Posts Tagged Pershing
Join 1,400 Advisors at Pershing’s Insite Conference Next Month – Hear Tibergien, Clinton and 30 More Experts Predict the Future of Our Industry
Posted by Scott Martin in News on May 20, 2012
Four years after Wall Street imploded, “the economic crisis” is still headlining high-profile events like Pershing’s INSITE conference. But long-term clarity is also on the agenda.
After watching the markets implode summer after summer, it’s hard to remember when summer was the time when you could actually sell in May and get out of the office for a few months.
From the collapse of natural gas hedge fund Amaranth Advisors back in the summer of 2006 through last year’s Treasury credit downgrade, the cycle between crises has gotten shorter and shorter, leaving even the best of us less time to digest and learn before the next big bump.
And six years is a long time to wait for the world to get back to normal.
That’s one reason it’s so interesting that the closing session of this year’s INSITE conference from Pershing promises a look back at “Economic Crisis: Lessons Learned and the Way Forward.”
The question is which crisis star journalist Fareed Zakaria will be talking about: last summer or the 2008-9 credit crunch, which destroyed two of the bulge bracket brokerage firms and left the rest of Wall Street reeling.
If you make it down to the conference yourself June 6 through 8, you’ll be able to get the answer for yourself. (Register here.)
Roughly 1,400 advisors and support professionals from all corners of the industry are expected to show up too, along with a galaxy of asset management firms courting their business.
Mark Tibergien, CEO of Pershing Advisor Solutions, and his management team will be on site as well, so the concentration of industry brainpower on the floor is going to be hard to beat.
Getting beyond crisis mentality
What’s great about the continuing education programming this year is how focused the sessions are on the heavy lifting of day-to-day practice management.
While there will probably be plenty of topical chatter on electoral politics, the latest debacle in the euro zone and what Facebook’s thundering thud of an IPO will do to the market, it will stay on the edges of the conference and the conversation.
The real meat looks to be sessions that help advisors roll with change to build better long-term outcomes for their clients and their own careers, whatever surprises lurk around the corner.
A decade ago, topics like “Investing in Highly Volatile Markets” and “Finding Clarity Amid Regulatory Confusion” might have been ignored as abstractions.
Now, they look like absolutely critical refresher courses on how to remain tactically flexible while sticking to the fundamental truths of markets and the financial planning process.
Are those truths shifting along with the industry landscape? Maybe. Interest rates are still depressed, asset class correlations have blown out and even basic assumptions like the 4% retirement distribution rule are being challenged across the board.
Meanwhile, mobile and social technology is fueling the biggest revolution in the way advisors get and share information since the birth of the Internet a generation ago.
Change can be a challenge as well as an opportunity. But as they’ve been saying since ancient Greece, the one thing we can rely on is that the future will look different.
I was just talking to a survivor of the Lehman Brothers crash last week, and he was clear that the industry will never find a “new normal” because there was never an old one to begin with.
All we had then were historical data, variations from the mean and reversions to trend.
All we have now is whatever we build.
Back to basics
The biggest crowd draws at Pershing’s conference are also the biggest survivors: self-help guru Deepak Chopra and former president Bill Clinton.
Chopra is scheduled to give some motivational remarks on leadership. That’s fine. Getting people’s confidence up is what he does.
Clinton will be talking about “Embracing Our Common Humanity.” The session description doesn’t mention anything ripped from the headlines beyond the longest-term geopolitical developments that are drawing people around the world together economically and socially.
That’s probably what advisors who feel adrift most need to hear when the winds of change are battering at your office door. We’re all in this together — clients, counterparties, colleagues.
If one of us gets stressed out by the market or regulatory uncertainty or the lack of transparency on the tax code, odds are good that someone else feels exactly the same way. They might not have any solutions, but working together, we might get through the worst of it.
That’s what your clients come to you to get, and it’s probably what a lot of advisors are hungry to hear.
Otherwise, the crisis never ends. It turns out Fareed Zakaria’s speech is going to be less about any particular crisis we’ve all lived through, but about the feeling of perpetual crisis in the market over the last decade.
He starts with the housing bubble and ends where we are now. It should be a bumpy but enlightening ride, and we’ll keep you posted.
Scott Martin, senior editor, The Trust Advisor.
TD and Fidelity Win Top Honor as Advisors’ Most Trust-Friendly RIA Custodians
Posted by Scott Martin in News on October 9, 2010
Looking for an RIA custodian that supports trust accounts? Our survey reveals that Fidelity and TD Ameritrade in particular have come a long way to provide a flexible trust platform that really helps advisors.
A decade ago, all an advisor had to do was provide financial planning and wealthy clients unhappy with wirehouse service would come rolling in. But value is the key word in today’s custody vendor consideration.
Trust services have become a key differentiating factor, and all four of the major custodians — TD Ameritrade, Fidelity, Pershing and Schwab — now provide plenty of institutional support to their affiliates who want to incorporate trust in their business.
“We know that this is an important need for advisors,” says Matt Judge, head of TDA’s wealth management solutions group, adding that “the high-net-worth clients are definitely looking for this and going to advisors who can provide it.”
In fact, Judge estimates that 20% of the assets on the $100 billion TDA custody platform, or about $20 billion, is in now in “some kind of trust account.”
Based on conversations with other custodians, that’s probably the leading edge of the industry. For example, Fidelity, with $300 billion on its RIA books, only reports about $6.6 billion in advisor trust assets.
But the real story is how fast the numbers are growing as advisors wake up to the possibility that they can now put their hard-won clients’ money into a trust without losing the account to a traditional bank trust department.
At Fidelity, trust assets doubled over the last 15 months, says spokesman Steve Austin.
With all four of the big custodians actively competing with each other to offer the best trust platform, strategies vary. This year, TDA wins the trust-friendly prize because its trust support can match any of its competitors, even though we ranked it so low last year.
Fidelity is close behind with the most extensive “a la carte” approach, while previously top-ranked Pershing and Schwab — each of which still offer high-quality trust hosting service — slip down the list primarily because they have not been innovating as aggressively.
|
Trust Friendly RIA Custodians |
||||||||
|
Custodian |
Trust Provider |
Architecture |
Marketing Support |
GST Exempt Trusts |
Asset Protection Trusts |
Directed Trusts |
State Tax |
Score |
|
|
Trust Network |
Open |
Yes |
Yes |
Yes |
Yes |
No |
6 |
|
|
Varies |
Open |
Yes |
Yes |
Yes |
Yes |
No |
6 |
|
|
Trust Network |
Open |
Limited |
Yes |
Yes |
Yes |
No |
5 |
|
|
Charles Schwab Bank |
Closed |
No |
Yes |
Yes |
Yes |
No |
4 |
|
Source: Internal Research. ©2010 TheTrustAdvisor.com |
||||||||
TD AMERITRADE
Although TDA built out its in-house trust operation two years ago through its $225 million acquisition of Fiserv, that business — now rolled into the Maine-based TD Ameritrade Trust Company — primarily caters to retirement plans.
Since retirement accounts operate on a tax-deferred basis, Maine’s state income tax is not a downside factor here. And at this end of the trust business, the ability to offer asset protection, dynastic trust or other sophisticated vehicles that are not available in Maine is irrelevant as well.
For affiliated RIAs, TDA refers trust business to various directed trust service providers, including Advisory Trust Company and Wealth Advisors Trust. Based in Delaware and South Dakota, respectively, they can support all major trust types and do not subject clients to state income tax.
TDA is talking to a few additional trust companies to join its network and add to the menu of options that affiliates can choose from. They promised us an announcement could come soon.
However, if an advisor has a favored trust company outside the network, TDA will accommodate the accounts and any assets in them, Matt Judge says.
“It’s a truly open architecture,” he explains. “While we have partners to refer an advisor to, we can work with anyone that you want to work with.”
In theory, these third-party trustees could even be traditional bank trust departments or outside wealth managers, but Judge recognizes that advisors usually view these trust providers as potential competitors.
“Our partners focus only on the RIA market and don’t compete on advice,” he says. “Advisors retain the responsibility of managing these assets.”
TDA provides extensive marketing and educational support — including a monthly webinar and breakout conference sessions — for advisors looking to either add trust to their business or beef up their existing trust activities.
FIDELITY
Fidelity takes a segmented approach, giving affiliated advisors a tiered menu of ways they can structure their trust relationships.
At the most simple, Fidelity is happy to wrap trust assets into an RIA’s main brokerage statement and let the advisor act as trustee. This option is becoming a lot less popular after Rule 206 clamped down on the practice, but Deborah Gaff, the head of Fidelity’s trust services unit, tells me she still sees it from time to time.
Next up the pyramid, the company will act as agent for an advisor who is somewhat comfortable as trustee but still needs a little help running the disbursements and other transactions. At this level, each advisor effectively gets a dedicated trust officer to backstop the accounts.
For those who want to totally divorce themselves from the trustee role, Delaware-based captive Fidelity Personal Trust Company will take over as corporate trustee. All accounts are directed — the advisor is clearly spelled out as the investment manager of record.
Fidelity Personal Trust supports all major types of trust except special needs trusts, in which the firm prefers to act as an agent for a family member, Gaff says.
Finally, Fidelity will refer advisors to its own growing network of independent trust companies, which include First American Trust, Colonial Trust, Santa Fe Trust, and others.
In any event, the company has ramped up its marketing support for affiliates who want to offer trust to their clients and prospects.
PERSHING
The smallest of the four major custodians, Pershing still shines by pioneering the “trust network” or open architecture approach to trust services.
Like TDA, the company has no true in-house trust company that faces the advisory channel. Instead, affiliates are referred to various directed trust vendors: Advisory Trust, Reliance Trust, Santa Fe Trust and Wilmington.
Between them, they provide all major trust types and will serve a wide variety of accounts.
While the network remains great, Pershing slips down the list this year simply because its competitors have adopted many of its best features.
At this point, open architecture is no longer a differentiator but a de facto industry standard, and we look forward to seeing how the company innovates next year.
SCHWAB
Although Schwab is by far the biggest RIA custodian with 5,500 affiliates and $600 billion on its platform, it is also the only one that has maintained a closed shop where trust assets are concerned.
Rather than give affiliates a choice, the default option is to run trust options through Delaware-based Charles Schwab Bank. (Charles Schwab Trust Company is also available to handle retirement plan accounts.)
Alternative assets remain a sore spot for many Schwab advisors and a potential loophole in this system.
Theoretically, Charles Schwab Bank can handle real estate, limited partnerships and other non-traditional assets that have become popular in personal trust accounts. However, the company’s recent back-and-forth policy on whether it would support these assets on its brokerage platform has shaken RIA confidence in how well they will be able to integrate these trust assets into their overall book of business.
To avoid the angst, advisors may look into setting up trust accounts through Millennium Trust instead. Schwab picked Millennium to provide custody of alternatives “orphaned” by its initial decision to dump these assets, and the platform should still mesh well with Schwab’s system.
Scott Martin, contributing editor, The Trust Advisor Blog. Steven Maimes contributed to the research and reporting.
M&As: A Successful Trust Business Can Sweeten the Deal
Posted by Jerry Cooper in News on December 18, 2009
Banks are eager to acquire registered investment advisors again, firms offering trust services are more attractive.
Pershing’s New Report “Real Deals 2009″ suggests 2010 will be a good year.
This week the news services were filled with stories about mergers and acquisitions once again. One reason was the December 9 release of the Pershing Advisor Solutions (PAS) and FA Insight study – “Real Deals 2009: Definitive Information on Mergers and Acquisitions for Advisors.” It’s now available for download at www.pershing.com.
This morning, The Trust Advisor interviewed Mark Tibergien, Pershing Advisor Solutions’ CEO, at his office. We wanted to know what M&A activity has meant to the advisor community this year. In addition to discussing the current state of M&A 101, we explored what edge an advisory firm might have for acquisition with a solid trust business under its belt.
Tibergien said that having a trust operation as part of an advisory business “does potentially help.” He added that a trust operation gives the advisor “access to the will vault.” This translates into two distinct benefits for the RIA practice. First, accounts are likely to remain loyal because once trust relationships are created with a family they usually hold firm.
Second, advisors with a trust operation possess a blueprint on the direction of future generations. Knowing that future in advance via the trust instrument will give the advisor a clear picture of what’s to come after the client passes away.
Advisors without trust services who manage family money have an 8 out of 10 chance of being fired by heirs after their client dies. The Trust Advisor Blog reported on this phenomenon last September in: Does a Client Have a Life After Death?
Our article presented compelling evidence that providing trust services along with investment advice greatly reduces the likelihood of an advisor being fired by the new generation.
Fiduciary expert Stephen C. Winks said this week that the advantage of trust powers for an RIA are extraordinary. But he cautioned that it wouldn’t make sense for an RIA to buy a trust company. “It would be cheaper,” he said, “to create their own trust company.”
Middle Market Merger Mania
Pershing Advisor Solutions’ Tibergien reported in his third annual study on M&A activity that, while the volume of transactions in the RIA sector is down this year, a new trend of mergers among RIA firms and a decline in financial buyers has emerged. The study showed that In the first nine months of this year, 31 transactions were recorded–a pace similar to the 44 in 2008. But this is still well off the 67 that took place in 2007.
Transactions between RIA firms became the most common form of deal in 2009, accounting for more than 45% of all transactions year to date. In 2008, RIA-to-RIA deals were less than 29% of all deals, and in 2007 they were below 24%.
“The key takeaways [from the study] are that there still is a lot of interest in transactions, but the volume has come down a lot. Most of the activity is tilting toward an RIA-to-RIA transaction and away from serial, or financial, buyers,” Tibergien said. “Most people who are looking at deals are focused on the compatibility of the organization and not just on the financials.”
Tibergien explained that the market disruption over the past 18 months froze capital and forced firm financial buyers sit on the side lines. In his opinion, the financial crisis also opened RIA firm owners’ eyes to the fact that they could achieve economies of scale, meet staffing needs, and establish a better market presence by merging with another RIA firm. He also noted that clients’ concerns about succession following aging owners could be eased through merger.
“I think, however,” he predicted, “there are a lot of pressures in the marketplace today that probably suggest that RIA-to-RIA consolidation will continue unabated for the next five years.” He added that most of the activity would be in the middle market: firms with $200 million to $2 billion in assets under management.
Banks are Buyers Again
Paul Lally, a mergers and acquisitions consultant based in Pennsylvania, says banks are looking for differentiators in the marketplace – to bring a certain cache to their wealth management business. The banks his staff has worked with have retail groups and are successful with the affluent customer. But they are looking to expand their high net worth business. Lally has found that the banks typically don’t have a high net worth platform, offering financial planning, tax planning, and investment advisory services.
The firm Lally was working with was a wealth management firm acting in high net worth space, with average customer investable assets of $1 million. Lally said “banks have come back to the table once again but in a different way. Several years ago banks would come to a wealth management company and just buy it with no questions asked.”
But that all changed since banks have been branded as “wasteful spenders” in the media this year. They have an appetite, but there is no longer a panic to buy. There is no longer a “Las Vegas marriage” where you get married one day and divorced the next. This time, deals are carefully scrutinized and must be approved by both one or multiple parties in the bank and several committees. They take longer and are more careful. But when a bank sees a strategic fit, the bank will likely acquire the firm.
Conclusion
The future looks bright. The New Year will likely be a promising period for RIA to RIA mergers with firm seeking both synergy and compatibility. There will be a courtship period and then a marriage planned to last, not divorce Vegas style. To ensure longevity, as Tibergien put it, the seller must have “his skin in a deal.” There will be no more quick and easy deals where the seller can simply take the money and run.
Jerry Cooper, senior editor, The Trust Advisor Blog.
Pershing’s “Trust Network” Wins it Top Honor as the RIA’s Most Trust-Friendly Custodian
Posted by Jerry Cooper in News, Practice Management on October 16, 2009
Advisor’s frozen in time since last October’s Meltdown have begun to warm up to attracting more “sticky” trust relationships. Our data shows that among the four major custodians, Pershing is the best choice based on more independent options and the best ongoing support.
As the financial winter appears to be behind us, advisory firms are now dusting off their growth agendas in pursuit of capturing more assets and higher quality accounts. With the surge in M & A activity beginning, advisors are looking to support different avenues of growth for developing new trust account relationships.
Joseph Spatucci, Vice President, of Pershing, LLC. says “Seventy percent of high wealth accounts over $1 million are associated with trusts.” This statistic gives RIA’s plenty of motivation to pursue attracting new trust account business.
With bank trust departments no longer interested in accounts less than $5 million there lies plenty of opportunity for the advisor to land new relationships. However, they must have the know how, expertise and support of a trustee firm to harvest this business. The first place an advisor will likely go to for support is their custodian.
This report looks closely at four of the major custodians, Schwab, Fidelity, TD and Pershing as to what their “recommendations” are for bringing in new trust business.
At first, one might think that Charles Schwab, with 52 percent of the market share, $575 billion under administration would be their first choice to go to for such highly complex support. 
However, the Trust Advisor team spent several weeks researching all the custodial firms to determine who offers the best support and resources to help bring in new trust relationships.
Pershing Advisor Solutions, the fourth rank, low man on the totem pole custodian outranked its other three competitors for several compelling reasons. First and foremost, given the fact that a trust relationship generally speaking average account size is $1 million to $5 million that coincides with selecting a custodian that is best suited to support the high end market – Pershing.
Last year, quoted in Fundfire, Mark Tibergien, Managing Director and CEO of Pershing Advisor Solutions said “We can’t out Schwab Schwab in serving the masses.” He added “We are focusing on larger teams wanting to grow their business serving larger clients. We look through the advisor to the end client so the measure of success is not the size of the advisor firm; it is the size of the client.” Tibergien added, “Emphasis is on the wealthier client who aligns itself perfectly to being the best suited custodian for supporting trust business since its average account size is $1.3 million.”
Tibergien’s words are reflected in the account concentration analysis show below. Despite Pershing’s small size, it packs a mean punch when it comes to hosting larger firms with large size accounts.
Last year Pershing launched a “Trust Network”open architecture platform of trust administration providers. This network is unique since Pershing does not have its own in-house trust company as Fidelity, Schwab, and TD have.
They have no agenda or preconceived trust provider to send clients to. They offer a selection of highly qualified and competent trust only administrators who perform trustee and administration services for directed trust relationships.
In this process, the RIA firm is assured of keeping the account relationship since it retains the investment management functions. In addition the providers listed on Pershing’s “Trust Network” offer no custody of assets in competition with Pershing, making a perfect fit for hosting assets on Pershing’s custody platform.
This chart below, Trust Friendly RIA Custodians provides a snapshot of the important features of a trust provider for developing new business. 
Particular emphasis is placed on being directed to providers that support the creation of GST exempt trusts or dynasty trusts, asset protection trusts, these are trusts that protect assets from unwarranted lawsuits and the risk of litigation, and supports directed trusts which permits the investment management to be delegated to the advisor so the client continues to have a seamless relationship with the advisory firm.
In addition, trust providers should recommend trust relationships in tax free states which in particular amongst the three providers noted accomplishing this are, Pershing, Schwab, Fidelity with recommended resources in Delaware.
I spoke Spatucci, at the June 2008 Insite Conference. Spatucci said, Bank of New York Mellon agreed to serve as the trustee for directed trust accounts provided the assets were in the bank’s custody. “That did not square off with us at Pershing”. He added, it forced his team to go off and find a better solution.
Pershing execs, with Spatucci in charge, came up with the idea of the Trust Network which supported the concept of open architecture, meaning that an advisor would not be steered to an in-house custodian-owned trust company, but instead would be fully supported using outside trust providers that it checked out and were added to its network.
In May 2008 Pershing announced the launch of the Network and unveiled its first showcase of providers at the 2008 Insight Conference in June. In attendance, Wilmington Trust, AST Capital Trust, now Advisory Trust and Santa Fe Trust Company all substantial and quality administrative trust providers.
I have had several contacts with the Pershing team since 2008. I have received great feedback from several advisors. For more information on the Pershing Trust Network, call Shadia Kirk, Vice President of Pershing who handles the program. Shadia is very trust literate, understands the issues and can be reached at 1‑630‑472‑6741.
CHARLES SCHWAB
All in one provider Schwab has always been keenly aware of the requirement to support trust relationships with the fact that it must agree with Spatucci’s 70 percent trust relationship metric has gone to considerably to make certain that it hosts a comfortable environment for its 5,500 RIA firms that depend on it for custody and clearing.
The first good decision Schwab made was to host its trust providing resource in the State of Delaware. This permits its trust company to host GST exempt trusts or dynasty trusts, asset protection trusts and directed trusts. Last year, Schwab announced that it would create a stand-alone trust provider in Delaware. For more detailed information on their support call Thomas Forrest, President of Personal Trusts, Charles Schwab Bank in Delaware. His telephone number is 302‑622‑3616.
FIDELITY
According to a 2005 news article, Fidelity seemed to be on a path similar to one that Pershing took last year for a referral program. The program from what we can determine was run by Donna Cournoyer, Fidelity’s vice president for trust services.
From what our research shows Fidelity has done it right by hosting its own trust provider in Delaware, Fidelity Personal Trust Company. This would permit this trust provider to host the special purpose trusts that are required to support these types of relationships. At this point. Donna appears to have left Fidelity last year, with no clear successor. Therefore, the only missing link is to determine who is in charge of Fidelity to connect all the dots. In other words who is the resource person there to contact should one wish to arrange for supported trust services.
TD INSTITUTIONAL
From what I can determine TD Institutional before it was TD and only Ameritrade seemed to be on the right track. It announced in the same 2005 press report that it offered trust services through an open architecture program and referred its advisors to two Delaware based institutions, American Guarantee and Trust and Capital Trust.
Then, an announcement came in January 2007 by Tom Bradley at TD Ameritrade’s chief that it had purchased the business assets of Gayle Weiss and Associates including its trust company subsidiary International Clearing Trust Company.
It was not clear from the announcement how much TD invested for this enterprise but it did say that the purpose of the trust company was not to support its advisors for directed trust relationships but to support defined benefit contribution plan and retirement plans.
The odd fact about this acquisition is that International Clearing Trust Company, ICTC, was chartered in the State of Maine.
Maine is not a GST exempt trust state nor is it a state that supports the type of trust business that advisors are looking for such as from Delaware, South Dakota, Nevada, or Alaska. On April 15, 2008 the State of Maine approved the name change from International Clearing Trust Company to TD Ameritrade Trust Company.
Again another odd move TD Ameritrade purchased a Fiserv Trust Company as a Colorado industrial bank and merged its assets into what appears to be the Maine trust company. Fiserv hosts a thriving business of supporting a custodial and retirement account trusteeships mostly for alternative assets at relatively pricey fees.
I have placed several calls to TD Ameritrade to find out exactly what their trust support policies were and was not able to learn much. I was not able to find a key resource person to let me know whether or not TD supports the directed trust relationships for the creation of special purpose trusts that many advisory firms are interested in pursuing.
As more and more trust business is created, the four major custodians and others are going to zero in on supporting trusts. Pershing in particular at this point seems best suited based on our findings to host this business.
Jerry Cooper, senior editor, The Trust Advisor Blog. Steven Maimes contributed to the research.
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