RJ and Makay

>> Read More RJ & Makay Blog Posts

Pershing LLC officials are warning their broker-dealer and investment advisor clients about new upcoming regulations, some of which may come as a surprise to them.  At Pershing’s annual conference in Hollywood, Florida attended by broker dealer and RIA custody clients, the company outlined how broker dealers will face new suitability rules and much broader trade reporting rules.

The four largest custodians — Fidelity, Pershing, Schwab, and TD Ameritrade — lured more than 400 advisors or advisor teams with about $27 billion in assets from wirehouses in 2010. These advisors, known as "breakaway brokers" left their firms to establish independent practices with Fidelity, Pershing, Schwab, or TD.

As respectable as 2010's breakaway results were, however, they're actually slightly lower than the record numbers of 2009 and may indicate a gradual return to pre-crisis levels. Large independent firms like United Capital Financial Partners, HighTower Advisors, and Focus Financial Partners are the main facilitators of advisor breakaways to the independent space.

Citigroup surprised the financial world recently when it announced Jersey City, N.J.-based Pershing, LLC would be its clearing/custody agent as well as the backbone of its RIA business. Fidelity, which is located in Boston, had originally been named as the front-runner for the job.

As part of the deal, Pershing's RIA custody arm, Pershing Advisor Solutions, will support a Citigroup referral network that advisors have long been anticipating. Deborah McWhinney, Citigroup’s president of personal banking and wealth management, said the Citigroup plans to refer high-net-worth customers on the banking side to RIAs that Citi Personal Banking and Wealth Management chooses. Because Pershing is managing the referral network, it may be better able to get its advisors named as recipients of those referrals.