“You have to be able to answer two questions,” said Ron DeCicco, chief executive of Pershing. “What is the value that you deliver to your clients? And secondly, how do you communicate that value to your clients?”
DiCicco said that the 75-year-old Pershing, along with its custodian parent, BNY Mellon, are growing at a strong pace (See sidebar below, “BNY Mellon and Pershing by the Numbers.")
The value proposition, Pershing officials write in a recent paper, often is the first impression potential clients have and can be the catalyst for a future relationship.
“It is also an opportunity for advisors to promote business growth by using language that differentiates themselves and targets their ideal client base by articulating attributes and features that appeal to specific demographics. Of course, the real test is delivering on what you promise,” according to the recent Pershing paper, What Do Top Advisors Say and What Do Investors Really Think?
Advisors, DiCicco added, also must help a new generation of investors by adding more professionals, many of whom should be new to the business or at least in the same age bracket.
“It’s estimated that we’ll need 237,000 advisors over the next 10 years to serve new investors,” DeCicco said. Yet the average age of an advisor today is 51. This group of advisors, he added, is not being replaced “at a fast enough clip.” He added that firms should be working on developing training programs that attract “younger and more diverse advisors.”
This, DeCicco added, will help firms attract millennial investors, those born between about 1980 and 2000. They now represent about 25 percent of the U.S. population and are a growing part of the nation’s wealth. However, these 80 million Americans are being missed by many advisors.
“In fact, they were almost as likely to ask a friend for financial advice as they were to go a financial professional,” DeCicco noted.
Only 16 percent of this group reported having an advisor as the main source of financial planning, according to a BNY Mellon/Oxford University poll. The majority of these millennials, the poll said, also said that “advisors were failing to connect with them” and that they were uninterested in most of their products.
Worse than that, DeCicco said in reviewing the poll, is what could be happening to many advisors over the next few years. The “majority of these respondents are firing their parents’ financial advisors when they receive an inheritance.”
And the threat of these abortive relationships, he added, will not be avoided if the bull market continues.
“They’re not firing them because the advisors are performing poorly,” DeCicco said. “They’re firing them because the advisors have not taken the time to establish a relationship with them.”
Sidebar: BNY Mellon And Pershing By The Numbers
BNY Mellon: Assets under management $1.65 trillion (A 7 percent increase over the last year). Assets under custody and administration, $28.3 trillion (a 3 percent increase).
Pershing: $1.5 trillion in global client assets. 41.3 million individual security positions on the Pershing platform, an 8 percent from the end of 2013.
Source: Pershing