CEO; Pershing; Jersey City
A BIG CHANGE RENDERED BY THE FINANCIAL CRISIS?
“The premium on the safety and stability of your clearing firm … has become a much more important criterion — and that definitely plays to our strength.”
For Brian Shea, a bit of good luck 28 years ago cracked open the door of opportunity. Brainpower and hard work propelled him to the top.
Promoted last October to CEO of Pershing, the BNY Mellon-owned market leader in clearing — with more than $900 billion in assets in custody and 1,500 clients globally — Shea, 50, kicked off his long career at Pershing right out of college.
“Brian understands so many aspects of our business beyond most mortals because he’s had experience in so many different [areas] of it. That gives him a distinctive perspective,” says Richard Brueckner, Pershing chair.
In tandem with Brueckner, Shea had been active in the company’s leadership as president-COO for nine years, when Brueckner, formerly chair-CEO, promoted him last fall. Now he’s at the helm of all Pershing affiliates worldwide, which embraces 21 offices and 6,000 associates.
He came onboard when the clearing business was, well, strictly clearing. Now the client- and service-focused Shea calls the description, clearing, “outdated.”
“We’ve dramatically changed our business model. Instead of looking at it as a clearing business,” he says, “we see it as: How can we deliver variable cost solutions and create shared economies of scale across the entire investment process to reduce customers’ costs and make them more competitive?”
During the past three years of difficult markets, Pershing — whose clients include Deutsche Bank Securities; Keefe, Bruyette & Woods; and MetLife Broker-Dealer Group — has expanded market share in each of its B-D, RIA and prime brokerage businesses, the last boosted by BNY Mellon’s acquisition last year of PNC’s Global Investment Services business.
Touting Pershing’s recent growth, the unassuming Shea is totally at ease; talking about himself, not so much.
Brueckner, who helped hire him in 1983 and with whom Shea shares an office at the firm’s Jersey City headquarters, calls him “a realistic optimist. He’s very upbeat, smart and reads people well. Brian is outstanding at assigning the right people to a task, bringing them together as a team and managing them to the right conclusion. He leads people across the goal line.”
Further, Shea puts the accent on communicating the firm’s strategic plans to every associate at least once a year and supplies them with progress reports. Why?
“When you’ve got 6,000 people, the critical thing is to have a shared mission and agenda — a sense that we’re all invested in the mission and objectives, and that we’re going to work and pull together to accomplish them,” he says.
At a time when some competitors have reined in strategic investing because of the recession and historically low interest rates that are still squeezing profitability, Pershing is investing for the long term.
“We’re under that profitability pressure as well. But our strategy is that we’re a little contrarian. The best time to expand is during a downturn in the markets,” Shea says. “We’re taking the opportunity to actually double-down and expand our capabilities. While we’re making some bold investments, we’re doing the right thing to position ourselves for the next leg up.”
He continues: “We’re trying to add more value for our customers by investing heavily in technology and the products and services they need.”
Pershing also keeps on being a key player in consolidating the clearing space, where, to be competitive, economies of scale are a must. For example, in November 2010, the firm acquired the correspondent clearing customers of investment banking firm Jefferies & Company.
“Other competitors will [find it necessary] to exit the [clearing] business before the end of the cycle, and we’re happy to relieve them of their burden,” notes Shea.
Born in New York City in the Queens neighborhood of Jackson Heights, Shea earned a BS in business management from St. Johns University, during which time he worked nights at Chase Manhattan Bank’s merchant services call center.
Set to join Chase’s corporate training program upon graduation, he hit a roadblock when the bank suddenly sold the merchant services sector. Under the terms, its former employees were prohibited from working in other Chase divisions.
Cue that good luck: Riding the Long Island Railroad, Shea’s father was chatting with another commuter one day, when he related Brian’s disappointing Chase news. “Send me his resume,” said the fellow passenger, who turned out to be a Pershing executive.
In the firm’s two-year management-trainee program, Shea worked in important areas, including operations, technology, trading, customer service and account management. That experience, on top of the three years’ supervising employees at Chase, gave his career an early spin. And not long after joining Pershing, he picked up an MBA in finance from Pace University.
Collegial dialogue is at the core of his leadership style. “You surround yourself with the smartest, best people and allow them to engage in planning and decision-making. At the end of the day, by having open dialogue, you get the best thinking of a broad range of people, and you tend to make better decisions,” he says.
Shea quickly dismisses the subject of Pershing client loss brought by financial-meltdown mergers, preferring to discuss pressure on B-D profitability and the resultant increasing trend to outsourcing among self-clearers.
“Over the last few years, we’ve attracted more than 40 formerly self-clearing firms to our fully disclosed clearing model. And we see even more opportunity,” he says.
“There are self-clearing broker-dealers whose return on capital would be improved by outsourcing and adopting partnerships with [us]. We’re making some real headway in actively trying to educate people about those advantages.”
But how to ease B-Ds’ pain in making investments required to comply with the upcoming regulatory overhaul? Pershing’s solution: Help them to greater productivity and efficiency, thereby reducing costs in other areas.
“We’re investing heavily in technology because,” he says “we know it’s the key to unlocking our customers’ productivity.”
Photo by Natalie Brasington