Wrapping up INSITE: Execs on the growth of the advisory business -- and what might endanger it

Brooke’s Note: This article contains some nuggets about where Pershing is headed and how its top execs are thinking about its business. But it also includes a slide show halfway down that gives a good feeling for the conference and its participants. As a Red Sox fan, I had a minor heart attack that Bucky Dent was part of the Pershing slide show but I summoned a shred of sportsmanship and left him in. Mr. Dent hit an untimely home run that sunk my home team in 1978.

As last week’s INSITE conference fades into memory, I wanted to share a few more of the tidbits from my lunchtime interview with Richard Brueckner, CEO of Pershing, Jim Crowley, a Pershing managing director who oversees the National Customers group, and Mark Tibergien, CEO of Pershing Advisor Solutions.

Breakaway outlook

Breakaways are still landing at Pershing this year – on both the B-D and the RIA sides – at greater rates than last year, said Pershing executives at last week’s Insite conference.

Tibergien said 16 wirehouse brokers have landed at Pershing as RIAs; Crowley said about 200 have come to the broker-dealer side.

Most people in the advisor business have been watching for signs that wirehouses will adapt to the movement of independents. The executives, including Brueckner said the wirehouses are still engaged in an arms race between themselves.

“I’m glad they’re distracted,” Tibergien said.

He said he sees the breakaway trend continuing because of what he calls the immigrant effect. “Those who have already made the switch send letters back home.”

More caution, less ebullience

Though Pershing is rolling along, and beginning to get some traction in the market as a pure b-to-b alternative to other custodians, the three men were feeling more cautious than ebullient. Brueckner, particularly, emanated caution.

As a Congressional conference committee meets in Washington, D.C., to produce a regulatory reform bill, Brueckner said the key concern for advisors was the fragile global economy and how to nourish it back to health. The power of regulators is limited, he said, noting that the challenges that brought about the financial crisis were in the power of regulators to recognize and address – it’s just that they didn’t.

Complicated world for portfolio managers

The three men acknowledged that advisors face an increasingly complicated world when it comes to portfolio management. With a market that promises turbulence for some time to come, many advisors are looking for options beyond “buy-and-hold.”

Pershing is offering more portfolio management sessions to advisors, and more advisors are taking Pershing up on those.

Competition with BNY Wealth Management

Addressing the news that BNY Wealth Management is planning a more aggressive sales strategy that may put it into competition with other divisions, like Tibergien’s, the men said that they anticipated quickly settling into a working relationship with Peter Berg, the new sales director.

“At least one-third of our advisors already have a relationship with BNY Mellon,” Tibergien said.

Crowley acknowledged that early on, there was tension as Tibergien came on to Pershing Advisor Solutions. Over time, the two men – and the units of Pershing – learned to work together. That working relationship depends on discovering what each individual client needs, and then steering him or her to the appropriate division.

“We just try to be there with choices,” Crowley said.

Retirement platform in the works

Responding to the new interest by advisors in the 401(k) business, Pershing is developing a platform to help advisors serve as plan advisors to small company plans, Crowley said. The company also wants to figure out how it can bring the retirement plan assets managed by its advisors onto its platform. The company now has 2 million retirement plans on its platform.

Pershing in the hybrid market

Twenty-one broker-dealers are now engaged in RIA Complete, which Pershing introduced last April. Through the program, the company offers broker-dealers advice and services for hybrid advisors, or those transitioning into the fee-based space.

One of the biggest components of the platform, of course, is NetX360, the software that has as one of its primary selling points its ability to integrate fee- and commission-based business.