From the July 2009 issue of Investment Advisor • Subscribe!

July 1, 2009

At Pershing, Opportunity

"I've never been as enthusiastic about the industry," said Pershing LLC CEO Richard Brueckner in greeting attendees at the firm's annual Insite gathering on June 3, while noting that "I've been in this business for 40 years." Brueckner recalled the significant changes that have occurred in the industry since last year's conference, and recounted Alan Greenspan saying at the 2008 Insite that "we're in the 7th inning" of the downturn, but also the former Fed chief's warning that we may be in a "26-inning game." Brueckner told the 1,600 attendees and 114 exhibitors that Dr. Greenspan "couldn't have been more right," and that despite the encouraging performance of the market since early March, "it's too soon to call the game."

Brueckner then cited a recent survey that found that 80% of investors are thinking about changing their advisors. "Is that," he pointedly asked the advisors in the audience, "an opportunity or a threat?"

In a private interview on June 5, Brueckner commented on the brewing re-regulation in Washington, saying "it's an unbelievably great opportunity to redefine how we met out regulation across all financial products," particularly, he said, since "there is a whole new set of customer expectations--they're higher." However, Brueckner also argued that "the government has the rules; we need better enforcement."

Brian Shea, president and COO of Pershing LLC, asked at the same meeting, "How do you regulate most efficiently? Who is bearing the cost?" It's investors, he said, which "argues for some prudent harmonization of the rules" regulating broker/dealers and RIAs.

Mark Tibergien, CEO of Pershing Advisor Solutions, noted that for both RIAs and independent B/Ds there's a "margin squeeze and a talent shortage" likely to lead to "more consolidation," particularly since "70% of all advisors are sole practitioners." What worries him, Tibergien says in raising the fiduciary issue and succession planning, is that many aging, sole-practitioner RIAs say they will simply "slow down" as they grow older. "You can't argue you're a fiduciary," he says, "and then not contintue to grow your practice. The way you run your business is part of your fiduciary duty."

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