PANC 2014: Home Office CEO Insights

Pershing LLC, a BNY Mellon company, is celebrating its 75th anniversary in financial services outsourcing, said Ron DeCicco, CEO. Pershing, the nation’s seventh-largest registered investment adviser (RIA) custodian, custodies $1.6 trillion in assets, 20% of which are in retirement accounts.

“We provide solutions to our clients—independent broker/dealers [B/Ds], hedge funds and registered investment advisers—so they can serve the end-consumer,” DeCicco said. Pershing’s front end allows advisers to see their entire book of business, plus it offers model portfolios, a turn-key training program and fiduciary support, he said. Additionally, in November, Pershing will be rolling out a retirement plan network that will offer a suite of solutions to help advisers, B/Ds and RIAs grow their business.

LPL Financial is the largest independent B/D in the country and has 70 individuals dedicated to retirement plans who work with 1,500 advisers, said Chairman and CEO Mark Casady. These retirement plan advisers support 40,000 plans with $110 billion in assets. Additionally, LPL works with another 2,500 financial advisers managing $390 billion in assets.

LPL retains 97% of its assets, “which tells me our clients are happy,” Casady said, adding that LPL has been attracting $20 billion in new assets every year. LPL has also become an adviser “recruiting machine,” having remained the market leader for recruiting advisers in the past four years, he said.

Casady attributes LPL’s tremendous success in attracting advisers with its “expertise in plan design, investment selection, automated rollovers and employee education,” in addition to a “range of technology solutions” that make advisers more efficient.

The biggest challenges Casady sees for advisers are threefold: first, fees and running an efficient practice; second, regulatory issues; and third, better wealth outcomes. LPL is able to help advisers with these challenges through its thought leadership and the 70 staffers dedicated to retirement plans, he said.

DeCicco noted that many advisers feel threatened by “robo-advisers,” yet technology can complement their business. He also pointed out that there will be $59 trillion of wealth transferred to younger generations by 2040. “Don’t just get to know the patriarch, but [get to know] their heirs,” he said. “[Generations] X and Y do want advisers’ help, but they want different interaction.”

Advisers’ growing willingness to offer investment advice is due to the fact that “investing is not getting any less complex,” DeCicco said. “People need help with investment decisions, which is why we offer model portfolios.”

Casady added: “If you look at outcomes, we all know that there is an epidemic of savings and investment advice in this country.” The best way to address this problem? Look at the needs of each participant, then help them get to better outcomes. “We have invested with Morningstar to create in-plan advice,” he said. “Financial Engines has commercialized in-plan advice—with a profit margin.”