Pershing clarifies how it's the un-Schwab and a far-flung crowd pours in to South Florida

Patricio Clancy of CFS Advisors perhaps traveled the longest distance to attend Pershing INSITE. His firm is based in Buenos Aires and signed on with Pershing just six months ago after “breaking up” with Morgan Stanley. Clancy said that the wirehouse is no longer serving as an asset custodian for advisory firms based in Latin America like his.

Keith Capasso of RIA Kibble & Prentice took the red-eye in from Seattle to attend. His firm, which manages about $900 million of private client assets and $1.8 billion of retirement assets, just signed on with Pershing, making it, with Schwab, the firm’s second custodian.

Financial advisor George Rand of Infinex Investments, based in Meridian, Conn, is a third-year veteran of INSITE. He and his colleagues, COO and general counsel Bill Cummings and financial advisor Anthony Petisco, chatted happily at the reception the the Exhibit Hall after Thursday’s session.

“I wouldn’t have missed it for anything in the world,” Rand said.

Like most industry conferences, Pershing INSITE an opportunity to renew personal contacts, meet new ones, hear some good speeches and eat good meals.

But amid all the hubbub, Pershing LLC was making its case for how it is different – and superior – to three companies with much bigger retail brands.

Retail chassis

“Our typical [client] feels they’ve outgrown their current custodian. The retail chassis of the industry – Schwab, TD and Fidelity – do retail business. We’re pure B-B,” said Mark Tibergien, CEO of Pershing Advisor Solutions.

In a nutshell, Pershing Advisor Solutions is positioning itself to win professionally managed firms with the capacity for growth that serve clients with complex lives, i.e. philanthropic endeavors, business owners, executives, ex-pats and overseas clients and those interested in alternative investments.

When Tibergien signed onto Pershing Advisory Solutions in 2007, the unit dealt with pure money managers. PAS, which was and is in fourth place, realized they’d have to distinguish themselves to win market share.

“Our competitors dominate – you can’t replicate [their strategy] and hope to win, says Tibergien. “You need an emotional connection to the client. We say to owner of an advisory, ‘we recognize you’re running a small business we want to do it better.’”

The strategy makes sense to one attendee, John Furey, principal of Advisor Growth Strategies, LLC. of Phoenix, Ariz..

Big tent

“It’s a zero sum game,” he said. “Advisors will go to the model that’s best for them. There’s a larger addressable market: wirehouse advisors, other asset custodians – U.S. household investor worth of probably $13 trillion to $14 trillion. It makes sense for Pershing to set up a big tent to capture all they can. It’s a huge world. There’s [still] a bigger addressable market that’s not at Pershing as the wirehouse model diminishes.”

Another way PAS competes with its counterparts is in the customer service arena.

Tibergien says PAS gives advisors far more personal attention than the other custodians: Its average ratio of client-service liaisons to clients is one to eight.

Along with versatile, user-friendly platforms, PAS to give its RIAs “the white glove instead of latex glove treatment,” said Tibergien.

In 2010, 98 RIAs joined PAS with an average commitment $180 million of assets under management.

This year PAS is combining its efforts with BNY Mellon Wealth Management to capture more market share. The two units currently have a combined $93.7 billion in assets and 652 RIAs. See: After trying life as two silos, the custody units of BNY Wealth Management and Pershing will largely merge

Regulation woes

The Dodd-Frank Act was a hot topic at INSITE 2011, so much so that the Legislative Overhaul breakout session was held both on Wednesday and Thursday, with both breakouts attracting sizable crowds.

The sessions, moderated by Pershing chairman Richard Brueckner, explored the topic from the points of view of an SRO: Susan Axelrod, executive vice president of Finra on Wednesday and executive vice president Daniel Sibears on Thursday; lobbyist Ann Costello, manager of government affairs for BNY Mellon; and a legal view from Lee Covington, senior vice president and general counsel of the Insured Retirement Institute.

Dodd-Frank, signed into law a year ago by President Obama, it is being enacted at a glacial pace due to the daunting implementation logistics and a Republican-controlled House of Representatives. The original July 2011 deadline for transferring regulatory responsibility to the states will come and go, said Sibears, and will not likely not occur until early next year.

Too much regulation will have the effect of moving advisory firms offshore as well as limiting services to clients, as advisors will be hesitant to offer inexpensive products because there will be too much paperwork and costs attached, all agreed.

See: CEOs of BNY Mellon, Lincoln Financial and Legg Mason are stubbornly glum on Pershing INSITE panel

Change always occurs in the midst of a crisis, Brueckner commented, often causing a knee-jerk reaction.

World leaders

A great deal of excitement was generated by keynote addresses by former President George W. Bush and former prime minister of Great Britain, Gordon Brown.

President Bush gave an anecdotal talk on Wednesday, speaking about his life during and after his tenure in office and describing the tense weeks of the fall 2008 market meltdown.

“I wouldn’t call me Wall Street,” Mr. Bush said. “I’d call me a West Texas skeptic. Markets are the best way and you have to take the consequences.”

While advisors were impressed and moved by President Bush, they were absorbed and entertained by Mr. Brown, whose talk focused on the financial industry, specifically the effect that the Great Recession is having on the international community.

Brown cited his administration’s declining to adopt the euro in the late 1990s as the main reason his country has escaped the fate of other European countries that were ravaged by the subprime crisis.

Different currencies are vital in a faltering global economy, he said.

“I concluded that euro was a political, not a financial program,” Brown said. “With ‘one size fits all’ currency, you can’t adjust monetary crisis to deal with a crisis.”

Seen and heard

You’d never guess that the financial advisors gathered at the Exhibit Hall on Thursday evening had just listened to a sobering conversation about the future of the industry from three industry CEOs.

Spirits were high in the massive room dotted with kiosks of 135 vendors displaying their wares, serving hors oeuvres, liquid refreshment and offering all manner of promotional merchandise.

Scott Sullivan of USB Financial, a small community bank in Eustis, Fla., said this was his sixth year at the conference. He, like many others, cited the distinguished keynote speakers, the breakout sessions and the variety of vendors as reasons for INSITE’s success.

“This one is the best ever,” Sullivan said.