For the superstitious, 13 is considered an unlucky number, but when it comes to Mark Tibergien, it's a lucky 13 times that the Pershing Advisor Solutions CEO has been named to the IA 25. The number of years the IA 25 has been named? Thirteen.
While no man is an island—and Tibergien in particular can count his devoted custody and consultant advisor clients in the thousands and his mentees in the hundreds, including many other leaders of the business—Tibergien introduced the idea of applying rigorous business analytics to independent advisory firms. He has consistently sounded the alarm about the human capital shortage we’re already seeing in the industry. He has encouraged, cajoled—everything but threatened—advisors to do the right thing when it comes to succession planning, because it’s right for advisors, right for employees and right for clients. He's also run a couple of high-profile, innovative businesses with colleagues who share his passion and insights.
His efforts at Pershing, which he joined in 2007, were based on finding competitive edges in the RIA custodian space because “God knows there nothing more commoditized than custody.” He and Pershing “saw that the evolution” of advisory firms from practices to businesses “was underserved,” that there was a “lack of attention to building capacity” in firms and that PAS’s competitors were focused on the mass affluent.
So among the differentiating, and successful, solutions PAS introduced were bank custody and lending. Spurred on by its advisors' counsel—Tibergien is nothing if not a good listener—he reported that 100 RIA firms that custody with Pershing now use the bank custody option, which was integrated with the brokerage custody in 2013, offering advisors a choice of custody platforms for their HNW clients.
As for Pershing’s lending offerings, offered with BNY Mellon Private Banking, he noted that “wirehouses always led with credit,” so having lending options for RIAs aids in attracting breakaway brokers and gives RIAs a competitive edge against the wirehouses. However, he’s quick to point out that what PAS is offering is “not credit; it’s liquidity” for HNW clients who “might need a credit line of more than $1 million” in the form of an Investment Credit Line (ICL) to purchase high-ticket items, like a home or insurance policy, or services without the investment portfolio and tax ramifications of having to sell their investments. Since launching that lending program 18 months ago, he said that the loans account for 5%--“heading to 10%”—of BNY Mellon Private Banking’s loan book.
Tibergien is a cheerleader for Pershing and parent BNY Mellon—“BNY spends $1.4 billion on technology annually,” he boasted, with Pershing getting 25% to 30% of that amount—and mentioned that Pershing has been “clearing for 75 years.” Unlike his RIA custody competitors, he pointed out that Pershing doesn’t have a retail advice offering that could compete with advisors, and that about half of Pershing LLC's $1.6 trillion in assets under custody is in advisory assets served by PAS and the corporate RIAs of broker-dealers who clear through Pershing. BNY Mellon has $28.5 trillion in assets under custody, making it the largest custodian in the world. Pershing is also a “global business platform” that will benefit a smaller world with more multinational clients, he added, saying Pershing has “custodial platforms” in places like Singapore and London, “linking the world.”
As for the future of the advisory business, Tibergien pointed out that in 10 years, “two-thirds of employees will be millennials.” While many advisors are focusing on the coming big wealth transfer from baby boomers, he dismissed that focus as “boomer arrogance,” and suggested that millennials have “almost as much liquid wealth” and that their ability to generate even more wealth (unlike the boomers) is “incredible.” He believes that there will be “more large firms,” and that the advisory business will come to “look like the accounting” business, where there are a handful of major national firms plus some mid-sized firms along with smaller lifestyle-like RIA firms.
Exhibiting his trademark candor, Tibergien said independent broker-dealers “have some strategic opportunities” ahead of them—“should I convert to an RIA or become a custodian?”—but that they should “stop thinking like victims and start thinking like entrepreneurs.”
On robo-advisors, he said Pershing will “partner with other firms that are proficient at the front end” of the client experience, but that success will come to those who “combine people and technology.” Robo-advisors are “democratizing access” to investment solutions for many investors, but “the more complex your life, the more you want human interaction.”
Whether at Moss Adams or earlier at Management Advisory Services and for eight years at Pershing, Tibergien has done it all with a relaxed intelligence and a sometimes pointed (and always on-point) sense of humor that disarms his critics while driving home his point.