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Regulation and Compliance > State Regulation

Pershing Hosts Powell, Other VIPs near Miami

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The annual Pershing INSITE conference keeps getting bigger and better, event organizers say. This year’s INSITE 2007, held June 6-8 at the Westin Diplomat Resort & Spa in Hollywood, Fla., drew up to 1,000 client guests (including walk-in attendees) and about 500 others, at least a 25 percent increase from last year.

And financial advisors clearing through the Bank of New York-owned organization continue to attend “for the differentiated, value-added experience,” says Ron Fiske, a Pershing Managing Director. This year, for instance, Pershing added a laboratory track to give advisors more “hands-on” time with NetExchange platform to “help you grow your business,” Fiske says.

“We are committed to continuous improvement,” adds Pershing COO Brian Shea. Pershing recently gave its broker-dealer clients the ability to set up health-care savings accounts to individual investors, for instance.

And in 2006, an average of 1.6 accounts moved over to Pershing from the top 10 broker-dealers, for every 1 account that left the firm. That represented some 233,015 incoming clients and 149,615 outgoing ones. “Our clients are gaining market share,” says Shea.

Gen. Colin Powell, former U.S. Secretary of State, addressed the conference on the first day of the event. Powell, who jokes that he misses having his own 757 to fly around in, says the United States “must remain open” as a culture or risk losing more foreign visitors, such as students, to other countries. “Leadership is about fellowship,” explains Powell.

To increase the exchange of open information between the 44,500 employees of the U.S. State Department during the first term of President George W. Bush, Powell pushed for a new computer system. “Great leaders face reality,” Powell shares. This can mean putting in new technology, but it also encompasses more sweeping change – as in the case of Perestroika under Mikhail Gorbachev in the former Soviet Union and the acceptance of capitalism by Chinese leader Deng Xiaoping.

In terms of U.S.-China relations, Powell says the situation is stable, since both nations agree that trade is the way to improve wealth and human capital. The only hitch would be if Taiwan were to claim independence from mainland China, which would risk war.

China’s rising demand for energy resources is seen by that nation’s leaders as an issue of national security. “It will not be deterred,” Powell says. The country also has a large appetite for investment and education and is embracing the University of Liverpool, England, as a model for its higher education.

“In the United States, we must remember that our universities are not failing, but our K-12 educational system is, which affects our 300 million residents. And education is central to wealth creation, Powell remarks.

In the Middle East, “the United States is not facing reality,” he says. “In Iraq, the insurgency has led to civil war, and if we can’t solve it, we should let the Iraqi people solve it on their own.” He said that the 500,000 U.S. troops, many of whom have been asked to return for duty in Iraq, cannot continue to sustain this burden.

“The world is in transition, and this is being driven by a lack of boundaries, information technology and the information revolution, and the desire for economic growth,” explains Powell. But this growth must include “the creation of wealth for all and not just for a small group.”

Powell, the son of Jamaican immigrants, shared the emotional experience he has had in New York, when hot dog vendors recognize him and refuse to charge him for a snack. This gesture, he says, represents their recognition of what America has done for them. “We should protect our borders. But we have 12 million (illegal) immigrants here who work and contribute to our economy. There should be a way to ‘regularize’ them.”

The threat of terrorism, Powell explains, is real. “They can hurt us, but they cannot destroy us,” he says. The attitude of European leaders like former U.K. Prime Minister Tony Blair is one the United States should model. “They acknowledged the damage caused by the terrorist bombs and then got on with it. Yes, terrorists are a threat, but they can never control us … We cannot listen to such fears.”

Former national economic advisor Laura D’Andrea Tyson highlighted the growing importance of trade in the U.S. and global economy in her June 7 talk. Exports and imports now represent more than 30 percent of our gross domestic product, she says. Yet, many nations have become less dependent on the U.S. economy for growth and stability vs. the 1990s.

“Globalization is a process of creative destruction,” says Tyson. “And those who perceive themselves to be losers may move to protect themselves.”

Low-priced imports have helped cut the U.S. inflation rate by 1 percent annually since 1997, and that’s supported low interest rates, she explains. At the same time, median real wages in the United States and other developed economies have largely stagnated or fallen, despite increased productivity.

Estimates show that up to 30 percent of U.S. jobs could move offshore. “But we perceive the threat to be 90 percent,” Tyson explains, and that contributes to weak wages.

Highly skilled jobs will remain in demand, along with work that must be conducted face to face in the United States – like health care, retail and domestic work. “But the middle class is facing the loss of income and work,” shares Tyson. “There is reality in this anxiety.” In fact, while worker productivity has grown 17 percent in the past seven years, the median real wage has only increased 0.9 percent, she adds.

If policymakers do not address these issues, there is a risk that U.S. voters will pressure elected officials for protectionism. “Only a third of college-educated workers think globalization is good for workers, and they are the ones who stand to gain the most,” Tyson explains.

Tyson urges the presidential candidates to consider policy solutions like worker training and other steps that can increase U.S. global competitiveness vs. calling for protectionism and charging other countries with being “unfair.”

And, as Morgan Stanley chief economist Stephen Roach has described, there is a real risk of economic and financial disruption if the U.S. Congress takes action against China as a way to force it to revalue its currency. “This could kill the financial markets,” stresses Tyson.

While acknowledging such risks, BlackRock Vice Chairman and Director Robert Doll is upbeat about U.S. equities. He polled the Pershing audience on June 8 and found that about three-quarters of those present agreed. “The fears we had for the first quarter have not come true,” Doll says. “This should be an up year, though not as good as 2006. It should have more volatility and angst.”

Driving U.S. stocks is the expectation that price-earnings ratios should expand for the first time in six years, with large-cap and high-quality stocks beating small-cap and low-quality stocks, he says. Like Tyson, Doll sees populist politics as a market risk, but he downplays that in comparison with the positive trends that could further drive up equities. “Companies still have a lot of cash on their balance sheets,” he says, and that could be spent on investment, mergers and acquisitions, stock buybacks, etc.

Persuasion in PracticeTo win clients and influence prospects, psychologist Robert Cialdini (an expert who counts Warren Buffet as a big fan) emphasizes these tips, which he shared with guests at Pershing’s INSITE 2007:o Scarcity–describe what people risk losing by not working with you.o Trust–admit weaknesses first and then share professional talents and credentials;o Exclusivity–explain your unique skills and share the latest information you’ve come across;o Authority–establish this via client referrals and letters of introduction; ando Consensus–show potential clients how you’ve helped others just like them.

See “Influence: Science and Practice” and

Janet Levaux is the managing editor of Research; reach her at [email protected].


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