HighTower could double M&A in 2020 and soon hit $100 billion in assets: Oros

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CEO believes firm could double the half-dozen deals it has closed or initiated this year

It’s been almost a year since Bob Oros took over as CEO of HighTower, the Chicago-based consolidator of registered investment advisers with $71 billion in client assets.

Since then, the firm has continued its emphasis on the acquisition of advisers’ businesses, a clear shift away from its former business model where wirehouse advisers joined as partners and operated under the HighTower banner.

Mr. Oros sat down with InvestmentNews for an interview on Tuesday morning in Miami Beach, Fla., on the sidelines of the MarketCounsel Summit to discuss HighTower’s prospects at a time when giant mergers are becoming commonplace in the RIA industry. The firm could soon reach $100 billion in assets, he said.

Bruce Kelly: With the RIA merger marketplace white hot, what’s your outlook for 2020?

Bob Oros: We’ve seen no slowdown in activity. A lot more firm founders are getting educated and getting an educated point of view. The number of people willing to sign a [non-disclosure agreement] has spiked pretty significantly, but culture and values are critical. They won’t do a deal unless they are aligned.

BK: How many acquisitions did you do in 2019, and what about next year?

BO: We’ve announced four, year-to-date, and we’ve signed letters of intent with two more. There is a very robust pipeline behind that. We are seeing much more activity and expect 2020 to be much more robust than 2019, for the industry and HighTower itself. We potentially could do twice the amount [of M&A deals] we did this year, and this was a very good year. But for us, it’s still quality over quantity.

BK: Does the Charles Schwab acquisition of TD Ameritrade concern you, as the combination creates a giant RIA custodian?

BO: From the HighTower perspective, they are both our custodians. It doesn’t concern us because we feel they are motivated to provide great service, and we are an important customer to them regardless.

BK: What could change for advisers due to the Schwab/TD combination?

BO: Some of the impact [to advisers] is probably over-hyped, but what’s going to change is how much personal attention someone coming into your office is going to give [the adviser.] But honestly, do you really need that? Each firm has to evaluate that.