May 1, 2013

Elliot Weissbluth: The 2013 IA 25 Extended Profile

CEO, HighTower Advisors

HighTower is the 'destination of choice for any wirehouse escapee,' according to Weissbluth HighTower is the 'destination of choice for any wirehouse escapee,' according to Weissbluth

This is Elliot Weissbluth’s second appearance on the IA 25. Read his extended profile from the 2012 IA 25 here. Click here to view the complete list and Special Report schedule for extended profiles for each of the 2013 IA 25 honorees.

Last year, when we highlighted Elliot Weissbluth on the cover of our IA 25 issue, we said that with HighTower’s unique appeal to top-level wirehouse brokers who sought independence while taking advantage of the best of the financial services business, Weissbluth had changed the conversation on and about Wall Street. It’s no longer a dualistic understanding that “Wall Street is bad; independent advisors are good.”

So where is that conversation now? “Like any other big topic, it hasn’t changed much in the past year,” said Weissbluth, before subtly contradicting himself by describing a rather big change: “More advisors have left the wirehouses,” with many of the larger ones having joined HighTower as partners. At the same time, “the level of tolerance that individual investors have has decreased.” What has increased is the “level of skepticism about these large firms—that they put their clients’ interests first,” while “the delineation between manufacturers and true fiduciaries is sharper.” Weissbluth said he’s “optimistic that the consumer is incrementally more sophisticated,” and he sees opportunity ahead as “the next generation decides what advisor they’ll use.”

It’s not so much that the next generation of clients doesn’t trust advisors, he said; instead it’s about “service model modality.” He argued: “Do millennials want to be serviced the way their parents were? Is a quarterly office meeting or golf game or dinner or paper performance report the way that the next generation wants to be serviced?”

He turned the conversation to a comparison of the future prospects of wirehouse firms and independent firms like his. “Do the incumbent firms servicing the majority of investors have the prescience and the commitment to invest and change their businesses” to meet the needs of that next generation? “No,” he answered, because the independent firms “are significantly ahead in innovative technology and solutions, and the big firms are playing catch-up and may never catch up.”

Beyond his championing of the independent model, he remains a passionate proponent of the HighTower model. “HighTower is now the destination of choice for any wirehouse escapee” because, he argued, those escapees can become a full-blown HighTower partner or take advantage of the firm’s more recent models: the HighTower Network and the HighTower Alliance, versions of affiliation that are similar to the independent broker-dealer business model but with unique variations in typical HighTower fashion. “A team can leave, own their own business, have control of their own destiny and avail themselves of the sophistication of our platform. That de-risks the move entirely because they end up with more products, better pricing, greatly reduced operational costs” and less business risk.

So what’s next for HighTower, which was in 13th place in 2012 on Inc.’s list of the 500 fastest-growing private firms? “We’re on a 20-mile plan, inspired by Jim Collins” in his book “Great by Choice.” In Weissbluth’s translation, that means HighTower “only does acquisitions in the first three quarters of the year; in the fourth quarter we refresh and rebuild.” So far this year, HighTower has “done four transitions and opened up two new offices.” HighTower, he said, will “keep building and building; one step after another.”

That building likely won’t include existing RIA firms, though. “I’m a numbers guy,” Weissbluth said. “There are more opportunities in looking for teams to leave the big shops than there are RIAs looking to plug into somebody else’s network. We don’t want to compete with the Schwabs, Fidelitys, Envestnets.” Most of those RIA firms, he said, “are set in their ways,” so changing their business models would be a “Sisyphean task for them.” In contrast, “when a team leaves a brokerage firm, they’re open to a firm like HighTower helping them make all those decisions. We’re interested in firms that want to grow their businesses.”

Reprints Discuss this story
This is where the comments go.