Pershing draws a record crowd to steamy Miami but many hearts are in D.C.

A record 2,000 people including RIAs, independent broker-dealer reps — and even the odd wirehouse advisor — thronged the Westin Diplomat hotel in Hollywood, Fla. for the opening day of the Pershing INSITE 2012 conference. See: Advisors flock to steamy South Fla. for Pershing’s conference and get a glimpse of web-based NetX360.

Brian Hamburger of MarketCounsel was there — he had agreed to speak on a panel months before — but his mind was elsewhere.

At 1 p.m., in the hotel’s cavernous lobby, Hamburger spoke to a reporter while simultaneously checking his phone for updates on the hearing being held in Washington by the House Financial Services Committee regarding H.R. 4624, “The Investment Adviser Oversight Act of 2012.” See: Brian Hamburger hammers the FINRA SRO proposal in a letter.

“This is the big one — there’s no sense in ignoring it,” he said. “It will spell success or failure of the industry.”

Hamburger noted that the investment advisory community must take some responsibility for the situation. “RIAs are a victim of their desire to level the playing field,” he said. See: Brian Hamburger answers the questions about an SRO future that has RIA stomachs in turmoil.

Brian Hamburger: This is the big
one.

Should the bill become law, RIAs will come under of a self-regulatory organization. And while said organization is not named in the legislation, it is widely thought, as Hamburger puts it, to rhyme with 'Rimna.’”

Although Hamburger is optimistic that the bill will not make it out of committee — at least not before the November presidential election — he and his allies, chief among them David Tittsworth, executive director of the Investment Adviser Association, are determined not to become complacent.

“It’s important you don’t leave it for chance,” says Hamburger.

(Leading up to yesterday’s hearing, a number of organizations weighed in regarding the bill including The Consumer Federation of America and the Project on Government Oversight.)

Start all over again?

The legislation, known as the Bachus bill, was on the minds of many advisor attendees whose perspectives, somewhat naturally, given the mix of channels, varied. See: In a pivot, Dale Brown tells Committee that 'SRO’ is a 'misnomer’.

After years as a broker-dealer first with American Express and then with Multi-Financial Securities Corp., Tibor Klein set up his own RIA, Klein Financial Services in Valley Stream, N.Y. It was painful, he said, to have to drop all the licenses he had studied so hard to acquire. Klein shed his last one in December.

Still, he has no regrets. “There’s no added value to being a broker-dealer, Klein says. “It’s fine starting out, but there comes a point when they have their hand in your pocket — you think it’s one, but [it’s really] both.

Klein, who started his practice three years ago, has $100 million in assets with a staff of four.

He is happy with Pershing, which was the clearing company when he was with Multi-Financial.

“It was an easy transition from Pershing to Pershing Advisor Solutions,” Klein says. I like the people behind it. They’re responsive. All custodians have same bells and whistles — it’s raspberry or cherry. It’s when there’s trouble that you find out [if you can count on them].”

One step back

Kris Lewicki, of Kris Lewicki & Associates LLC of Sunrise, Fla., was a rep with LPL until a year ago when he left to set up a solo-RIA practice to attain “independence and no conflicts of interest.” Lewicki reflected that it would be a “step back” if the fee-based channel fell under the purview of the Financial Industry Regulatory Authority Inc..

“We shouldn’t be creating an SRO — we should fund SEC.” What will finally happen, he says, is “anybody’s guess — I’ll go with the flow.”

Lewicki keeps his $25 million in assets under management in custody with Schwab Advisor Services and is attending the Pershing conference as a guest as part of a Financial Planning Association package.

David Shindel, an executive vice president and CIO of United Planners Financial Services of America, a broker-dealer with a corporate RIA, says, “We believe in the fiduciary standard whether under FINRA or SEC” but allows that his firm would feel the effects from FINRA’s side less. He adds: “Harmonization is attractive.” See: How Tom Bradley had a bad sleep but led a good conference for TD Ameritrade.

What’s best for investors

Bernie Clark, executive vice president of Schwab Advisor Services, and Skip Schweiss, managing director of advisor advocacy and industry affairs at TD Ameritrade Institutional had traveled to Washington for the hearing bringing with them hundreds of missives from advisors opposed to the bill.

When asked about his views on the Bachus bill controversy, Mark Tibergien, chief executive of PAS, whose parent company, Pershing LLC, is the top clearing firm in the United States, took a diplomatic stance.

“We think there has to be more of a conversation about what it means to the end-client,” he said. “Broker-dealers feel that RIAs are using regulatory arbitrage in order to have less scrutiny by monitors. RIAs feel the SEC is better than an SRO. Our role as custodian is safety of client assets.” See: Mark Tibergien is making Pershing an industrial strength custodian with an RIA service touch.

Brian Shea, CEO of Pershing, a BNY Mellon company, sent a follow-up e-mail on the topic that expanded on Tibergien’s remarks.

“Pershing serves both broker-dealers and investment advisors who hold themselves to high professional standards and provide solutions which are in the best interests of investors. The current advisor SRO debate seems overly focused on the defense of existing business models and less about the impact on the end investor. Pershing supports a rational, cost-effective regulatory structure driven by what is ultimately best for investors,” he wrote.

'It resounds’

Bill Clinton talks with Pershing’s Frank
La Salla.

The day brought one notable, if slightly unlikely, moment of unity. RIAs, B-Ds and hybrids alike — a traditionally Republican-leaning crowd — seemed won over by sentiments expressed by the top-of-the-bill speaker of the day, former President Bill Clinton.

The 42nd president gave a wide-ranging speech followed by a discussion with managing director of Pershing, Frank La Salla, to a standing-room only audience in the hotel’s Great Hall.

Clinton drew enthusiastic applause several times when he spoke of the need to re-establish trust and cooperation between the warring factions in Congress.

Francisco de la Camara, a senior vice president at Merrill Lynch, based in Fort Lauderdale, spoke for many when he said, “I’m a Republican, but he made good points. Country first. It resounds.”