HighTower lowers the gate for breakaways

HighTower Advisors, one of the fastest growing RIA aggregator firms in the country, will offer two new paths for financial advisers to make the transition to independence, the firm announced this morning.

The HighTower Network will give advisers who want out of wirehouses access to HighTower’s technology, investment platform and broker-dealer services, while leaving them the option of managing their own staff and handling day-to-day operations.

The HighTower Alliance will offer advisers even more autonomy. Wirehouse advisers or existing independent advisers who want to launch or keep their own brand but access HighTower’s investment platform and broker-dealer services can join the alliance. Financial advisers who join either new business line will receive payouts in the range of 80% to 90% of revenues as opposed to HighTower partners, who work under a shared earnings model. They will also shoulder more of the costs of running their businesses.

“We’ve now covered the waterfront and any adviser can join us,” Elliot Weissbluth, chief executive officer of HighTower explained at the MarketCounsel conference in Las Vegas this morning. “Alliance members could join Dynasty if they want to or they could sell themselves to Focus Financial.”

Shirl Penney, chief executive of Dynasty Partners, another aggregator firm that has a more adviser-autonomous model than HighTower’s offering, congratulated Mr. Weissbluth on the strategy. “It’s a brilliant move, and we think it validates our business model,” said Mr. Penney during a panel discussion with Mr. Weissbluth and Rudy Adolf, head of Focus Financial Partners at the MarketCounsel conference.

Mike Papedis, executive vice-president of business development for HighTower, said the move was prompted by financial advisers. “Many advisers in our pipeline expressed a desire to be more autonomous,” he said. “The movement to independence is gaining momentum and the launch of these two new business lines supports financial advisers no matter their choice of the route to independence.”

The new business lines will also likely lead to more competition with firms like Dynasty, said Mr. Penney. “To this point we’ve rarely competed for the same advisers,” he said. “I suspect we’ll run into HighTower more frequently going forward.”