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HighTower doubles recruiting staff and seeks green pastures of Morgan Stanley Smith Barney brokers

Unforeseen interest in potential breakaways accelerates plans of big aggregator

Thursday, April 22, 2010 – 7:11 AM by Brooke Southall
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Elliot Weissbluth: The Dean Witter and Morgan Stanley cultures never integrated so you have two cultures taking in a third culture – Smith Barney.

HighTower is adding recruiters to both the West Coast and the middle of the United States, with an eye to attracting broker talent from the wirehouse some consider the most impervious to headhunting – Morgan Stanley Smith Barney.

The Chicago-based serial buyer of brokerage teams has doubled its recruiting force with the hires of Michael Papedis, who will serve as a director responsible for advisor recruiting and business development in charge of brand from Chicago, and MeeSun Boice, who will be in charge of advisor recruiting for the Western Region with a strong focus on the California markets. She’ll work from HighTower’s San Francisco corporate offices.

Unforeseen pick-up

The hires reflect an unforeseen pick-up in interest from larger, higher quality brokerage teams at UBS, Merrill Lynch and especially [lately] Morgan Stanley Smith Barney, according to says Elliot Weissbluth, CEO of HighTower Advisors.

“If you had asked in December whether we’d be adding to recruiting staff, I would have said: no way!” he says.

“Not surprising on HighTower,” writes John Furey, principal of Advisor Growth LLC of Phoenix, Ariz. in an e-mail. “It just shows high interest in their model and independence in general and they are deploying their capital.” HighTower reported in January that it raised $100 million of venture capital to go along with $65 million previously landed. See: “Weissbluth lands war chest for HighTower Advisors”: https://www.riabiz.com/a/107043

One part of the unforeseen pick-up is the robust interest level of advisors employed by Morgan Stanley Smith Barney.

Morgan Stanley Smith Barney teams

HighTower’s two most recently recruited teams both left that wirehouse. Strata Wealth Management of Rye, N.Y., manages about $500 million and The Levin Group of San Francisco manages about $300 million. Strata’s partners: Jeffrey Sullivan, John Lang, Peter Lang and Roman Ciosek, have Morgan Stanley legacies of 26 years, 19 years, 40 years and 13 years respectively. The Levin Group’s partners, Barnaby Levin and Anne Lambert, were with Smith Barney since 2000.

There are good reasons why Morgan Stanley Smith Barney’s brokers are a good pool of talent for HighTower to fish in, according to Weissbluth.

“Morgan Stanley Smith Barney advisors are systemically unhappy with the way the merger – really it’s an acquisition – is going,” he says. “It’s cultural, it’s financial and you’re not dealing with a particularly contented group to begin with. The Dean Witter and Morgan Stanley cultures never integrated so you have two cultures taking in a third culture – Smith Barney.”

Indeed, these three wirehouse cultures are much more different than most people realize, says Steve Winks, principal of SrConsultant.com in Richmond, Va.

Intensive compliance

“Morgan Stanley has the most [intensive] compliance department in the industry,” he says. “They maintain brokers do not render advice and make sure that is the case. Smith Barney — heir of the old E.F. Hutton, through Shearson — had the most progressive advisory services platform on Wall Street. Thus the two mix like oil and water. ... Because Morgan Stanley is providing direction, the new Morgan Stanley Smith Barney is a disappointment to old advice hands who have pioneered advice within a brokerage environment.

“Thus the question: Where do the best brokers (the top 20% that have 50% of the assets) go who wish to distinguish themselves in advisory services?

“Firms like HighTower are prepared to win hundreds of billions in assets of disenfranchised brokers who no longer have confidence in Morgan Stanley’s or ability to support them.”

Yet Furey, who works with breakaways brokers as a temporary chief operating officer, says it is still not clear to him how vulnerable Morgan Stanley Smith Barney is to recruiting.

Top candidates

“The jury is still out,” he says. “I don’t hear too much about incremental friction versus other wires. But what I can tell you is Smith Barney advisors have been top candidates for independence. I see no reason why that won’t continue going forward.”

Weissbluth believes he’s landed the right recruiting talent to talk to brokers from Smith Barney and other wirehouses about the better culture that HighTower is creating.

Papedis spent seven years at Fidelity Investments in Chicago. His most recent position was as vice president of senior sales responsible for recruiting big advisors in the central portion of the U.S. Previously, Mr. Papedis was with TD Waterhouse.

Many HighTower advisors keep assets at Fidelity so the Papedis hire made particular sense.

Not competing

“It’s good for us; it’s good for Fidelity,” said Elliot Weissbluth, CEO of HighTower. “We’re a client. We’re not competing with Fidelity.”

Boice previously was the northwest region talent leader for UBS in Los Angeles. There, she managed a recruiting pipeline and was also involved in hiring and bringing financial advisors on board.


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