HighTower has formally adopted a strategy that other wealth managers are using to grow. The firm has forgone its original partnership model to focus on offering capital and support services to other registered investment advisors, a move CEO Bob Oros said positions the company to double in size.
“It certainly is very different than where HighTower started,” Oros told WealthManagement.com. “We are not going to do deals like those original partnership deals.”
For example, HighTower recently partnered with LourdMurray, a Beverly Hills, Calif.-based RIA that had over $3.6 billion in client assets. With HighTower's help, LourdMurray merged with San Diego-based Delphi Private Advisors, creating a $4.8 billion RIA, the company said Tuesday.
“I was feeling like we hit another wall,” Blaine Lourd, managing partner and co-CEO of LourdMurray, said. Even though the RIA was considered large by most standards, Lourd wanted it to grow. He conducted a roadshow that included five banks, three RIA consolidators and four family offices, before landing on HighTower.
"It was never about a money trade for us," Lourd said. "Yes, the capital is important, but more important is, 'Can this firm add value to our organic and inorganic growth goals?'”
Elliot Weissbluth, who stepped down as CEO to become chairman of the Chicago-based firm’s board, founded HighTower in 2007 as a turnkey landing place for so-called wirehouse brokers. Most of those who joined became partners in the firm and, if they chose, could pick up and leave.
But since private equity firm Thomas H. Lee Partners acquired a "significant" piece of the company in 2017, HighTower has been restructuring deals with partners that "have choice and want to be part of the company long term,” Oros said.
While the company does not comment on specifics of its deals, Oros said they are being handled on a case-by-case basis. In most instances, HighTower is taking a range of minority to majority ownership of firms in exchange for a mix of cash and equity. Other companies, such as Emigrant Partners, a new service provider to independent registered investment advisory firms, have similar offerings.
Oros, the former CEO of HD Vest who officially joined HighTower in January, said the independent channel has never been more competitive and that HighTower has invested, and will continue to invest, in order to keep an edge.
He said the $60 billion RIA is continually investing in its core infrastructure and hiring professionals that other wealth managers aren't, including 35 employees focused on technology. "How many RIAs would ever invest in 35 technology people?" he said.
It's also hiring more in-house accounting and finance professionals and plans to leverage their skill sets between its 98 advisory firms around the country.
“We’re making investments to grow twice our size,” Oros said. "We’re preparing for a world where we think we can be much larger than we can be today.”
