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March 06, 2012 at 11:00 AM
You may have read the report this week that HighTower Advisors landed another top brokerage team, this time from Merrill Lynch. These breakaway brokers worked together in Merrill’s private banking division, and could potentially add some $5 billion to HighTower’s growing asset base, which stood at just over $20 billion before this most recent addition.
Admittedly, that’s a drop in the bucket compared to Schwab Institutional’s $679 billion in client AUM or even Pershing Advisor Solutions’ $125 billion. Still, HighTower’s growth curve is pretty impressive in three short years, particularly its ability to attract the very largest advisory firms that are every custodian’s dream market, like these Merrill brokers. To my mind, HighTower’s rapid—and escalating—success suggests that its hybrid model (or as HT execs describe it; their Open Source Architecture) is indeed a look at the future of financial advice.
In the interest of full disclosure, I should mention that I did some publishing consulting work with HighTower last year, although I’m not working on any projects with them at present. Working with corporate clients poses some obvious conflicts for a journalist, but it also offers some advantages as my relationship with HighTower and its CEO Elliot Weissbluth illustrates.
For many years now, I’d believed—and written—that the conflicts inherent in commission-compensated financial advice and principal trading far outweighed any potential client benefit, both with respect to advisors themselves and to their broker-dealers. Consequently, I was firmly in the camp of folks who looked to the independent RIA custodians as the best strategic partners for professional advisors. But in my time working with HighTower and Elliot, I came to see the advantages of taking a broader view, and the drawbacks in providing limited services to advisors and their clients.
