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Pershing Maintains Its Velvet Rope Approach to RIA Custody

Pershing Advisor Services has terminated 130 advisor relationships over the last three years, and the average size of advisors joining the platform keeps climbing.

Pershing Advisor Services, the firm’s registered investment advisor custody unit, continues to focus on the large, professionally managed, growth-oriented firms serving clients with complex lives, CEO Mark Tibergien said in an interview with The average advisor that came onto the platform last year had $750 million in client assets.

“It wouldn’t surprise me if this year the average is even a little bit higher.”

With that high standard, the firm has terminated 130 advisor relationships over the last three years. Tibergien said these firms didn’t fit the firm’s culture, its risk profile or the way in which they choose to do business.

“It just allows us to be more pure in how we’re serving the market rather than trying to be a master to everybody,” he said.

There are only about 3,000 RIA firms in the country that fit Pershing’s profile and could get past that velvet rope. The custodian currently works with 560 firms.

However, assets are climbing. Assets on the platform have grown from $30 billion about six years ago to about $200 billion today. The custodian has been on a six-year run of double-digit growth.

The types of advisory firms that fit Pershing’s profile are seeking solutions not generally available on a retail brokerage platform. For these firms, it’s important to have a brand name that’s separate from their custodian and many of them are multicustodial.

Tibergien believes the velvet rope approach makes sense given how the industry is evolving.

“It used to be a big deal for advisors to be at $1 billion of assets,” he said. “Now there are 650 RIAs in the country that are over $1 billion, and many are multibillion.”

Over the next decade, there will likely be 10 to 12 national RIAs and 50 to 60 super-regional RIA firms, Tibergien said.

“The business is transforming in such a way that those RIAs that are professionally managed and growth-oriented are not content just being a small player in the marketplace,” he said. “They’re actually doing something to create a strategic presence.”

Tibergien said there are studies that show that if you’re one of the top three firms in a market, you’ll have twice as many opportunities to do business than the fourth next firm.

“Larger firms are able to attract more talent, and they usually have more horsepower around mergers and acquisitions. And of course they have a bigger brand presence.”

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