HighTower Advisors is changing how it delineates between its different business models as it looks to grow as an a-la-carte service provider for independent advisers.
As a way of simplifying its message, the firm is dropping the “network” and “alliance” terms it used to differentiate between its independent channels. Prospects who do not join as an employee in the firm's original partnership model will now simply join the independent “platform” and select the level of service they want to receive rather than specifying network or alliance affiliations.
The changes come as the firm looks to increase the awareness of its independent fee-for-service model and accelerate growth in that division.
“It does take some time when you start to expand your offering to make the marketplace aware of that,” he said. “I think you'll see growth in that part of our business exceed our core equity business.”
HighTower has added six teams to the channels in the two years since the Network launched officially with its first team in June 2013. The Alliance channel officially launched March 2014 with one team.
A spokseswoman for the firm, Melinda Brodbeck, said that it would be unfair to characterize the change as a “rebranding.”
“They simply removed the terminology to avoid confusion in the marketplace which is why they are not using the terms Network and Alliance,” she explained in an email.
The network allowed advisers and brokers to work as an independent contractor of HighTower so that they could use the firm's platform, back office and broker-dealer without having to give up ownership of the firm. The Alliance was a cheaper, white-label offering for registered investment advisers who wanted just the platform but would handle their own compliance.
HighTower's chief executive, Elliot Weissbluth said last year that the firm was shifting focus from recruiting to its partnership channel, which has roughly 50 teams, to building out these new business lines, which are less capital intensive.
Almost all of the 12 teams who joined HighTower last year, however, joined the partnership channel.
Industry recruiters said it pointed to how competitive the marketplace is for independent advisers.
“It does go to show how difficult it is to build a purely independent channel from scratch,” said Ron Edde, a third-party recruiter with his own firm, Millennium Career Advisors. “I still think it's a great option and multi-channel firms carry some advantages, but it's very difficult to build something purely independent from the ground up.”
Rick Rummage of The Rummage Group said that advisers may be quicker to latch onto names such as
Wells Fargo Advisors or
Raymond James Financial Services Inc. who have a larger existing presence.
Danny Sarch, an industry recruiter with Leitner Sarch Consultants, said that it was too early to judge growth in the independent platform.
“I don't know how to handicap it in terms of expectations,” he said. “One man's slow is another man's discerning.”
Mr. Sarch said that he doing away with the terminology was a significant business move but was probably good for recruiting.
“I see it as a pragmatic reshaping,” he said. “As a recruiter, I see someone might want pieces of the alliance or pieces of the network and you can then assign a cost to those without having to label them.”
Mr. Parker declined to discuss specific recruiting goals but said that he expected growth of the independent platform to accelerate as close to a dozen teams were “inbound.”
“Because the addressable market for us is expanding, I think you'll see a better year,” Mr. Parker said. “You're going to see a very strong year in terms of recruiting.”
