A longtime understudy of Mark Tibergien, the CEO of Advisor Solutions at BNY Mellon Pershing, has left the custodian to join a competitor that is salivating at the RIA market.
Gabriel Garcia, the former head of Relationship Management at Pershing Advisor Solutions, left the company and joined E*Trade four weeks ago. He is now the head of Business Management and Strategy for E*Trade Advisor Services, the discount brokerage’s custodian and service provider to RIAs.
At E*Trade, he will report to Matthew Wilson, president of E*Trade Advisor Services, and will oversee product strategy, marketing, compliance and other facets of the business.
The cornerstone of E*Trade Advisor Services is Trust Company of America (TCA), a custodian to RIAs that E*Trade purchased in 2017 for $275 million and has since then shed the name of. When the sale closed in March of 2018, TCA brought with it about 200 RIAs and $18.3 billion in assets. It has since grown to include 225 RIAs and $19.4 billion in assets.
The acquisition also came with “tremendous talent and leadership” and as the assimilation of TCA completes, a stage has been set for a burgeoning custodian for RIAs, Garcia told RIA Intel. The company also hired Private Advisor Group’s head of national recruiting, Charlie Latimer, to be the vice president of Sales at E*Trade Advisor Services. It is also looking to fill a number of other open positions and capture market share as the number of RIAs grows and more investors choose fiduciaries as wealth managers.
“There are some great incumbents in the space that have served the RIA community well but there are some gaps, frankly,” Garcia said.
Every custodian wants to serve RIAs with $1 billion in assets under management, or more, including E*Trade. But there is an enormous group of advisors with between $50 million and the $1 billion mark that Garcia says will be attracted to E*Trade Advisor Services.
Unlike Charles Schwab and others, E*Trade’s RIA businesses isn’t competing directly with its RIA in the form of its own advisors or any automated investment advice offerings, or robo advisors, according to Garcia.
It’s also focused on marrying technology and human support for RIAs, which will have designated customer service teams – advisors in need of help won’t be directed to a call center and a person they don’t know.
To help lure advisors leaving wirehouses or independent broker-dealers to start their own RIA, E*Trade’s Liberty platform includes a turnkey package of technology tools, such as a client relationship management (CRM) system, billing, reporting and account aggregation. The cost for the platform is set on a case-by-case basis and E*Trade is evaluating that fee structure along with everything else as it overhauls, Garcia said.
But beyond that group, any advisor tired of the cumbersome task of maintaining their own suite of necessary technology to run an RIA might be interested in Liberty, Garcia said. Still, the architecture of the platform is open to other third-parties if advisors prefer another service provider or their needs change.
Altruist – a new digital, commission-free custodian for RIAs – says it will save advisors up to 90% on technology and custody costs with a similar philosophy.
The hope is to “break the model of the custodial space” but “E*Trade should not be thought of as a new kid to the block,” asserted Garcia.
For decades, the company most recognized for its discount brokerage has also engaged in business-to-business services, including as an administrator to the stock plans of more than 20% of S&P 500 companies. Its corporate service business includes two million stock plan participants and a total of $254.3 billion in assets.
And Garcia spent almost a decade in what might be the best incubator for the job he has now under Tibergien, a prominent authority on RIAs and the custody business. Garcia said he was a mentor that taught him about RIAs and how to lead and motivate employees.
“I have the utmost respect for my former colleagues and friends [at Pershing]. I learned quite a lot about the industry and building a custodial platform under the tutelage of Mark Tibergien.”