A Top Wirehouse Advisor Moves to HighTower Advisors

We chose this case study to provide a snapshot of a “move” that for many reasons is particularly instructive. We work with a broad spectrum of advisors, and this case study is one of their stories.

Why would an enormously successful and highly respected top advisor managing in excess of $500 million in assets decide to leave his wirehouse after more than 20 years of service, to join a firm which to him had little brand recognition? The answer reveals a powerful story and says much about the current landscape, the overall industry and the direction we see it heading.

Overview

“Alex” is one of a rare group of advisors who joined a wirehouse as his first career and, over the next 20 years, built a thriving practice. He earned a reputation for having the highest integrity, eventually developing a unique niche which enabled him to differentiate himself and grow exponentially over a period of a few years. Ultimately he created a team with the right partner and support staff and elevated the business to an enviable position within the community and the industry.

Over time, every other wirehouse and regional firm attempted to recruit Alex and his team yet he turned down each transition deal, as much as 3.5x his multimillion-dollar annual production. He refused to be distracted from his tremendous momentum and remained confident that he would be at his firm for the rest of his career.

Frustrations Mounting

Although Alex did everything right in terms of creating an ideal client business model and was at the top of his game, by June of 2011, he began to experience misgivings about his firm. The new ownership was exerting significant control over his day to day operations. While he was running an exemplary practice, he was nonetheless subjected to an overwhelming compliance process, with multiple layers to navigate for approvals of what once were routine matters, and was starting to be limited in his choices of investments. And with increasing client unease due to negative press around the firm, he was finding the environment demotivating, and believed the new leadership focused more on serving shareholders than on either clients or advisors. What began as minor annoyances developed into major frustrations leading to a turbulent relationship with management. With great reluctance, in January of 2012, Alex came to the realization that he needed to get better educated about the industry landscape. At the outset, he expected this exercise to prove nothing better existed; that the issues he was dealing with were industry wide, and to confirm that he was already at the best place for himself and his clients.

While Alex had made the decision to do some exploration, he was also committed, out of loyalty to the senior leadership at his firm who had also become his friends, to simultaneously allow them repeated opportunities to address and remediate his frustrations.

The Process

Alex went into the due diligence process loving his firm’s platform and technology and did not feel limited in any way by the resources, tools, research, lending and trust capabilities. So, his bar was set quite high in terms of the expected value add a new firm would need to deliver in order to captivate him. After numerous conversations with us, Alex decided to take an “a la carte approach,” asking to meet with leadership of the top contenders among the wirehouses, boutiques and regionals. The one thing he was sure of was that he had no interest in building his own independent firm. He did not see himself as entrepreneurial and always valued the support and name recognition associated with large firms. While he was beginning to witness more of his peers venturing beyond the traditional space to some form of independence, he was not tempted by this at all. His strengths and passions were serving clients and growing the business. At every meeting with firms he interviewed, he posed the same two key questions to leadership:

• How can you help me grow?
• How can you help me better serve my clients?

Although he had created a highly successful business, Alex was still eager for practice management and professional development support. He wanted the next opportunity, if there were to be one, to represent a significant uptick for clients and his team members.

The Right Fit

While he respected the cultural differences offered by other firms, he did not find a traditional option that could compete with the capabilities of his current firm and provide tangible proof that they would “move the needle” in helping grow his business and offering a superior client service experience. After interviewing several firms that failed to yield further interest on his part, Alex was amazed to discover that a relatively new model, HighTower Advisors, created in 2007 with almost eerie prescience of the events to occur only a year later, was uniquely positioned to meet the needs and address the concerns of high end advisors who put the interests of clients first. HighTower embodied for him the ideal opportunity: one that merges access to best in class products and resources on an open architecture basis with a culture that allows the advisor to best serve the interests of clients. They could provide access to the “entire street” with clients benefitting from the competition both in terms of pricing and service. The wealth management and alternatives platforms surpassed what he had seen elsewhere, including at his own firm. HighTower introduced him to the head of an investment bank, and Alex quickly realized the great potential to do investment banking business that he was currently unable to pursue due to the restrictions of his current platform.

In selectively building a partnership model around all elite practices, HighTower is unique, and Alex found the synergy compelling. This synergy has allowed them to build a compliance model most appropriate for the highest quality advisors in the industry rather than having to oversee tens of thousands of advisors of varying skill and tenure. Consequently, Alex would be able to get done what had been thwarted in the past. Furthermore, the innovations and thought leadership of his partners would be easily accessible to him, something not typically found in the traditional space.

After multiple, intensive home office visits, he found himself increasingly sparked by HighTower’s commitment to innovation and excellence. While at first he struggled with the idea of losing the brand identity of his firm, he spent months speaking and meeting with other partners who had themselves moved from the wirehouse world. It was after exhaustive due diligence that he became certain that by joining HighTower, he would be able to provide clients with access to best in class products and services, free of conflict and with the high degree of integrity he demanded. Only then, knowing that he found the right home, did he make the decision to leave his firm. He slowly embraced the idea of building a brand around his own team, but with the full support of a firm to build out, launch and support a new office. He did not opt for the biggest payday upfront; in fact, the short term economics paled by comparison to what was otherwise offered to him. He chose instead to join a partnership of the industry’s top financial advisors that would allow him to grow his business and enhance his client service model beyond his greatest hopes.

The Lesson

We had been sharing our thought leadership with Alex every few months since 2007. During one of our conversations in 2011, he said that he found himself at a professional 
crossroads. Forced to deal with changes within his firm that were out of his control, he seized this opportunity to consider the power of possibility that he discovered outside of his firm. After a year long process characterized by detailed analysis and a healthy dose of skepticism, he became inspired to move out of his professional comfort zone. In partnership with HighTower, he embraced the idea of building his own brand – something he had never seriously considered.

Alex challenged both his assumptions about the industry and his long-held vision of what his future would look like, and trusted that through the due diligence process, he would come to the right decision. Because the landscape of the financial services industry has changed so drastically in the past few years, and advisors’ own expectations of how they want and need to live their professional lives has evolved, those who have not remained current are likely not aware of the vast array of opportunities that are available, and the possibilities that exist today. Alex’s story amplifies the importance and the rewards of keeping an open mind, and discovering opportunity on an unexpected path.

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