The Chicago-based advisor-owned financial services company has grown quickly by attracting heavy-hitting advisor teams and making them partners in the firm.
Among privately-held U.S. companies, HighTower ranks 13th in three-year revenue growth on the 2012 Inc. 500 list, posting an increase of 8853.5% to $43.9 million in 2011.
HighTower CEO Elliott Weissbluth said that by adding two new channels, HighTower will be able to attract advisors who prefer to continue to own their own practices rather than joining a partnership.
"They'll get the same research and the same capital markets opportunities," says Weissbluth. "That includes fixed income, lending, and structured products. Nevertheless, they won't work for HighTower. These advisors will run their own business."
Advisors that choose the HighTower Network will practice under the HighTower brand, Weissbluth said. "They'll affiliate with our ADV," he said, "and we'll govern their behavior. These advisors will benefit from our risk analysis and our compliance oversight, so they won't have to hire their own staff in those areas. Trading activity outside of our ADV will be prohibited."
Advisors that choose the HighTower Alliance won't use the HighTower brand. "They'll be responsible for their own compliance," Weissbluth said, "and they'll have their own ADV. They will, though, have access to our services."
Weissbluth pointed to the "big question" advisors usually face when they go independent.
"They have to choose one custodian," he said. "Independent advisors who work with us will have a unique advantage because we're a multi-custodial, multi-clearing, fully hybridized firm."
In return for such flexibility, independent advisors will cede a percentage of top-line revenues to HighTower. The basic plan calls for HighTower Network advisors to retain 80% while Alliance members get 90% payouts. Weissbluth said there might be some variation based on specific services HighTower provides to specific advisors.
Mike Papedis, the executive vice president of business development at HighTower, added "at some point, independent advisors tend to encounter what we call the 'Valley of Death.' They find that they are spending so much time running their business that it prevents them from reaching their growth potential. In either the Network or the Alliance, advisors will find more time to expand their practice."
HighTower will consider breakaway advisors as well as existing independent firms for the two new ventures, Papedis said.
"We can provide more flexibility to support their choices on the road to independence," he said.