HighTower exec says advisers are not a distribution channel

Financial advisers and brokers should “seize the day,” and “embrace and leverage open architecture products,“ according to David Pottruck, co-chairman of HighTower Advisors LLC in Chicago. The former chief executive at Charles Schwab & Co., who helped build HighTower into a $15 billion advisory firm in less than a year of operation, offered some direct advice to a wirehouse-rep dominated audience today at the Investment Management Consultants Association gathering in Atlanta. “You need to run your team or practice with a client centric culture,” he said. “And you need to demand that you and your colleagues have a voice in how the firm is run.” While Mr. Pottruck only briefly talked specifically about HighTower, much of his presentation suggested a trend toward the kind of open architecture, dually-registered platform that HighTower has created. In citing some recent client dissatisfaction survey results, he said “the attitudes of consumers have shifted” and that the financial services industry needs to respond. “Big firms in particular must stop thinking of their advisers as a distribution channel for proprietary products,” he said. Mr. Pottruck pointed to a recent Cerulli report predicting that some $800 billion worth of client assets will be transferred around the financial services industry this year, including a net loss of $188 billion by the wirehouse firms. “The financial crisis really hasn't changed anything, but it has speeded things up,” he said, and added that independent advisory firms will be increasing their efforts to recruit experienced brokers from the brokerage industry.