January 28, 2014

Mark Tibergien Issues Challenge to BD Execs

Mark Tibergien joined Pershing Advisor Solutions in 2007, and since then he has built Pershing’s RIA  business from $30 billion in assets under custody in 2008 to $120 billion. In a speech Tuesday, he challenged a room full of broker-dealer execs to step up their game.

The average advisory commitment to PAS, he said in an interview Tuesday during FSI’s OneVoice conference, is $250 million, and the average client of the RIAs who custody with PAS is $4 million to $5 million. “We had a phenomenal year” in 2013, he reported. He also said “we’re right on plan” in PAS’ goal to be “recognized as the leader in providing custodial” and other solutions to “professionally managed, growth oriented advisory firms,” who have clients “with complex financial lives.”  

Beyond the dollars in custody, Tibergien was even more pleased to report that Pershing had its “best-ever client satisfaction” rating and “highest ever employee engagement” score, which ranks whether PAS employees are “happy and fulfilled.” As for those employees, he said, “we want people who are happy to be here — and our clients [the advisors] feel that.”

Anyone who knows Tibergien and has followed his career would not be surprised that he seems to naturally focus on the importance of having engaged employees, of having clear goals and positioning and of accurately measuring business success. Throughout his career, first at Moss Adams and now at Pershing, in his writings for Investment Advisor and in his industry speeches, Tibergien has been instrumental in calling on advisors to turn their practices into businesses, to apply strict metrics to their businesses, to have a clear vision of who their ideal clients are and to warn of an advisor shortage just as demand for advice is peaking.

In an address to a group of a hundred or so independent broker-dealer executives on Tuesday morning at the conference, Tibergien was his old self: challenging those executives over their business models and compensation methods, encouraging them to focus their positioning, cajoling them to build better businesses and asking them to look 10 years into the future, to “begin with the end in mind,” to determine what they should do now to achieve their goals a decade from now.

Among his challenging statements:

  • “This is a business built by and for boomers, but that won’t last for long,” and since the investable assets of investors under 45 is the same as those over 45, it’s high time for BDs and advisors to focus on the generations following the boomers. They just might find success with younger advisors and employees, there's much that can be learned from younger people, Tibergien suggested. That's been his own experience in a program at Pershing where his reverse mentor is a 25-year-old woman, which has given him great insights into why, for instance, many young people don't want to get into the advisory business.
     
  • Independent broker-dealers “sit in the realm of supervised independence,” in which they “straddle the line” between the employee-based wirehouses and the fully independent RIA space.
     
  •  “If you're focusing on advisor succession planning, stop it,” he said to the executives. Focus instead on advisor development. After all, he half-joked, “a business strategy focusing on the dead and dying is an interesting one…having preached about the importance of succession planning since the 1980s, I feel like the loneliest missionary on the planet.”
     
  • Rethink your priorities. Along similar lines to the point above, he suggested that BDs “spend less on recruiting and more on development” of existing advisors, noting in passing that BDs are “mostly trading old people” among themselves through recruiting.
     
  • Watch your language. When you speak of your independent contractor representatives, are you speaking about ‘reps’ and ‘producers,’ when “you should be talking to advisors?”
     
  • Expect more consolidation. Tibergien reported that there were “600 to 700 fewer broker-dealers” in 2013 alone.
     
  • Outsource. “If it’s core to your business, own it; if not, rent it.”

He left his audience with the notion that broker-dealers’ business models may well change, that “many BDs have muddled positioning” that sounds the same as all other BDs and that compensation models for advisors should reflect the importance of serving existing clients rather than gaining new clients.

After presenting all these challenges, Tibergien left his listeners with an optimistic, empowering insight: you can live in the past, complain about the present or create the future.

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