Wealth Think

10 Smartest Insights From Pershing Insite

By Paula Vasan June 10, 2013, 7:22 a.m. EDT 5 Min Read

HOLLYWOOD, Fla. -- From not giving up your audit too soon to wise words from Pershing's Mark Tibergien on creating a human capital strategy, here are some of the smartest things we learned at this year's INSITE conference.

1. Know How to React to Regulatory Exams

Don't give up your internal audit too soon, said Joan Schwartz, managing director at Pershing. You don't want to hand examiners a road map. If regulators ask for internal exam reports, Schwartz said, you want to highlight the integrity of your self-evaluation -- but ask to provide those documents at the end of the exam if you can.

2. Be a Smarter Recruiter

With wirehouses offering juicy retention packages, dont try to go dollar for dollar to compete with them, said headhunter Howard Diamond, managing director of Diamond Consultants. Instead offer things that play to your own strengths: the appeal of independence; work-life balance options such as letting a parent work at home two days a week; or equity in lieu of upfront cash. Another idea is to give some of your smaller clients to a new recruit, to show that youre willing to part with some of your book of business. And make sure you know what makes your firm attractive: You need to be able to tell your story better, Diamond said. Have your value proposition in spectacular shape.

3. Be a Leader

Super Bowl winning quarterback Peyton Manning charmed the audience as a keynote speaker on what it takes to lead -- whether it's as a football star or in the business and finance world. Teams play better when leaders don't hesitate to decide, based on 'enormous' preparation, he told the crowd. Financial advisors are surely no exceptions. Advisors must be able to gather and analyze information, make informed decisions, and adapt to changing environments so that their clients know they are committed to the shared goal of success, Manning and advisors attending the event acknowledged.

4. Invest in Your Future

Dont get comfortable with the status quo, warned a couple of Pershing execs. Pershing COO Lisa Dolly cited mobile apps as an example: Even though adoption is not on a mass scale now, we know we need to be there, she said. You cant catch up five years down the line; you need to make the investment today for tomorrow. Pershings chief relationship officer, Jim Crowley, echoed the need for firms to keep one eye on the horizon. "The challenge for our clients is transformation -- to deal with the difficult growth environment, a challenging regulatory environment, and an environment with, broadly speaking, scarce human capital, he said. If firms are transforming and evolving their strategy, they will be successful. If they are sitting back worrying, thinking and not transforming ... their business is not going to thrive."

5. Focus on Next-Gen Advisors and Clients

Staffing is an area of crisis for most advisory firms, said Mark Tibergien, CEO of Pershing Advisor Services. These firms are struggling to recruit the right talent after building their firms around boomer advisors and clients. Develop a model that both recruits younger advisors and brings in younger clients. The advisory firm of the future is going to be a true ensemble, he said. Solo practitioners are a harder model to sustain. Advisors must focus on firm growth and on building a business that will last, he said.

6. Embrace Emotion

There's often a perception among advisors that they must help clients overcome and mitigate emotion, according to David Loeper, president and CEO of Wealthcare Capital Management. "But advisors should not aim to remove emotions with clients -- they should tap into it to help clients understand the consequences of their investment decisions," he said. The discovery session, in which advisors learn about clients' financial situations and personal goals, is the time financial planners must assess risk tolerance and the emotion that comes with it.

7. A New Look at "Family"

Advisors need to get rid of stereotypesabout today's "modern family" to harness relatively untapped markets. Today's "family" no longer primarily consists of married, heterosexual couples with two or more children, said Kim Dellarocca, Pershing's head of practice management and segment marketing. A total of 51% of Americans are now single, many women are the sole or primary breadwinners in their families, and same-sex marriage is now legal in 10 states. It's also now estimated that racial "minorities" will become the majority in the U.S. by 2042, Dellarocca explained, citing U.S. Census data. Understanding the changing demographics of the population will help you take advantage of opportunities.

8. Seeing the Big Picture

Questions over fees and compensation are often asked and important to consider, yet they're questions that sometimes get more attention than deserved, advisors said. "That focus [on fees] is largely indicative of scrutiny and distrust that emerged from the financial crisis and the Madoff scandal," said Steven Hurst, a financial planner at Sunstone Wealth Management. "I understand why investors focus on fees. But there are other more important questions that should be asked as well." Encourage your clients' curiosity in your length of experience, level of education, social media interaction, and published work, for example.

9. Model Risk From Market Downturns

Risk management can cover a lot of areas, said Eric Schwartz, founder and CEO of Cambridge Investment Research -- but Cambridge encourages its advisors to think about it in the broadest possible sense. Go beyond investment risk and insurance coverage to think about how your own practice could be at risk, Schwartz told a packed room during the View From the Top panel of financial services executives. We did this before the last downturn," he said. "We knew exactly how much the market had to go down before we started losing money; it was 60%. But most of our advisors have no idea of that number.

10. Watch for Regulatory Shifts

Pershing CEO Ron DeCicco identified the three areas where he expects the next set of regulatory changes -- starting with the idea of a uniform fiduciary standard. The fiduciary question is still out there, he said. Pershing is also watching the money fund reform proposals that have come out. Finally, he said, advisors should keep an eye on the continuing definition of the rules mandated by Dodd-Frank: Only about a third of those rules have been clearly defined, he pointed out.

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Paula Vasan