ORLANDO, Fla. — Pershing Advisor Solutions CEO Mark Tibergien offers a simple response to any client firms or advisors who are concerned that their business model is under threat in the new fiduciary era.
“The beauty of this business is, there’s an oversupply of clients and an undersupply of people who provide advice,” Tibergien says. “Who wouldn’t want to be in an industry with that dynamic? It really becomes a question of, so, how do you get your share?”
Pershing is gaining a sizeable portion of the pie. The clearing and custody firm has boosted its fiduciary assets under custody to $615 billion from only $53 billion in 2010. The Jersey City, New Jersey-based firm is adding more RIA assets through its broker-dealer clients and conversions from bank custodians.
Pershing still trails Charles Schwab’s $1.5 trillion in RIA assets under custody and Fidelity’s $800 billion. However, Pershing serves more than 750 RIAs, 800 BDs and 100 funds, according to the firm. Pershing, a subsidiary of BNY Mellon, also announced $50 million in new investments to fuel its advisory services.
“Helping them with the structure of their organization, the compensation profile, the messaging, their pricing for the marketplace and their competitive solutions that they want to offer to differentiate themselves is critically important,” says Pershing managing director Gabriel Garcia. “So we approach it not from a practice management perspective, but from a business management perspective.”
The $50 million will fund a variety of tech enhancements, new programming and staffing moves. Pershing is bulking up its marketing services, starting a leadership development program and developing an updated version of its NetX360 platform as well as a new managed account platform.
In addition, the firm plans to hire more tech professionals in order “to deepen its integration and digital client experience capabilities,” according to Pershing. The custodian has already tapped company veteran Christina Townsend to act as the newly created head of advisor solutions platform strategy.
In late May, Pershing added a newly launched RIA with $600 million in client assets, Palm Beach Gardens-based Dakota Wealth Management, as a custody partner. The average size of RIA assets in Pershing’s custody, which includes corporate RIAs for its BD clients, amounts to $813 million.
About a third of its $60 billion in growth in RIA assets in the past 12 months came from inflows, with the other two thirds attributable to market-related factors. The rise of fee-based assets in the BD space has added to the growth, and the firm gains about 50 to 60 new relationships per year, Tibergien says.
For example, Pershing grabbed some $2 billion in assets from bank custodian competitors in the first quarter alone, according to COO Karen Novak.
The new business came to Pershing “because of the integration we have done to bring together the two custodial platforms through our technology,” Novak says. “And that’s allowed us to expand our prospecting pipeline to focus on firms that are not on a brokerage platform.”
Part of the new business from bank custodians also came from transferring assets of existing clients to Pershing’s platforms, Garcia adds. His team is working on four “significant opportunities” amounting to more than $500 million each in new assets from current clients, he says.
In general, about half of Pershing’s new assets migrate from competitor custodian firms, and the other half comes from breakaway moves, according to Tibergien.
He cites Pershing’s lack of retail brand conflict with advisors, its capabilities under BNY Mellon, its technology and a like-minded culture among the custodian’s aligned firms as the major factors driving new assets to its platforms.
“If we never get noticed by the end client, we’d be thrilled,” Tibergien says. “We’re not concerned about being proprietary, we’re concerned about being integrated and open and business-solutions oriented.”