Reg BI won't stop advisory sector advances over broker-dealers, Pershing's Tibergien says

Reg BI won't stop advisory sector advances over broker-dealers, Pershing's Tibergien says
Executive says clients prefer to work with investment advisers because of the transparency, greater choice in investment options and fiduciary status of the business model.
JUN 13, 2019

Growth in the investment advisory sector will continue at a rapid pace despite the Securities and Exchange Commission's regulatory changes that are supposed to close the gap in the standard of care between investment advisers and brokers, according to Pershing Advisor Solutions' CEO. About $665 billion out of approximately $1.8 trillion in assets, or roughly 33%, on the custodian's platform are managed by registered investment advisers, up from about 5% of $1 trillion total assets in 2010. Mark Tibergien, chief executive of Pershing Advisor Solutions, foresees adviser assets breaking the 50% mark. "The growth likely will be exponential in the future," he said in an interview at the Pershing Insite conference in Phoenix this week. Mr. Tibergien said clients prefer to work with investment advisers because of the transparency, greater choice in investment options and the fiduciary status of the business model, which will remain in place under advice reform recently approved by the SEC. Some critics say the new SEC rules will diminish the marketing advantage advisers have over brokers because the centerpiece of the package — Regulation Best Interest for brokers — will blur the distinction between brokers and advisers. "It's going to be very muddled," Daniel Berstein, chief regulatory counsel at MarketCounsel, said during an Insite panel. But Mr. Tibergien said the increasing market preference for advisory services will not be altered by the changing advice rules. "That shift is not happening because of regulation; it's happening because of consumer demand," he said. Under Reg BI, advisers and brokers will be regulated separately, with advisers continuing to adhere to fiduciary duty and brokers governed by Reg BI rather than the current suitability standard. Although brokers will now be able to tell a customer they are acting in the customer's best interest, Mr. Tibergien doesn't see the rhetorical change giving brokers a means to keep clients from moving to RIAs. "Hoping the government will help you compete is a loser's mentality," he said. The new regulatory standard for brokers won't change the fact that they often have to make recommendations from a limited menu of proprietary products promoted by their brokerage firm, said Gabriel Garcia, managing director of Pershing Advisor Solutions. "When you're captive to a brand and paid as an employee, it's a different [client] experience," Mr. Garcia said. Independent RIAs are "winning in the marketplace because it's the preferred [way] in which investors want to do business." Pershing, a division of BNY Mellon, has 744 RIAs on its platform, which also includes broker-dealers, hybrid broker-adviser firms and hedge funds, among others.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.