The Pershing leader and former Moss Adams star lit into advisors on practice management issues

June 24, 2011 — 2:50 PM UTC by Brooke Southall

3 Comments

On the second floor of the Ritz-Carlton in San Francisco, the scene was set for Pershing’s one-afternoon advisor event, complete with an ample buffet luncheon.

I arrived early and spotted Mark Tibergien, sporting a pink necktie, who introduced me to a number of other Pershing Advisor Solutions personnel, including Pablo Bizjack and Benjamin Harrison. Harrison is in the process of relocating to San Francisco from Hoboken, N.J. to oversee his company’s efforts to ramp up its West Coast business development.

Bizjack is responsible for bringing RIA assets aboard. He spent eight years with Fidelity Institutional Wealth Services as a vice president before joining Pershing in January. Bizjack’s presence caused a minor stir among advisors who hadn’t known of his move to Pershing.

Peter Berg, who heads up the BNY Mellon’s semi-separate custody effort, was also there as well, having traveled from Boston. See: After trying life as two silos, the custody units of BNY Wealth Management and Pershing will largely merge.

And then, RIAs started to pour out of the elevator and suddenly it was as if a Schwab Advisor Services had broken out.

Fiery speech

This Pershing event, featuring a take-no-prisoners speech by Tibergien pointing out the poor profitability and lax management approaches of RIAs, was not primarily a workshop for its own Bay Area customers. Pershing was hosting a recruiting event for RIAs who might consider adding Pershing as a secondary custodian. The firm is pushing harder into San Francisco because the area is loaded with RIAs, Tibergien says. See: Pershing clarifies how it’s the un-Schwab and a far-flung crowd pours in to South Florida

In attendance were advisors and executives from The Savant Group (Tom Burkhart); Focus Financial Partners, LLC (Rich Gill): Aspiriant, California Investment Trust (Dennis Clark); and Sanctuary Wealth Services (Jeff Spears). Most are Schwab RIAs though Burkhart is more of a Fidelity Institutional Wealth Services client.

In all, there were about 35 non-Pershing attendees including Colin Higgins, president of San Mateo, Calif.-based The Golub Group, which keeps most of its $700 million of assets under management at Schwab but recently opened an account with Pershing.

There could well have been more Schwab people at the workshop had the custodian not been holding its EXPLORE conference simultaneously in Avon, Colo., which no doubt attracted some big RIAs. One example is Roger Hewins, president of Hewins Financial who is helping to report the Schwab event for RIABiz. See: Schwab EXPLORE goes deep into mountains with its biggest RIAs

Using more than one custodian “keeps everybody honest” by ensuring a sense of competition, Higgins says. In addition, The Golub Group has started its own mutual fund that has about $20 million of assets. The relationship with Pershing has helped improve distribution, he adds.

Suicide watch

Anyone who came to see Mark Tibergien in vintage Moss Adams-era form came away satisfied as he regaled the group with anecdotes.

Those advisors, on the other hand, hoping to receive kudos for becoming successful entrepreneurs, might have been disappointed as Tibergien relentlessly chided the group for having failed to adopt basic practices that could result in greater profitability, more growth and an eventually liquidity event. “What got you here won’t get you there,” he said.

Stating what was fast becoming obvious, Tibergien added: “My goal is to upset you.”

His passionate presentation was such that when the cell phone of an advisors went off, Tibergien deadpanned that it must be the suicide hotline returning the call.

Blood, sweat and tears

The basic problem, Tibergien said, is that RIAs employ business practices that yield low profitability and rewards for the owners. He mentioned one big practice where the owner only takes home about $70,000 in annual pay. The owner’s rationale was that he’d make it all back when he sold his big business based on the firm’s high revenues.

Sounding a bit like Mark Hurley of Fiduciary Network, who doubts that many RIAs have any enterprise value at all, Tibergien expressed doubt that that would ever happen for that individual. See: What to make of Mark Hurley’s latest prophesy that most RIA firms will go out with a whimper.

Older advisors, he continued, are laboring under false illusions about the value of their practices.

“They want to be compensated for 20 years of blood, sweat and tears, forgetting that they already were.”

Tibergien also questioned the myopic focus on older investors. “It’s as if when the last baby boomer dies, the world will come to an end.”

Both he and Dan Inveen, managing principal of Seattle-based FA Insight who spoke in the second slot, pushed the crowd to consider raising prices.

Hands down

Tibergien asked for a show of hands to see how many advisors had raised prices in the past year. None were raised. He remarked that typically about a third of hands go up.

He also polled the crowd to see how many hybrid RIAs were present. The silence was deafening.

The message Tibergien was trying to convey is that the best firms should have operating profits in the range of 25% of revenues. These days, the amount is more like 8% for many firms, he said.

Tibergien also believes that many firms are vulnerable because they have not achieved critical mass, which he defines as $7 million to $8 million of revenues.

“If you lose your biggest client and it’s a hiccup then you’re at critical mass,” Tibergien said.

Talent shortage

Profitability is too low considering the pricing pressures that are looming – namely ones associated with labor. Advisors need more talent to grow and signing on qualified employees is going to be expensive – even in this wretched job market – because of an “acute talent shortage.”

“We need 9,000 [more advisors] just in RIA firms in the next five years,” he says.

Tibergien’s solution is for firms to pursue a dual strategy of recruiting and developing fresh talent.

He mentioned one client that decided that hiring fresh talent was too slow a path to growing a staff. But four years later, that person has failed to find any talent by recruiting. In that time, he could have hired and groomed multiple people.

A phone call away

So did Tibergien’s performance win any new business? It was hard to tell, though the affection for the PAS chief and respect for the way he can tear apart a balance sheet in front of a crowd won universal praise. The underlying message is that if you go with Pershing, a top-flight management consultant with your interests at heart is a phone call away.

Higgins says that BNY Mellon sent a strong message four years ago when it hired someone of Tibergien’s skills and reputation.


Mentioned in this article:

FA Insight
Consulting Firm

Pershing Advisor Solutions
Asset Custodian
Top Executive: Mark Tibergien



Share your thoughts and opinions with the author or other readers.

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Elmer Rich III said:

June 24, 2011 — 3:42 PM UTC

We too have noticed a difference in the attitudes of the best RIAs — they want the (usually hard) truth, so do their clients.

Unfortunately, in our industry “happy talk” is the dominant sales and marketing strategy. In a “wikileaks” world, that doesn’t work anymore. If you stretch the truth or don’t fully disclose — someone is going to find out, in seconds, and your reputation is permanently tarnished. Good for Mark.

To be even more contrary, we are seeing our clients be effective with frank disclose or their own weaknesses rather than pretending. It’s unique, helps to clearly differentiate them and surprisingly successful.

Look at it another way — do you want to work with clients (or providers) that can’t stomach the truth?

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Bill Sparks said:

June 24, 2011 — 6:18 PM UTC

Same old story – zero disclosure and smoke and mirrors.
What part of the talk was “brutally honest”? His goal wasn’t to upset RIAs, it was to get them to convert assets to his firm. Why not just talk about the glaring problems at Schwab and position his firm against them? That would get my attention.

The idea that raising fees now will somehow prevent erosion of profitability once there is fee compression is ridiculous. We’re headed to a fixed pricing model based on government mandated numbers no matter what we do.

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Frederick Van Den Abbeel said:

June 25, 2011 — 8:56 PM UTC

Quite frankly I would enjoy being on a panel with the other custody providers in front of a large audience of prospective (or existing RIAs) and let the Advisors start asking their questions. No marketing; straight talk, frank answers. Count TradePMR in!

I’m HAPPY to sit next to my friends at Pershing, Schwab, TD, Fidelity and the others.

Brooke — maybe you can moderate and have the first meet-up in San Francisco? Call it Custodian Olympics.


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