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HighTower makes an executive out of a partner to fine-tune advisor access to investments

Former UBS advisor will simplify the bewildering investment-related choices afforded by open architecture

Wednesday, January 26, 2011 – 3:57 PM by Brooke Southall
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Matthias Paul Kuhlmey: We’re in the beautiful position to buy best of class (products and services) nevertheless you need an in-house function to hold it together.

HighTower Advisors is making one of its practicing advisors the head of its newly established Group Investment Solutions.

The Chicago-based serial buyer of big advisory practices will have Matthias Paul Kuhlmey overseeing the company’s custodial relationships, investment consulting and research. Kuhlmey, who had a book of more than $200 million when he left UBS, will earn a corporate salary and continue to manage his client accounts. HighTower hired him after searching for about a year to fill the position.

Advisory teams at HighTower can gain access to any number of custodial relationships — and their products — from providers like Schwab Advisor Services, Fidelity Institutional Wealth Services or JPMorgan. They can also access big investment outsourcers like Altegris, Fortigent and Envestnet — and investment research from the custodians and beyond.

Comfortable access

The idea is to make the process of accessing these types of relationships more “comfortable,” Kuhlmey says. HighTower, which has 20 teams in 10 offices and about $18 billion in AUM, has developed a niche offering multiple custodial and multiple clearing environments for its advisors and hybrid RIAs. See:How to choose between the bewildering custody choices

The platform has been successful in helping to attract not only a large group of large wirehouse advisors but also to fill the company’s pipeline, according to HighTower CEO Elliot Weissbluth.

However, the multitude of possibilities for advisors creates complexities.

“We’re in the beautiful position to buy best of class (products and services) nevertheless you need an in-house function to hold it together,” Kuhlmey says. “(For example) You don’t want to search every custodian; you want to go in-house and search for it” on a platform where the menu of choices is consolidated and put in an easy-to-navigate format.

What HighTower is steering away from in this process is centralizing too much control in how its advisors manage client assets.

No house view

“HighTower does not have a house view; we want to help them shape their opinion,” Kuhlmey says. “...We need to consolidate everything to create a center of competence.”

The idea is to get the best of centralized command and entrepreneurial nimbleness, according to Tim Welsh, president of Nexus Strategy LLC.

“It’s the message of central control and local flexibility,” he says.

The move marks the start of a big initiative at HighTower in 2011 to build out the management team — largely using advisors themselves as leaders.

“We’re building this around a true meritocracy,” says Weissbluth. “The other Wall Street firms say they listen to financial advisors. They basically just pay lip service.”

Kuhlmey, 40, who joined HighTower in November of 2009 says he was drawn to this service challenge based on his years of working for European banks that he says tend to offer extraordinary service. He has nearly 20 years of experience serving ultra-high net worth private clients who reside overseas. He is skilled in buying and selling of foreign equities not listed on U.S. exchanges within the respective foreign currency. See:HighTower Advisors nabs a UBS team and shifts to new recruiting gear

Mike LaMena, HighTower’s chief operating officer, thinks Matthias can succeed in his mission.

Balancing a corporate position

“Matthias brings a depth of global capital markets experience and passion for the investment solutions space, as well as the practical experience of balancing a corporate position with his duties as a financial advisor.

If efforts like Kuhlmey’s are successful, they can take the core competency of aggregators beyond just bringing aboard new practices to better managing existing ones, Welsh says. There’s a constant tension among the various big firms that are aggregating practices about where the mother company should step in. Focus Financial of New York, the biggest of these efforts with about $40 billion of assets is adamant about leaving entrepreneurs alone to let them succeed. United Capital Financial Partners, with about $12 billion of assets takes the opposite tack saying that unless there is a tight wiring together of advisors into a single wealth manager that little or no value is added.

Prior to HighTower, Mr. Kuhlmey worked for UBS’s Private Wealth Management Office in New York and oversaw the New York-based Domestic Private Banking Team at Bank Julius Baer. He also worked at Deutsche Bank AG in New York, where he was actively involved in projects leading to the integration of Bankers Trust Co. into Deutsche Bank’s U.S.-based operations.

Deutsche Bank in Europe

He spent considerable time in different functions with Deutsche Bank in Europe, including as a member of the Divisional Board Member team in Frankfurt, Germany. Mr. Kuhlmey received his degree in business law from the University of Applied Sciences in Lüneburg, Germany, and a diploma in finance and banking from the Hannover Business School, Germany.

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Nexus Strategy
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Top Executive: Timothy D. Welsh

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