Tim Welsh gets the consulting godfather to open up about NetX360, how roll-ups roll and the tripling of custody assets at Pershing

September 19, 2012 — 4:38 PM UTC by Guest Columnist Timothy D. Welsh

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Brooke’s Note: Your eyes are not playing tricks on you. Tim Welsh has now delivered, including this one, four articles for us in less than a week from out on the road. It’s not easy; it’s a labor of love and he doesn’t cut any corners. If he didn’t cover the Advent Software and Veres/Bruckenstein conferences, we wouldn’t know what happened — or know what Peter Hess and Mark Tibergien are up to. In this short and sweet interview Welsh gets numerous bits of news about Pershing and views on the RIA business that are valuable to consider. See: Tibergien uses brutal honesty to captivate big Schwab RIAs and others at San Francisco event.

At this week’s Business and Wealth Management conference in Denver I had the opportunity to sit down with Pershing Advisor Solutions LLC chief executive Mark Tibergien. Long known as the godfather of practice management, Tibergien has had a lasting impact on the RIA industry through his past leadership of the Moss Adams consulting unit. When you look at just about any practice-management program at the custodians, broker-dealers and other organizations, the tenets of those programs can be traced back to his legacy over a decade ago. Tibergien has consulted with and developed many of the most successful RIAs in the industry, many of whom credit his advice, guidance and wisdom in getting them to where they are today. See: Veres and Bruckenstein lure big RIAs to Denver to discuss getting even bigger.

His impact has been further extended through his professional development of Rebecca Pomering and Philip Palaveev, who now head organizations of their own (Pomering at Moss Adams Wealth Advisors LLC and Palaveev at Fusion Advisor Network). See: Former Moss Adams star begins to taste success in the 'real’ world.

On the eve of his fifth anniversary as the leader of the Pershing custody unit serving advisors, Tibergien has brought his unique style and sense of humor in providing his thoughts and comments on the shape of the RIA industry today, along with what Pershing has done to step up its game during his tenure. See: Mark Tibergien is making Pershing an industrial strength custodian with an RIA service touch.

No drive by

Tim Welsh: You’ve been at Pershing for five years now. Describe where you’ve been and where you are now.

Mark Tibergien: When I got to Pershing on Oct, 1, 2007, we had roughly $30 billion in assets. Today we have over $100 billion. Our challenge at the time was to find a way to compete with a market dominator, a clone, and a discount broker. And the key to that was differentiation. We needed to flip the paradigm around and identify not what to sell, but who to sell to. See: What headway Pershing’s RIA unit is making after four years under Mark Tibergien.

As part of that process we identified our target client as a firm that is professionally managed, growth-oriented, works with clients with complex lives, and has a capacity to grow. In order to serve these firms, we developed a broad platform of products and services that would better meet their needs than what they were getting from their existing custodian.

These key deliverables were things such as lifting out Moss Adams consulting to create a practice-management offering that was not just “drive by” consulting, but actual meaningful engagement. Additionally, we’re enabling advisors to work with international clients and investments, alternative assets, and more. Our goal is not just to get the breakaway, but to also be the takeaway from other custodians. See: Pershing clarifies how it’s the un-Schwab and a far-flung crowd pours in to South Florida.

Ceding the South Pole

TW: You mentioned international was a focus. What initiatives are successful and where are the growth opportunities?

MT: International markets are definitely a growth story, and we are on every continent except Antarctica (laughs). We have built out a strong platform leveraging our parent company to be in over 50 countries. We are recruiting for talent and are continuing to build the business. We can handle multi-currency and are seeing excellent results in the U.K. assisting advisors with expatriate clients. In fact, I’m traveling to London and Europe just about every two months these days to further drive our strategy there.

Faint praise for roll-ups

TW: The aggregators, consolidators and multi-use platforms continue to make headlines. What’s your take on that industry dynamic?

MT: I’m actually not surprised by their success. When you look at what they’ve created, in many aspects they are really a variation of an independent broker-dealer operating under an RIA model. They are good at attracting advisors who prefer to be employees rather than true entrepreneurs, and from the numbers point of view, there are a lot more of the former than the latter. Also, from an industry backdrop, the RIA segment is really the only area that is growing — retail platforms have shrunk by 10%.

What history teaches us is that the key to success for these “middleware” platforms is to be well-capitalized and first to market, while those who languish in either aspect fail. Advisors like to bet on the winning horse, so those platforms that are well-branded with visible success of recruiting will have a self-fulfilling prophecy. That’s a truly clever strategy.

What’s up with NetX360?

TW: Recently there’s been a lot of focus and attention on technology integration from the custodians. What’s the latest with NetX360? See: Pershing keeps ahead in the mobile space with an Android app and mobile trading.

MT: What I think is not being talked about is the fact that Netx360 has over 105,000 users, which is a huge population of advisors using it on a daily basis. We’ve had nearly 100% adoption. We have over 3,000 programmers and are investing over $350 million in the platform. Those numbers alone are unique in the industry. As part of that technology focus and partnership with our clients we have a feedback button on the screen than enables anyone to submit a suggestion for improvement. Through that button we’ve received over 9,000 feedbacks, which we’ve actively worked on to make NetX360 even better. We’re not talking about what we’re going to build; we’re actually doing it.

The BNY Mellon connection

TW: As you look back on your first five years, what are some of your most proud accomplishments?

MT: Because we are such as large organization, building a deeper linkage with BNY Mellon and integrating our offering with the bank has been a continual effort and our success there has been particularly gratifying. See: BNY Mellon’s new RIA custody unit will collaborate [and compete] with Pershing Advisor Solutions.

But what I’m most proud about is the team we’ve assembled. We’ve created an alchemy of people with the right attitudes who like working with each other. As part of that, we’ve created a unique culture that has been key to our success.

Timothy D. Welsh, CFP® is president and founder of Nexus Strategy, a leading consulting firm to the wealth management industry, and can be reached at tim@nexus-strategy.com or on Twitter @NexusStrategy.

Mentioned in this article:

Pershing Advisor Solutions
Asset Custodian
Top Executive: Mark Tibergien

Moss Adams
Consulting Firm
Top Executive: Rebecca Pomering

The Ensemble Practice LLC
Consulting Firm
Top Executive: Philip Palaveev

Nexus Strategy
Consulting Firm
Top Executive: Timothy D. Welsh

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Elmer Rich III said:

September 19, 2012 — 7:41 PM UTC

Our experience with Mark is that he always shoots straight. Organic growth is very, very hard. Impossible? Impossible to make profitable? Questions that need to be asked.

Research suggest acquisitions, along with divestment, are more productive, especially now. The next 12 months seem critical.

Research also suggest 1st to market is critical.

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