custodies at Pershing, they can use AdvisorEngine’s relationship with Smartleaf to leverage a sophisticated new capability. The workflow handles everything from simple fund-only allocation models to complex highly customized, tax-optimized equity accounts — all at unprecedented scale.

The Morning Routine

The daily cycle comes to life early each morning by getting Pershing, AdvisorEngine and Smartleaf on the same page. Pershing, as system of record, initiates the process by sending daily data feeds containing prior-day positions, transactions, prices, and other data to AdvisorEngine. AdvisorEngine then forwards files at the tax lot level as well as up-to-date sales information to Smartleaf.

But Smartleaf needs more than that - they need to know which models apply to which accounts and what the model contents are. These can be maintained by the advisor directly in Smartleaf, or maintained in AdvisorEngine’s system and forwarded to Smartleaf along with the morning position readout. At this point, everyone is now positioned on the same starting line and ready for the trading day’s opportunities.

With Smartleaf directly integrated into the AdvisorEngine platform, advisors can use their single sign-on into the Platform to see the latest data in Smartleaf, queue up rebalancing trades on demand, and trade as they deem necessary to meet the account’s goals and objectives. Trades in stocks, ETFs and open-ended mutual funds are supported. 

The Afternoon Routine

AdvisorEngine polls Smartleaf and grabs the approved trades that have been queued, forwarding them to Pershing for acknowledgment and handling. Mutual fund trades are entered for each individual account for overnight processing, while stock and ETF trades are completed in real-time as consolidated blocks in the advisor’s omnibus (or average-price) trading account at Pershing.

If a block is executed by Pershing in multiple sub-blocks (for example, a thinly traded security) they all get poured into the omnibus account as a single trade and the same average price is applied for allocated account holders participating in the block to ensure fairness. Trades can be monitored through AdvisorEngine’s order monitoring system. This not only handshakes with order creation systems like Smartleaf, it’s also configurable to work with any custodian, manages blocking, sends trade files to executing brokers, tracks order status, and sends end of day allocations.

By 4:30 p.m. it’s time to wind down the day and send Pershing the final allocation for block trades that are known to have been executed. This automated transfer of data tells Pershing which accounts bought or sold, along with how many shares.

The Overnight Routine

Overnight, Pershing affirms the trades for settlement, and by morning they have been booked in the next Pershing file sent on its way to the AdvisorEngine platform, where the client can see the results. AdvisorEngine reviews the actual files received against the original trades to ensure completeness and accuracy, and highlights any unresolved events so that the client has better information as they monitor reconciliation and settlement.

The Power of 4

This tight four-way partnership between the advisor, AdvisorEngine, Pershing and Smartleaf opens a straight-through highway to powerful new growth opportunities, and the quick and easy application of models to generate added value for account holders leverages digital efficiencies to create an exciting new form of mass customization.

The end result – enhanced alpha for end clients delivered from a flexible, expandable menu of investment options – helps solidify the advisor’s relationship with end clients and open new vistas of growth. 

Let’s work together to harness this powerful integration. Schedule a demo today to see how you can initiate this straight-through trading cycle – utilizing Pershing, Smartleaf and AdvisorEngine.


This blog is sponsored by AdvisorEngine Inc. (“AdvisorEngine”) The information, data and opinions in this commentary are as of the publication date, unless otherwise noted, and subject to change. This material is provided for informational purposes only and should not be considered a recommendation to use AdvisorEngine or deemed to be a specific offer to sell or provide, or a specific invitation to apply for, any financial product, instrument or service that may be mentioned. AdvisorEngine makes no representations as to the accuracy, completeness and validity of any statements made and will not be liable for any errors, omissions or representations. As a technology company, AdvisorEngine provides access to award-winning tools and will be compensated for providing such access. AdvisorEngine does not provide broker-dealer, custodian, investment advice or related investment services. 

About Joseph Konrad

As Head of Data Quality at AdvisorEngine, Joseph Konrad builds next-gen systems that help advisors digitally service end-clients of all sizes with a high-quality onboarding experience, risk assessment, investment program management, transparent investing, performance measurement and online reporting.