Penny Phillips re-platforms at skyrocketing, $25 billion, six-month startup, Hightower Signature, after $353 billion Hightower mothership acquired her firm in M&A spree
After landing her $5-billion 'Journey' rollup, Hightower CEO Larry Restieri says 'Signature' could hit $50 billion in a year-- a dual play on Hightower's scale advantages and W-2 RIA model
7 min read- Hightower acquires Journey Financial Wealth, led by Penny Phillips.
- Phillips joins Hightower Signature, a new RIA for salaried advisors.
- Signature aims to attract advisors with a salary model and practice management support.
- The move signals Hightower's strategy to internally re-platform and grow.
Brooke's Note: Hightower Advisors rumbles along like a westbound freight train cranking out cash flow from its $350 billion of AUM, and getting the job done. Yet, its owners would like it to begin acting more like a Tokyo-bound bullet train whooshing along faster, quieter and more efficiently. Retrofitting is one option. But Focus Financial and other old-line rollups may have developed another working model – roll the whole thing up again internally but this time using a more modern configuration. Such a creative, constructive cannibalism is off to a good start under Larry Restieri at Hightower. The wrinkle with October-launched ‘Signature" is that it’ll sell direct to consumers and compete with its B2B partners. The other fine-tuning is that it'll compensate advisors through a salary model. Maybe what it lacked was a bridge to young advisors. Now in acquiring Journey, it has a charged-up (and decidedly young) Penny Phillips who is adept at practice management, running a rollup, and speaking on her feet. It may make the 2007-founded Hightower train track to the future.
Larry Restieri's plan to judiciously cannibalize the $354 billion under the original "Hightower" into Hightower Signature, an in-house RIA for salaried and supported advisors, took a giant leap ahead yesterday (Feb. 5).
It netted $5-billion Journey Financial Wealth in New Jersey, and its CEO, Penny Phillips, in the bargain. See: Penny Phillips is the first millennial woman to launch a rollup, with four Wall Street veterans providing the AUM and capital
Phillips, then 34, co-founded Journey in 2021, before that heading her own firm, Thrivos Consulting. She was also, perhaps, the highest profile RIA practice management voice on social media.
Journey was a hybrid RIA affiliated with broker/dealer Purshe Kaplan Sterling Investments. The partnership has 8 employees and 16 advisors, serving about 1,000 clients.
Restieri, the new Hightower CEO fresh from Goldman Sachs, who replaced Bob Oros last February, launched Hightower Signature in October. He will have amassed $25 billion after closing on Journey by the end of March. See: Bob Oros is out at Hightower -- for real this time -- with poached Ayco CEO, a Goldman Sachs partner, replacing him
Signature – with an eye on $50 billion of AUM by year-end – came flying out of the blocks with a tailwind because it is an in-house succession solution.
“I think it could double [from $25 billion] even over the course of this year, just between internal M&A and external M&A,” Restieri says. “And it'll be it will definitely be a foundational piece of how we grow Hightower.”
Pivotal driver
Whether it can attract outside advisors depends upon finding the goldilocks business model, balancing support and autonomy, and appealing to millennials – generally born between 1981 and 2000, or 30 to 45 years old – exactly Phillips' cohort.
“Hightower Signature Wealth is still young,” Restieri says. “It's still creating a vision, yeah. So, we're not so baked in how we're doing things that she can't come in and help us build this to be the best firm possible.
How HighTower's executive shuffle, kicking CEO Elliot Weissbluth upstairs, opens door for new talent and paves way for Thomas Lee-fueled acquisitions splurge
[Phillips] can now help us do what she did at Journey, (founded in 2021) and she could be a pivotal driver of that and just do that on steroids, right?
“She's got a real media presence. think she can be a real loud voice for us trying to do it. Look, frankly, that's why I was so excited to have her join -- to have this vibrant voice speaking with the megaphone that we plan to give her," he adds.
Phillips, now 37, says she likes the hand she's being dealt to go for gold – especially with a captive Hightower audience of quality advisory firms as building material. It has 648 advisors across 33 states and the District of Columbia.
“You're building it with those advisors who have been so successful on the platform, who are now converting [to putting advisors on a salary], you almost can't fail at it,” says Phillips, who will become head of advisor strategy and client experience.
“What I believe Signature Wealth has is they get to build an integrated business with all of those best practices at their fingertips.
“Hightower Signature Wealth can be, if we do it right, and I believe we will, the gold standard for what that type of new independent RIA employee – whatever you want to call it – business could be.”
No channel conflict
Phillips took the CEO reins at Journey in 2022 when it had about $2 billion in AUM, and grew it by about 150% in three years or so.
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Of course the creation of an in-house RIA at Hightower, means that it has a practice that competes with the autonomous practices under the Hightower umbrella.
Restieri largely waves off those concerns and says advisors tend not to think that way.
“Advisors, the advisors really get along and like working alongside each other, even though, like I'm sitting here today in New York, and there are, I think there are like nine different practices that sit here.
HighTower gets a new CEO, to be revealed later, as Elliot Weissbluth moves upstairs
"It's not competitive at all, you know what mean? And I think everybody's focused on their own way to do things, they have their own connection, how they practice. And we have not found a lot of, you know, just historic kind of channel conflict.”
Seller-driven
Still, Restieri hardly imagines a scenario where every big Hightower practice joins the new Signature unit.
“Everybody can join if they want but there are firms within our universe that I don't expect to join Hightower Signature Wealth,” he says.
“So do I expect Bel Air to remain independent? Yes. Do I expect Bahnsen to remain independent? Do I expect Treasury Partners to remain independent?”
Penny says the transactions are often seller-driven and she experienced that at Journey.
"[We had] advisors even within our own platform say, 'Hey, I'm thinking about sunsetting. I want to stay here. Can I, you know, convert?' And so why not, and I will say that our, the advisors that we were speaking to, B2B, were also coming to us and saying, ‘We love your culture.’”
Thomas H. Lee Partners bought a majority stake, estimated at 50% to 60%, in Hightower in 2018 and injected $100 million in growth capital. At the time, Hightower was a semi-distressed asset.
The sale price was estimated in the range of $250 million to $350 million. The firm reportedly shopped Hightower around in 2020, seeking as much as $2 billion. See: Thomas H. Lee Partners reportedly puts Hightower Advisors on the block, but an air of unreality surrounds the timing and premium price following two-year revamp
Exciting change
So how much will Phillips return to her consulting megaphone and how much will she continue to be more quietly hands-on building out Signature Wealth?
"One of the things that I committed to when I transitioned from Thrivos to Journey, was that a lot of those amazing [consulting] resources were a benefit of joining Journey, and I really focused intentionally on the amazing advisors who were taking a chance.
"And so I shifted to working almost exclusively, obviously, with our advisors.
"I think this [move to Hightower] certainly will be a bit of a change for me, but in an exciting way, because I'll really be able to do what I am good at and what I enjoy, while also helping to shape the strategy of the firm.
"And I think we've learned a tremendous amount in five years. And now I have the experience, not just sort of working beside advisors, coaching them or helping them, but actually building a firm for them.
“It's a whole different sea of knowledge that I've gained. And I think it's going to be awesome.”
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