Mark Tibergien is making Pershing an industrial strength custodian with an RIA service touch

Brooke’s Note: This is the fifth article in the Asset Custody Project series.

To some financial advisors, it seems like Pershing LLC made its big move into the mainstream of the RIA custody business in 2007 — and then nothing much happened.

The company caught the industry’s imagination that year by hiring Mark Tibergien away from consulting firm Moss Adams LLP of Seattle. He arrived on the heels of the company creating Pershing Advisor Solutions in 2006, which had formerly been known as Investment Manager Services.

Tibergien had made his name as the top management consultant at Moss Adams, and some people believed the new CEO of Pershing Advisor Solutions could wave a wand to make Pershing’s assets balloon.

Instead, what Tibergien did was what consultants do best: He set a long-term plan. Then, he methodically began to execute it.

With the RIA strategy now fully shaped, 2010 looks to be the year that Tibergien makes his presence felt.

Out-Schwab Schwab

The Pershing executive has long maintained that he wasn’t going to try to “out-Schwab Schwab” by being all things to all financial advisors. His plan, instead, was to focus on RIAs that truly needed more specialized service and products.

These RIAs include ones with $100 million or more of assets under management – and primarily ones that serve high net worth investors with sophisticated investing needs. For instance, one area of specialty Pershing has is serving investors with the need for global services.

Tibergien just returned from Dubai, where he was working with a family office based there, he says. In May, he has a trip planned for London, where he’ll explore how Pershing can better serve the IFA market. Independent financial advisors are the British equivalent of RIAs.

Competitive edge

Heading into 2010, Tibergien believes that his company is establishing a competitive edge in the RIA custody market in four areas:

1.)Service: When Tibergien arrived at Pershing, improving service was paramount. “In the past, it wasn’t our best foot,” he says. “It was among the most unpleasant conversations I had” with clients upon assuming the role of CEO, he said. “Now RIAs are naming names and singing praises” of Pershing service personnel.

Pershing turned the quality of its service around by taking a page out of Schwab’s playbook — and a few of its play-makers.

“We were so impressed with Schwab’s service that we hired 14 of their people in the past two years,” he says.

Many RIAs consider Schwab to be the standard bearer of good service in the asset custody industry. It rates high in surveys and in anecdotal reputation, and Fidelity is rolling out a new service structure that Schwab’s former RIA chief, Charles Goldman, helped to design.

Pershing Advisor Solutions also made Evan La-Huta its director of client experience in 2010. He was previously a director in Pershing LLC’s quality management office.

La-Huta is reviewing processes of PAS with an eye toward improving accountability for better response times, fewer errors and measures of professionalism, Tibergien says.

2.)Products: Pershing committed to improving its product offering last year when it hired away Natalie Wolfsen, a vice president of products at Schwab Advisor Services. She became head of all new products for Pershing in July of 2009. Pershing now has global investments, fixed income offerings and alternative investments that are superior to its competitors, Tibergien says.

It also offers 138 money market funds, which is a level of open architecture not seen at competitive custodians, he adds. Other custodians tend to steer RIA cash into proprietary money market funds, according to Tibergien.

3.)Technology: Pershing continues to roll out its NetX360 software for advisors. This represents one of the more ambitious efforts by a company in the advisory industry to create a single platform for transactional and fee-based business. No platform is smooth and bug-free right out of the gate, and various observers around the advisory industry say that NetX360 has not been immune to challenges. It is being rolled out slowly because it is a desktop application and many features and interfaces have yet to be developed. Tibergien declined to say whether the rollout will be completed by the end of 2010.

Nonetheless, there are advisors, broker-dealers and consultants who are highly impressed with NetX360.

State-of-the-art

“NetX360 is absolutely state-of-the-art,” says Charles Huebner, managing principal of Pointe Capital Management LLC, made up of a group of breakaway brokers from UBS last month with several hundreds millions of dollars of assets under management.

To read about independent broker-dealers who brought hundreds of reps to Pershing to take advantage of NetX360, click here https://www.riabiz.com/a/6015

To read the RIABiz review of NetX360, click on:“Nevin looks under the NetX360 hood”: https://www.riabiz.com/a/7036

4.)Practice management: “Pershing is the leader in practice management,” Tibergien says. “It’s the training I bring” as a veteran of Moss Adams LLP.

Recently TD Ameritrade raised its profile in practice management by publicizing the thousands of consulting engagements it has provided to RIAs in the past year. Schwab has had a big, well-regarded consulting practice in place for several years and Fidelity Institutional Wealth Services is also solidifying its program.

But Tibergien believes that Pershing has a fundamental edge. “In their case it’s value-added,” he says. “It’s a fundamental part of our offering – not a bell or whistle.”

Tibergien’s involvement with his firm’s 530 RIAs with $74 billion of assets includes training the company’s relationship managers and helping with the strategic planning with big practices. He also makes himself available as a sounding board for all Pershing RIAs.

“I’m a pretty hands-on CEO,” he says.

Overarching reason

Notwithstanding these Pershing features, there was a more overarching reason that Huebner and his big UBS team are setting up an RIA using Pershing as a primary custodian. He liked the solidity of the BNY Mellon balance sheet and as a former Goldman Sachs executive he couldn’t get comfortable with the idea of doing business with companies like Schwab, TD Ameritrade and Fidelity.

“Some of these guys are basically in competition with you,” he says.

He adds: “Coming from Goldman Sachs, I know how securities are meant to trade,” he says. “There’s too much spread [between bid and ask prices] in the retail community.”

Huebner adds: “We settled on Pershing because they lined up with our client business,” he says. “They didn’t do business with a lot of small clients.”

Didn’t have the systems

He also considered using the services of Northern Trust and State Street before deciding against them. “The trust companies didn’t have the systems” for handling RIA business, he says.

Name of custodian: Pershing Advisors Solutions

Address: One Pershing Plaza Jersey City, NJ 07399

Phone number: 800-445-4467

Founded: 1999 as Investment Manager Services and relaunched as Pershing Advisor Solutions in 2006

Parent company: Pershing LLC, a BNY Mellon company

Total Assets in custody: $74 billion

Number of RIAs using platform: 530

Head of RIA custody business and executive’s starting year with the company: Mark Tibergien 2007

Head of RIA sales and relationship management starting year: Jim Dario 2008

Name of RIA technology platform: NetX360

Date of last major update on tech platform: June 2009

Minimum assets for advisors: $100 million with exceptions for fast-growers and RIAs with more assets to follow

Size of biggest advisory client by assets: Largest PAS client has $3.5 billion on the PAS platform. Largest advisory firm that has a relationship with PAS has almost $40 billion in AUM.

Custody fees [including fees for RIAs that fall under the minimum]: none

Brand names of [now defunct or soon to be] custodians absorbed by custodian: Neuberger Berman’s RIA custody business