Schwabbies and those who custody with Fidelity and TD Waterhouse take note: If you have at least $100 million under management, the Bear wants your business. Long a major player offering custody, clearing, and other services to broker/dealers, hedge funds, and institutional asset managers, the Bear Stearns Companies Inc. is now zeroing in on the independent advisor. Investment Advisor has learned that the New York-based broker is bent on capturing what it sees as an attractive and growing clientele: high-end investment advisors who are disenchanted with custody and clearing services provided by other brokerage firms.
"We've identified a relatively unsatisfied segment of the securities business, and that is the investment advisor," says Ron Suber, a senior managing director. Most custodians don't offer advisors the types of services they need to help them battle their staunchest competitors: big Wall Street firms and banks, he says. That's where Bear Stearns hopes to come in. It offers advisors' more sophisticated clients specialty services, including structured products, securities lending, and cash management. "Our goal is to provide [advisors] with resources so they can compete with the most powerful names on the street."
Since launching Bear Stearns Advisor Services two years ago, Bear has experienced such success in signing up advisors with at least $100 million in assets that it's adding new services and personnel to the division. John Tyers, a former Schwab executive, has been tapped to help spearhead the endeavor. "In the last 8 to 12 months, the firm has made a full commitment to be a top-tier provider to that mid- to large-size advisor business, just as we are a top-tier provider to the broker/dealer and hedge fund markets," says Tyers, who heads registered investment advisor sales. He says the firm is targeting 1,500 RIAs who are registered with the Securities and Exchange Commission and have from $100 million to $5 billion in assets. "We will go below or above those numbers for firms that make good business sense. But it's that pocket of firms where we see a huge void in the market in terms of the services they're asking us for," he says.
Bear already has 62 independent advisor clients with assets of $31.1 billion. It faces stiff competition from the top three custodians of advisor assets: Schwab, Fidelity Investments Institutional Brokerage Group, and TD Waterhouse Institutional. All have also set their sights on the high-end advisor market. But Robert McMillan, an analyst with Standard & Poor's Corp., says the securities firm's "really good brand name and tremendous assets" should help in attracting advisors.
Before joining Bear in April, Tyers worked at Credit Suisse First Boston, where he was part of a group charged with building an advisor division. From 1994 to 2000, he helped Schwab build its advisor business as regional VP for the Southeast. Both Suber and Tyers report to Richard Lindsey, president of Bear, Stearns Securities Corp., which is a prime broker for hedge funds, broker/dealers, and RIA services via Bear Stearns Global Clearing Services. The firm is best known for its longstanding record in servicing B/Ds and hedge funds, but Suber says Bear Stearns is no newcomer to the advisor business. "Bear Stearns clears for B/Ds that manage money, and those who are investment advisors," he says. "Many of those broker/dealers are, in fact, money managers and RIAs, so we have tremendous experience and understanding of the [advisor] business already. What's happened over the last couple of years is that many advisors have come to us saying, 'I'm not a broker/dealer, but I'd like to utilize your unique solutions.'"
What's unique about Bear, Tyers says, is the synergy that exists among Global Clearing's three business lines–prime brokerage, broker/dealer, and RIA services. All three "are extremely complimentary in servicing client needs," he says. Suber adds that the head of technology oversees all three groups and can therefore "ensure that the [service] benefits, if applicable, are applied to all of our various clients" within each group. "If we learn something new that an advisor wants, we can apply that expertise and experience to the broker/dealers who may have that very same issue," he says.
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