Shirl Penney will grill three of his big vendors on stage in Vegas: Mike Durbin, Mark Tibergien and Bernie Clark

Brooke’s Note: Mark Tibergien, Mike Durbin and Bernie Clark are to be commended. Custody chiefs have squared off before but under the controlled circumstances of Barron’s events where advisors are typically richer than the custody execs (hence in their post-rabble-rousing career stages) and where journalists are kept where they belong — at home. The very willingness of these men to go to Las Vegas to face advisors who might actually have an ax or two to grind and where there are no leash laws for journalists is big. It says: Bring it on. We are okay with who we are and if you find chinks in our armor, we want to hear about it. But these lords of custody, given the pent-up demand for answers, may also be glad that the have five months to prepare.

This time, keep the soft pitches and gratuitous bonhomie to a dull roar.

That’s how Shirl Penney is approaching his questioning of the heads of three of the largest RIA custodians — all of which are vendors used by his firm — when they square off at the MarketCounsel Summit this December.

The chief executive of Dynasty Financial Partners will moderate Schwab Advisor Services’ Bernie Clark, Michael Durbin at Fidelity Institutional Wealth Services and Mark Tibergien at Pershing Advisor Solutions when they appear on the same panel at the Four Seasons in Las Vegas for the regulatory and compliance conference that will run from Dec. 8-11.

Pressing questions

Such panels are known for being heavy on hail-fellow-well-met congeniality and light on incisive critiques and usable information. See: Eavesdropping on the Barron’s Top Independent Advisor Summit and appreciating its vibe.

But this year the executives won’t get to engage in fellowship at the expense of edifying the audience.

Fidelity Institutional’s Mike Durbin and his
Schwab and Pershing counterparts will face
close questioning by Penney at the
MarketCounsel Summit in Vegas in December.

“I’ll definitely make sure there’s engagement,” Penney says. “I do consider them all personal friends but the whole idea is to make it engaging and for the most pressing questions to be asked.”

Though he declined to say what questions are most pressing, new questions arise constantly about how the big custodians will position themselves as their services get viewed more as commodities and their retail arms offer advice that looks more like what RIAs do.

Understandable reasons

There are questions, too, about how much they intend to remain as leaders in the business and practice open architecture. Right now, it remains cumbersome for advisors to deal with multiple custodians — or switch — because these providers (for understandable reasons) jealously guard their accounts.

Fees are another issue. Custodians don’t charge custody fees except to the smallest accounts. But instead, fees tucked inside products and spreads are everywhere. Could a clearer disclosure be created? Another biggie is open API. TD Ameritrade is leading the way in making its code available to third party vendors of software and some technologists believe other custodians will need to follow that lead.

Finally, can the custodians — in a unified manner — be counted on to take on fiduciary-regulatory issues in Washington that affect RIAs — when it might be counterproductive to other channels within their companies?

To ensure questions reflect RIA concerns, the Dynasty chief will solicit queries from the audience. But he has his own ideas, too, about where the vital issues lie.

“We are a client,” he says. “We know the strengths and challenges they have.” See: The two dramatic moments everyone was buzzing about at the MarketCounsel conference.

Cracks in the monolith

This custody panel is highly anticipated at the MarketCounsel pageant as Clark, Tibergien and Durbin are as influential as any players in the industry. Advisor demand to know their plans and intentions runs high — often outstripping supply. (TD Ameritrade RIA chief Tom Nally won’t participate because of a scheduling conflict, according to the Omaha, Neb.-based company’s spokeswoman, Kristin Petrick.)

Schwab, Pershing and Fidelity’s nearly $1.7 trillion of combined RIA assets confer upon the custodians a scale advantage that makes them de facto leaders of the RIA industry — though a changing market has brought this unquestioned dominance into question. See: Part I: Is the era of the monolithic RIA custodian coming to an end?.

One major crack in the custodian monolith has been the rise of an increasingly dynamic and influential mezzanine level of companies — TAMPs, roll-ups and, indeed, regulatory and compliance firms like those of the conference’s sponsor, Englewood, N.J.-based MarketCounsel.

And then there are the RIAs that are transmogrifying in ways that make them players unto themselves — with Marty Bicknell’s Leawood, Kan.-based Mariner Wealth Advisors as a prime example. See: The explosive growth to $20 billion AUM of Marty Bicknell’s second roll-up-like venture, Montage Investments, and where his $8 billion wealth manager fits in.

Enthusiastic volunteers

Another such equation-shifting company is Dynasty, known as a “middle office” fulfilling the vital role of intermediary between custodians and advisory firms. The New York City company directs billions of dollars of assets to the big-three custodians in addition to Minneapolis-based RBC, and even some of the wirehouses. See: Dynasty Financial leads a second $1 billion-range team — now Fidelity RIA — out of Wall Street in as many weeks.

Savant Capital’s Brent Brodeski will participate
in a panel of Barron’s top-ranked
advisors.

Penney adds that the panel members seem eager to participate, based on the fact that his e-mails to Durbin, Tibergien and Clark requesting their presence all got affirmative responses within a half hour of him pushing the “send” button.

Stellar line-up

The custody panel is only one sparkling component of a killer agenda.

Previously committed for speaking are: Mark Cuban, Sallie Krawcheck, former SEC chairmen Christopher Cox and Harvey Pitt, former New York Attorney General and Governor Eliot Spitzer and CNBC’s Ron Insana. See: How Brian Hamburger won speaking commitments from Mark Cuban, Sallie Krawcheck and Eliot Spitzer without throwing money at the challenge.

Also appearing on a panel of Barron’s-ranked independent advisors are Steve Lockshin, chairman of Los Angeles-based Convergent Wealth Advisors; Grant Rawdin, chief of Wescott Financial Advisory Group LLC in Philadelphia; and Brent Brodeski, chief of Savant Capital Management. The panel moderated by Barron’s managing director, Sterling Shea.

Brodeski is author of What I learned at Harvard Business School that doubled my RIA assets to $3.3 billion in two years.