The new leadership continues to push RIAs to see the custodian as less niche but more nimble

June 11, 2018 — 7:33 PM UTC by Guest Columnist Timothy D. Welsh


Brooke's Note: The message from Pershing was always to judge the book not by its industrial cover but by the pages within. But as time passes and the quality of competitors rises, Pershing is necessarily taking on a more refined look. For RIAs, it has always been about Mark Tibergien -- and it still is. But the master now has Lisa Dolly above him and some well-seasoned young executives right below him in Gabe Garcia and Ben Harrison. That new look was in evidence in Florida, making the unthinkable -- Tibergien's moving on, as he hints at -- thinkable and Pershing, the old wholesaler of distribution, is finding a little bit of a retail polish including a new level of user-friendly software.

It was the Lisa Dolly show in Orlando, Fla. as Pershing projected an image of power -- as always -- and finesse, a more fashionably late-arriving quality at the clearing custodian.

The CEO of Pershing LLC -- the only high-level woman executive in the Big Four custody-clearing pantheon -- presided over an event where the Jersey City, N.J.-based firm took equal, unspoken shots at super-rivals like Fidelity Clearing & Custody Solutions and up-and-comers like Omaha, Neb.-based TD AmeritradeWhy Pershing's CEO pick looks uninspired, and why that look may be deceiving.

Safely past her rookie seasons, Dolly played on the four pillars of stay-awake-at-night RIA fears -- starting with what happens when you are too small to battle giants. She brought her energy to a packed crowd of over 2,300 advisors from RIA firms, independent broker dealer-executives, third-party consultants and hundreds of vendors.

"Bigger is better," Dolly said of Pershing's parent, BNY Mellon, which has custody of more than $33 trillion of assets -- and $1.9 trillion of AUM for good measure. Part of the Dolly finesse is to reclassify a bunch of corporate RIA assets as broker-dealers always put on the clearing side of the business.

Now, Pershing counts $615 billion of RIA assets. The old trick of new math Pershing used to make its RIA assets in custody soar from $200 billion to $615 billion in one year

It is, at face value, the seeds of a massive RIA asset growth story. When Mark Tibergien, Pershing Advisor Solutions CEO, took over in 2010, those assets, counted more conservatively to include only classic RIA assets, stood at $53 billion. See: Pershing clarifies how it's the un-Schwab and a far-flung crowd pours in to South Florida.

Other RIA fears include: becoming software-obsolescent, running short on talent to compete and complete succession and the fear of not being able to manage the firm as rivals hire professional managers. See: The big impression Mark Tibergien and his reverse mentor, Kayla Flaten, 25, made on me over a Manhattan lunch.

'Coach and counsel'

Mark Tibergien with Pershing colleagues Karen Novak, Gabe Garcia and Evan LaHuta.

Dolly said BNY Mellon is investing an additional $50 million over the next several years to bolster its staffing and improve the client experience through technology innovation, as well as investing in marketing programs to further increase advisors' ability to grow.

“Advisors are starting to have a conscious strategy around the future of their business, viewing people as an investment, not a cost,” Tibergien said, commenting on Pershing’s strategic investments.

“There is now a growth in professional management, a focus on businesses rather than practices, and our goal is to coach and counsel these firms to hire professional management, gaining experts in running the business which can be transformational.” See: Eavesdropping on the Moss Adams workshop: How big and broadly owned your firm should be.

Dolly added: “The talent shortage in the industry will become even more acute and costs will continue to rise.” See: Tibergien uses brutal honesty to captivate big Schwab RIAs and others at San Francisco event.

Conversation imminent

In a world of mounting profit-margin pressures, it is the rival custodians that are cruising for a bruising, according to Tibergien, who joined Gabe Garcia, a managing director at Pershing, and colleagues Evan LaHuta, head of client experience and managing director at PAS; Karen Novak, chief operating officer; and Ben Harrison, managing director and head of new business development for a sit-down that I joined prior to the kick-off of Pershing’s 20th annual INSITE conference.

“At what point do you become valuable or not to a custodian based on size?” Tibergien asked. “This conversation is imminent and will go hand-in-hand with the overall consolidation in the industry as advisors retire.“ See: TradePMR is making RIAs sign a promise to succeed -- to good effect.

The internal tussle for RIA custodians about whether to absorb the losses of small RIA -- ones with $25 million to $50 million in particular -- or levy a charge to offset expenses is nothing new. Some rivals like Fidelity charge $10,000 to small RIAs. Pershing's answer has been to accept only larger RIAs -- typically ones with $150 million or more in managed assets. See: Coming RIA custody fees and a new recruiting war catch the attention of deal hounds in Manhattan.

Yet for all the talk about size, Pershing is nonetheless using more of a little guy, underdog approach to technology -- coming late, but with great zeal, to the open architecture, AI and digital technology -- even biology -- game.

The main stage at Pershing’s 20th annual INSITE conference.

“We are just at the tip of the iceberg with technology,” Dolly said, citing AI technologies that will combine the digital, physical and biometric worlds to drive advisor productivity, predict client needs and simplify identification. See: Part of futuristic Pershing Insite 2017 is Mark Tibergien letting RIABiz know that he is intensively grooming his own successors.

Password is...

Ram Nagappan, chief investment officer of BNY Mellon-Pershing, and his tech team demonstrated slick facial recognition and biometric mobile apps that can eliminate the need for passwords and swiftly verify a client’s identity for money movement approvals.

“The majority of service calls we take are related to passwords,” he said, making this a highly sought-after feature to get into production. See: One RIA's bid to make the technology that makes it possible to use one password.

Jim Crowley, Pershing’s chief operating officer, then detailed the many new investments and enhancements Pershing is making in its custody and clearing platforms, including new apps for third-party technology integration in the Pershing API Store, along with the introduction of new “components” that are a combination of an API along with pre-configured interface templates pre-loaded with business rules and logic to streamline integrations and gain speed to market.  See: Alert to Pershing's API move and eMoney's dashboard acumen, TD Ameritrade brings its API partners to Texas to drive home its first-mover advantage.

This “componentization” will allow for drag-and-drop capabilities so that firms can customize their advisor and client experiences in their own advisor and client portals, integrated with Pershing’s data and client service tools. See: With Pershing as canvas, Dan Skiles and Peter Mangan paint a picture of a budding RIA custodian.

Dan Seivert of ECHELON, Greg Friedman of Private Ocean, Brian McLaughlin of Redtail and Kevin Hughes of MoneyGuidePro raised a glass at INSITE in rainy Orlando last week.

Other platform enhancements Crowley mentioned were a tighter integration with Envestnet Inc, simpler onboarding through Salesforce Inc. and a custom integration of MoneyGuidePro to better facilitate planning experiences for both advisors and their clients.

Future shock

Open API aside, Ram Naggapan, chief information officer at Pershing, boasted about Pershing's big data vault for the machine-learning component of portfolio management.  

“We have created a ‘deep’ portfolio construction and rebalancing system to simulate the mind of a portfolio manager by feeding it over 60 million portfolios and characteristics such as client risk tolerance, mean variance analysis, Sharpe ratios and more so it can learn and optimize portfolios via a neural network.”

What went unmentioned in talks of software aspiration was Pershing's robo integrations that included Marstone, SigFig, Vanare and Jemstep. See: Mark Tibergien reveals big Pershing robo future as his firm partners with Vanare, SigFig and Jemstep -- and follows TD Ameritrade's open API lead

Nagappan and his team are also experimenting with virtual reality technologies to simulate a 3D experience for clients to virtually explore meeting their financial planning goals. 

Comey calms, Leno kills

Ram Naggapan (3rd from l.) models his advanced technology lab team.

INSITE is widely known on the conference circuit for its high-profile keynote speakers, and this year's iteration did not disappoint.

Opening day featured a fireside chat with former FBI director James Comey. He regaled the crowd with his experiences prosecuting Martha Stewart for insider trading, dealing with Mafia crime bosses, managing the political calculus of the Hillary Clinton email scandal, as well as dealing with President Trump, who he said is basically a “forest fire” that will ultimately do short-term damage to the country. But the result of the fire will be stimulate future growth to heal the wounds Trump has caused, Comey reassured attendees. See: How the Trump phenomenon boils down to the benefits of animal spirits vs. Animal House.

Also on the docket were well-received keynotes from former Zappos executive Jennifer Lim, Square co-founder Jim McKelvey speaking about happiness, along with noted futurist Michio Kaku and conference-closer Jay Leno, whose 20-minute stand-up routine killed it on the general stage and was a first on the conference circuit for a comedy routine.

Rain-drenched pub crawl

The balance of the agenda was chock-full of technology, business, practice and marketing management sessions, along with frequent breaks in the exhibit hall. Despite the blandness of Orlando, vendors and exhibitors carved out various restaurants, bars and patios to entertain clients, network and touch base on the vast content contained in INSITE. Next year, the event is being held in Phoenix, Ariz. June 12-14 -- its first foray west of Orlando.

The final-night event was a block party at Pointe Orlando that featured a half-dozen restaurants, bars and nightclubs open to the INSITE attendees.

Despite the torrential rains, everyone had a great time watching the Washington Capitals wrap up the Stanley Cup and the Golden State Warriors win game 3, poised to win in a sweep over the hapless Cleveland Cavaliers.

To learn more about what went on at Pershing’s 20th annual INSITE conference, check out the many tweets on the #realinsite hashtag on Twitter.

Timothy D. Welsh, CFP® is President and founder of Nexus Strategy, LLC, a leading consulting firm to the wealth management industry, and can be reached at or on Twitter @NexusStrategy.

Mentioned in this article:

Pershing Advisor Solutions
Asset Custodian
Top Executive: Mark Tibergien

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

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