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HighTower throws open its doors to non-partner firms who want service and/or brand

The Chicago-based consolidator announces in Las Vegas that it is gambling that it can deliver a business model similar to Dynasty Financial Partners

Friday, September 14, 2012 – 4:33 AM by Brooke Southall
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Elliot Weissbluth wowed the MarketCounsel crowd in Las Vegas with the news that HighTower will take on Dynasty Financial head-to-head

Related Moves

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February 19, 2021 – 8:58 PM

Executive shake-up and staff hiring binge change Dynasty Financial Partners' talent mix, with Todd Thomson, Scott Welch, Ed Friedman and 12 women as headliners

The St. Petersburg-based producer of 'synthetic RIA scale' will continue to aggressively hire and adjust its talent ranks as it readies for next growth push.

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A 20-year Merrill Lynch veteran got Sanctuary Wealth to $10 billion in AUA in 15 months with no outside capital and no time in bed: 'Nobody's slept since April'

Jim Dickson also recruited HighTower talent, Amit Dogra, to bring the old HighTower brokerage model and execute it as HighTower veers toward buying RIAs

August 15, 2019 – 7:58 PM

New-look Hightower hires Abby Salameh and takes a 'Hurley-style' stake in a $4.8 billion DFA RIA

The Chicago roll-up gets a chief marketing officer who gets RIAs as it becomes part-Dynasty, part- Fiduciary Network in adopting a very 2019 deal structure for LourdMurray

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See more related moves

Mentioned in this article:

MarketCounsel | Hamburger Law Firm
Consulting Firm, Compliance Expert, Legal Services for RIAs
Top Executive: Brian Hamburger

DeVoe & Company
Consulting Firm
Top Executive: David DeVoe

Dynasty Financial Partners LLC
Specialized Breakaway Service, Mergers and Acquisition Firm, RIA Set-up Firm
Top Executive: Shirl Penney




Stephen Winks

Stephen Winks

September 14, 2012 — 3:55 PM

The operating leverage Elliot has created is extraordinary. There are owners who are greatly leveraged by affiliated users.

Raymond James created the first such business model when Tony Greene spun out of FSC to create the independent broker/dealer arm (IM&R) of Raymond James, the then small Florida traditional (brokers as employees) brokerage firm. Two firms utilizing the same support infrastructure generated margins and sophistication not possible by either. Though Raymond James was not your fathers traditional broker/dealer, HighTower is not the typical Advisory support firm in vision, scale and ability to execute. It is the first large scale advisory services support organization for equity partners who have skin in the game and a very large user base who presently do not have access to the enabling, expert prudent investment processes, advanced technology, work flow management, conflict management and expert advisory services support required for fiduciary standing that are modernity to an antiquated brokerage format.

Elliot knows something that scares Wall Street to death, he understrands that he can make expert fiduciary standing safe, scalable, easy to execute and manage as a high margin business at the advisor level at a lower cost than a packaged product. Importantly Wall Street can not respond in kind because of its expensive outdated business model and becomes a high cost low value added alternative to advisory services in the consumer’s best interest.

The good news for Wall Street is HighTower is not there yet, but firms like Dynasty, EnvestNet and others are highly motivated to advance (a) expert authenticated prudent investment processes that make fiduciary standing safe to acknowledge, (b) advanced technology and approaches to portfolio construction which provide transparency and continuous comprehensive counsel required for fiduciary standing, (c) work flow management tied to a functional division of labor (Advisor, CIO, CAO) which makes advice scalable, easy to manage and execute as a high margin business at the advisor level, (d) conflicts of interestr management essential to fiduciary standing not possible in a brokerage format, and (e) expert advisory services support for each of the ten major market segments advisors serve (Mass, Retail, HNW, Ultra HNW, DC, DB, Foundations and Endowments, Taft-Hartley, Public Funds, Profit Sharing Plans). None of these things are possible in a brokerage format and represent modernity—in the best interest of the investing public long thwarted by brokerage self interests.

Elliot Weissbluth’s announcement is a catalyst for large scale institutionalized support advisory services both within the brokerage industry and outside, and is driven by the desire of brokers and advisors alike to act in their client’s best interests. The client’s best interest will be served, based on objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters. This is an all or nothing value proposition as incremental solutions do not innoculate HighTower or its owners from fiduciary liability. Thus advisor ownership and control becomes a decisive advantage, not enjoyed by brokerage self interests, which makes it almost impossible for brokerage firms to respond.

The only question is does Dynasty or EnvestNet, or others have the know how to take advantage of the opportunity the marketplace has presented them. This is not an extrapolation of the brokerage model that is built to assure no advice is being rendered, so fiduciary responsibiliy is not triggered. Advice is not a product the broker sells but an expert prudent process the advisor manages in the client’s best intererst.

HighTower and Dynasty combined have $100 billion in assets, add EnvestNet at $140 billion and you have the mandate, the capital and the leadership to execute. It is just a question of know how.

Expert personalized fiduciary advice in the client’s best interest at a lower cost than a packaged product wins every time relative to outdated, high cost, conflicted advice of the brokerage format.

I think Elliot is on to something !

SCW

Jeff Spears

Jeff Spears

September 14, 2012 — 4:08 PM

One other reason this is a smart move for HighTower is this “new” structure is much more attractive for large breakaway teams that don’t want to sell their business to a roll-up firm.

Was this structure Dynasty’s idea?

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