POSITION: CEO, HighTower Advisors
EDUCATION: Rice University; John Marshall Law School
Elliot Weissbluth's HighTower Advisors has been open for business for less than a year but already has 17 financial advisors managing approximately $15 billion in client assets. How, in this environment, has a start-up RIA/broker-dealer managed to poach some of Wall Street's best advisors? One of the (big) reasons: He came up with upfront money, offering 50/50 cash and equity based on an FA's profitability — not his production. It's a new model: historically, independent b/ds and RIA firms haven't tried to match wirehouse sign-on bonuses, offering equity only instead.
Financing HighTower are a handful of venture capital companies, as well as firms like Envestnet Asset Management, and individuals including former Schwab CEO David Pottruck and former Morgan Stanley CEO Philip Purcell. Private equity firms are involved but as minority partners. “When you're owned by a PE firm, one day they have to sell. Here, the employees and the FAs own 50 percent,” says Weissbluth. Advisors are allotted equity in HighTower the day they join in proportion to the assets they bring with them. And unlike some of the arrangements at other wealth management firms, the partnership and the FA split the FA profits 50/50, no exceptions.
Danny Sarch, a recruiter with Leitner Sarch Consultants, calls what Weissbluth has done a “powerful new model,” noting that former Bear Stearns wealth manager Richard Saperstein brought his $10 billion book to HighTower in May. HighTower advisors get access to a 30-person staff dedicated to operations, compliance and accounting support; they have access to multiple custodian and clearing options. All HighTower FAs are also fiduciaries.
Says Weissbluth: “Sure, an IPO is certainly an attractive exit, but we're building a partnership that generates a lot of cash. Our partners don't have the right to force an IPO.” With upfront money, ownership, attractive payouts, a solid platform with support and fiduciary status, HighTower offers an intriguing option to FAs outside the wirehouse.