Between sessions at INSITE, Pershing execs describe how they'll spell victory in their grand custody merger -- and what stands in the way

Brooke’s Note: We have written scads of articles about supposed integrations of brokerage, bank and RIA custody. It never turns out to be fully baked. So when Dina asked what would be new to learn at the Pershing INSITE conference, I asked her to try to determine just how far Pershing has gotten with integrating its RIA unit with BNY’s RIA custody unit. Certainly the management changes are happening. Mark Tibergien is in charge. The devil is always in the technology. And that appears to be the case here.

The result of the long-labored-over integration of BNY Mellon and Pershing is kind of like putting Dunkin’ Donuts and Baskin-Robbins under one roof — they’re still separate companies, but to get your mocha latte and rocky road in one fell swoop you need only go to one store, stand in one line and get served by one person.

That’s how Gabe Garcia, director and head of relationship management and consulting at Pershing LLC, described the finally arrived yet still-in-process combination of its custody unit with that of parent Bank of New York Mellon Corp. on the second day of Pershing’s INSITE 2013 conference. The confab, held under slate-gray skies at the Westin Diplomat in Hollywood, Fla., was attended by1,800 advisors. See: Pershing draws a record crowd to steamy Miami but many hearts are in D.C..

Two platforms, one door

Although the company’s integrated bank and brokerage offering was formally announced last month, there are still hurdles to clear in perfecting the integration of the technology. See: Pershing and BNY Mellon unveil a unified, 'dream’ RIA and bank custody unit.) There was agreement among executives at the conference that the big mountain to climb in the next year is perfecting the integration of the technology.

NetX360, the Pershing Advisor Solutions platform, and BNY Mellon’s, Advisor Workbench, have been linked, as of May 1, through an entry point on the NetX360 site, at which point an advisor can “swivel” to Workbench, Garcia said in an interview yesterday. See: Suresh Kumar moves on to BNY Mellon and Pershing and NetX360 adjust to life without the maestro.

For regulatory reasons, the two platforms will continue to remain discrete. But the end goal, one that company executives say will take a year to complete, is to create a single portal from which to enter both sites.

Garcia stresses that technical obstacles aside, troops on both Pershing’s and BNY Mellon’s custody units, both based in Jersey City, NJ, stand ready to serve any advisor client who wants to use the bank channel. “We serve day-to-day needs. Brokerage accounts, checkbooks, debit cards. statement from last year,” he says. “We’re one team.”

Mark Tibergien: If that happened —
extraordinary victory.

Pershing Advisor Services is in talks with eight of its advisors with a combined $960 million currently keeping assets under custody with banks other than BNY Mellon hoping to lure some or all of those funds to Pershing. One of those firms, Garcia says, has $500 million with Northern Trust.

“They can move [the money from] Northern to us and have trading, service and technology — someone to see the value of entire relationship,” he says. See: Former Northern Trust CIO brings a cool billion and lofty credentials to HighTower.

Success metrics

Given Pershing Advisor Solutions’ strategy of targeting advisors in the high end of the high-net-worth market, the unit’s CEO, Mark Tibergien, believes that BNY Mellon’s private bank, with its gargantuan balance sheet, will appeal to end clients who are interested in not only making more money but investing the money they have — taking out “jumbo mortgages” for instance, and otherwise borrowing large sums with the aim of building more wealth.

Gabe Garcia: We’re one team.

Asked how he would measure success of the project, Tibergien said he would be thrilled if the adoption rate of advisory clients who use the bank platform is 15% a year from now.

“If that happened — extraordinary victory,” he said, pointing out that “changing custodians is not a fun experience. It’s like getting up and running on the beach. It’s hard to get started, but once you do, you’re healthier, fitter, stronger.” See: After trying life as two silos, the custody units of BNY Wealth Management and Pershing will largely merge.

To Jim Crowley, chief relationship officer and managing director at Pershing LLC, success would be “growing faster than the market at a multiple rate. It’s doable based on our unique position in the marketplace.”

When asked about the competitive threat posed by LPL, which, as a hybrid, can keep both licenses with one company, Crowley declined to address the independent broker-dealer directly but did say: “Competition is challenging. It goes back to [the premise that] firms have got to be specific about business propositions and to deliver based on needs investors have…. Our goal is to be a single custodian regardless of model, regulator, operation or service delivery.”

Robert Gates: The image of donning
a blond wig and high heels
was just too scary.
See: LPL shows flashes of its new image at Financial Masters 2013.

2 men to fill one pair of pumps

The conference began with a significant last-minute substitution. Former Secretary of State Hillary Clinton was scheduled to deliver the event’s keynote on Wednesday but was obliged to bow out to deliver a eulogy for Sen. Frank R. Lautenberg (D-N.J.), who died Monday.

According to Tibergien, the company’s crack event team lined up Robert Gates, secretary of defense under Presidents George W. Bush and Barack Obama, in a matter of hours. Tibergien delivered the keynote Wednesday in Clinton’s stead and Gates jetted in from Seattle late that night, arriving just in time to deliver the opening address Thursday, receiving three standing ovations.

He declined, however, to dress the part. “However unexpected subbing for Hillary was,” Gates remarked, “the image of donning a blond wig and high heels was just too scary.”