HighTower adds two battle-hardened T. Rowe generals to the 401(k) field

Brooke’s Note: Baltimore people love their town and financial executives like the better employers there even more. Truly, if you live in Roland Park, send your kids to Schools like Gilman and Garrison Forest and toodle downtown to a desk at (DB) Alex. Brown, Legg Mason or T. Rowe Price, life is good. With that in mind, I took note of a couple of true blue T. Rowe guys ending up with the very Chicago HighTower Advisors, just another interesting case of hybrid vigor and of the 401(k) business reconstituting itself in unforeseeable ways.

With its hire of two former T. Rowe Price executives, HighTower Advisors LLC has again served notice that it sees the 401(k) sector as a long, green pasture in which it can grow long-term profits. See: The great 401(k)-or-not debate: RIABiz webinar lays out the perils and rewards for RIAs thinking of wading into the fast-moving 401(k) stream.

On Oct. 28, the Chicago-based roll-up and service provider brought on Charlie Vieth and Steve Zients, T. Rowe Price veterans with more than 50 years of combined experience, to bolster the bona fides and heft of The Fiduciary Plan Advisors, a Baltimore-based retirement team led by Jania Stout that HighTower brought on in August, which now manages $1.2 billion in assets.

HighTower Fiduciary Plan Advisor, or HTFPA, works with more than 30 midsize 401(k) plans. This practice is unusual in that it focuses both on plan sponsors and participants. Many RIAs work mostly with employers or participants, but not often both.

“At HTFPA, our approach involves working closely with not only our plan sponsor clients, but with plan participants as well to provide education and support to help them meet their retirement needs,” Stout says. See: How the future of the 401(k) industry may hinge on the outcome of a lawsuit brought by Fidelity employees against their own company.

HighTower now has nine advisor teams, including HTFPA, with expertise in 401(k) planning, according to Michael Parker, national director of enterprise development for Hightower.

The teams “regularly partner with each other and with our more traditional wealth management teams to provide strategic guidance and solutions to clients in this area.” This model, he writes in an e-mail, has generated successful “collaboration to benefit both our advisors and their clients.”

Next act

Charlie Vieth [pictured] and Zients founded
a retirement consultancy in 2009 after
long executive stints at T. Rowe
Price.

Vieth and Zients will serve as managing directors at HighTower.

Vieth began at T. Rowe Price Investment Services Inc. in 1982 and served as president and director of T. Rowe Price Retirement Plan Services from 1991 to 2006. See: T. Rowe Price preaches a new retirement message that doesn’t involve retiring anytime soon.

Zients was at T. Rowe Price from 1985 to 2009, where he served as a senior vice president. See: Schwab and T. Rowe Price finally strike a OneSource deal with help from an ex-Fido exec.

In 2009, the two T. Rowe veterans joined forces to found Act2 Retirement Consulting LLC. Act2 no longer exists.

“The addition of Charlie Vieth and Steve Zients to our team is a tremendous step forward in establishing HighTower as a leader in the 401(k) planning space,” says Stout, managing director and co-founder of Fiduciary Plan Advisors at HighTower, in a statement.

HighTower declined to list how much the firm managed and whether they brought over any assets and declined to make Vieth and Zients available for interviews.

Just how dedicated?

Although signing these two advisors is clearly a coup for HighTower in the retirement arena, it is unclear where it leads, says Mike Alfred, co-founder of La Jolla, Calif. based -based BrightScope, Inc., which rates 401(k) plans.

“The question is whether HighTower is going to do something holistically in the retirement space or if they’re opportunistically bringing a retirement firm or two over when it makes sense. It certainly is a popular area and it is viewed as a place where assets should consistently be added because of payroll deductions.”

A number of firms have expressed interest in the retirement space of late, including Mariner Holdings. See: How Mariner Holdings is angling to become a $3-billion 401(k) company overnight by co-opting a local SageView office.

Clearly, a firm like HighTower is eyeing the rollover dollars, Alfred says, but it will need to be prepared to take on the giant legacy players in the field if it is to succeed in a major way.

“I see a lot of folks dabbling in retirement planning. and very few of them get much traction because it’s a space you really need to invest in. T. Rowe Price, Vanguard and Fidelity have invested in it for years and they’re heavyweights.” See: Fidelity, Vanguard and Schwab have top 401(k) brands but plan sponsors like the service of off-brands better, study shows.

One to keep an eye on

Mike Alfred: It seems everyone is
trying to come up with a
retirement strategy now, but HighTower has
the brand, momentum and scale to
compete with something bigger.

This foray into the 401(k)s appears to be HighTower’s latest tangent. Once known for its aggressive accumulation of RIAs, the firm switched gears in September 2012 and began to sell outsourced services. See: HighTower throws open its doors to non-partner firms who want service and/or brand.

At the beginning of 2013, HighTower had another growth spurt. See: HighTower shifts into high gear with a three-team, $1.2 billion AUM in-three-weeks spree.

The talent T. Rowe has accumulated speak to the firm’s serious intentions, Alfred says. “Anyone who ran the retirement business at T. Rowe Price is a serious player. Jania Stout has been in industry for long time and everyone knows her group.”

And given HighTower’s rapid growth in the RIA arena, Alfred believes the firm could achieve similar success on the retirement front.

“HighTower is a firm that has a good reputation and seems to have a lot of momentum — more so than other firms that are making announcements in the retirement area. I’ll be watching HighTower pretty closely. It seems everyone is trying to come up with a retirement strategy now, but HighTower has the brand, momentum and scale to compete with something bigger.” See: What exactly the CEOs of HighTower, Focus Financial and Dynasty Financial revealed when they shared a stage in Las Vegas.

'Instant credibility’

Rick Meigs, president of 401khelpcenter.com in Portland, Ore., agrees that HighTower took a significant step into the 401(k)-plan arena the addition of Fiduciary Plan Advisors and that its track record of aggressively expanding its wealth management network makes it a contender.

“Fiduciary Plan Advisors has a solid team of retirement plan industry veterans that bring a robust client-centric business model to their practice. It would seem to be a good fit for HighTower. The ability of HighTower to introduce Fiduciary Plan Advisors to its client base should provide Fiduciary Plan Advisors with the significant advantage by providing both access to corporate decision-makers and instant credibility — both critical in the highly competitive 401(k) market place” Meigs e-mailed.

The retirement arena is quite attractive for RIAs, Meigs adds.

“Having and strongly supporting Fiduciary Plan Advisors in their network should position HighTower as a growing player in the retirement marketplace. With 40% of plan sponsors likely to initiate a formal review of their plan over the next year, which puts $460 billion in DC plan assets into play, this is a smart move by HighTower. Only time will tell if they are able to execute and take advantage of possibilities.”