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HighTower extends its winning streak of luring breakaways near the nation's capital

The Chicago aggregator has already tied last year's annual recruiting with more than three months to pad the mark

Wednesday, September 21, 2011 – 4:21 AM by Lisa Shidler
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Jeff Leventhal: One lawsuit in a lifetime is enough. I followed the protocol to the T.

HighTower Advisors LLC has just lured its third wirehouse team in as many months in the Washington area and now has some $2 billion in assets in and around the nation’s capital.

On Sept, 16, the Chicago-based aggregator grabbed The Leventhal Group of Bethesda, Md., from UBS Wealth Management. The team is led by Jeff Leventhal, who joined HighTower as partner and managing director, and Evan Nowack, who joined the company as a financial advisor.

This latest acquisition brings HighTower to $20 billion in assets. Leventhal, 41, manages assets for about 200 families and has about $400 million in assets.

Barron’s named Jeff Leventhal to its Top 1,000 Advisors list from 2009 to 2011 and this year he was recognized as one of the top 20 financial advisors in Maryland. Nowack served as vice president of investments, specializing in asset allocation modeling, investment strategy and financial planning.

D.C. niche

Recruiting elite teams in and around Washington has been an important goal for HighTower, says Mike Papedis, its managing director of national business development.

“The greater-D.C. market is filled with a lot of entrepreneurial wealth and very sophisticated advisors,” he says. “We’ve been very interested from the advisory perspective about the opportunities that exist there.”

HighTower still believes there’s breakaway potential in the D.C. area, Papedis says.

In July, HighTower lured two major teams from the area.

Paul A. Pagnato and David W. Karp, formerly members of Private Wealth Advisors at the Merrill Lynch Private Banking and Investment Group, joined HighTower July 29. The Washington-based team brought more than $1 billion assets to HighTower. See: Fearless Merrill Lynch team breaks away with $1 billion in broad daylight.

In addition, advisors John Verfurth, Richard Weeks and Jeff Grinspoon left Morgan Stanley Smith Barney to join HighTower. The Vienna, Va.-based team had nearly $700 million under advisement. See: Big Morgan Stanley team on the Beltway hightails it to HighTower on second thought.

Jeff Leventhal points out that his book of business has continued to grow despite the downturn in the market, echoing Papedis’ sentiments that the D.C. area offers an advisor a healthy amount of business.

“I think Washington, D.C., more so than any other area in the country, has held up very well in this economy,” he says. “It’s a wonderful area to operate in.”

Why HighTower?

Leventhal had been shopping around for an independent firm after being in the industry for 17 years. He’s been at UBS
since 2003 after spending nearly eight years at Merrill Lynch.

“I made a decision that I wanted to be free from an investment bank,” Leventhal says. “I wanted to be in a true independent platform.”

While he wanted to be independent, it was important for him to be with a company that allowed him to focus primarily on his clients and gathering new assets. He looked at other similar firms such as Concert Wealth Management Inc. and Focus Financial Partners LLC, but says HighTower impressed him the most and offered exactly what he was seeking.

“I’m good at managing clients’ needs and that’s why HighTower is so appealing,” he says. “I’m independent but I don’t have to deal with back-office stuff.”

Schwab and Black Diamond are winners

Leventhal chose Schwab Advisor Services. as his primary custodian, though he says he will likely use Pershing Advisor Solutions for some of his international clients and will also use Fidelity Institutional Wealth Services for some additional clients. Overall, he felt Schwab offered the best competitive platform, he says.

“It was important to have a name that people were comfortable with,” he says. “Clients feel very comfortable with Schwab.”

He also chose Black Diamond Performance Reporting to be his technology vendor,because, he says, he was so impressed with the firm’s products. “The capabilities there are just so unbelievable,” he says. “The capabilities were far superior to anything I’ve seen before in other programs.”

Broker protocol saves the day

This is not the first time Leventhal has left a broker-dealer, and he learned important lessons the last time. When left Merrill Lynch in 2003 to join UBS, there was no broker protocol in place, and he was sued by Merrill.

This time, he says he hasn’t been sued by UBS and credits the broker protocol for drastically reducing litigations.

“One lawsuit in a lifetime is enough,” he says. “I followed the protocol to the T,” he says. “It’s an advantage to the clients. Before the protocol, the company said, 'we own your assets,’ but it’s really the clients’ assets, and they get to choose who they do business with.”

RIABiz maintains a list of signatories for the protocol at https://www.riabiz.com/protocol_members.

Pipeline growth

Papedis describes the HighTower’s pipeline as “brimming” and says his firm typically makes the short lists of those advisors who are seeking independence from wirehouses.

The firm already has lured eight teams this year, matching the 2010 amount. Papedis believes more teams will get transitioned before the year ends.

“Our model is unlike others we’ve ever seen,” he says. “From our perspective, there’s a new chapter in financial services. The concept of the HighTower model is gaining momentum and traction in teams throughout the financial services industry.”

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