Highline Wealth Management may be the newest entrant in the increasingly crowded RIA consolidation game, but it hopes to grow rapidly by targeting smaller firms with an equity partnership deal and, ultimately, profits.

The $1.2 billion Rockville, Md., firm wants to reach $10 billion in assets under management by 2020 by partnering with other independent advisors in the Washington, D.C., Baltimore; Philadelphia and New York markets.

“The need for scale is driving consolidation,” said Neal Simon, Highline’s president and chief executive, “In the next five to ten years we think there are going to be five to ten mega-independent firms with assets over $10 billion, and we want to be one of them.”

Achieving that goal won’t be easy and competition is fierce.

Other companies are also scouring the RIA landscape for firms, ranging from well-established, aggressive and deep-pocketed aggregators, including HighTower, Focus Financial and United Capital, to traditional advisory firms who are growing by acquisition, including Kansas-based Mariner Wealth Holdings, as well as newer entrants including Concert Wealth Management, Washington Wealth Management and Snowden Capital Advisors.

And there’s even more money currently being raised for similar acquisition-oriented firms, according to industry executives.

Highline plans to partner with firms with $100 million to $500 million in assets under management.

“We’re looking for like-minded partners who share our investment and service philosophies and who want to grow their business in a way they wouldn’t be able to do if they stayed on their own,” Simon said.

Using outside  investment managers and alternatives are key components to Highline’s investment philosophy, Simon said, while using certified financial planners along with a holistic approach to clients’ needs characterize the firm’s service goals.

To kick-start Highline’s expansion, Simon hired Aisling Carroll in January. Carroll spent eight years at Fidelity Investments helping advisors start their own firms as director of corporate development based in New York.

Another arrow in Highline’s quiver is financial backing from private equity. Sachs Capital of Potomac, Md., which has a 10% equity stake in the firm and has invested nearly $2 million since late 2011. “Significantly more” financing will be available for Highline’s expansion push as needed, said Andrew Sachs, a principal of the private equity firm.


Highline’s partnership model for expansion resembles Aspiriant, the Los Angeles and San Francisco-based wealth manager, which has about $7.5 billion in assets under management and expanded to the Midwest and Northeast since in launched in 2008.

Aspiriant’s founders now own about 37% of the firm (which has no private equity investors), while 36 partners, whose average age is approximately 45, own the remaining 63%, according to Rob Francais, its chairman and chief executive officer.

“The partnership model is working very well and as anticipated,” he said, noting the firm has grown more than 27% in four years. Aspiriant acquired Deloitte Investment Advisors in 2010, and hopes to add another firm as partner by early next year, Francais said.

The partnership model can work well for advisory firms looking to grow their business and take advantage of scale, aggregate their  purchasing power and receive expanded cash flows, said David DeVoe, principal of DeVoe & Co., a San Francisco investment banking and business strategy firm.

However, key issues such as corporate culture and investment and client service philosophies need to be aligned for firms to integrate successfully, DeVoe said.

Using the partnership model to expand is easier said than done, said Jeff Spears, chief executive of Sanctuary Wealth Services, a San Francisco  outsourcing provider.   

“It is a difficult sale to new partners. Aspiriant has only grown through acquisition and [San Francisco wealth manager] Presidio Financial Partners hasn’t grown at all in over four years,” Spears said.


Utilizing private equity for growth can also be a doubled-edged sword, according to industry experts, because private equity companies want to realize a return on their investment within a fixed period of time and can exert pressure on advisory firms for an exit strategy or liquidity event.

But Sachs said he is only a minority stakeholder and describes his company as a “niche” private equity firm whose investors are high-net worth individuals, not institutions.

“There is no pressure deadline for an exit strategy,” he said.

Simon agreed.

“We are committed to being in business for the foreseeable future,” he said. “There is no pressure from our private equity to cash out. Our deal with our investors is that they are happy with the cash flow generated by the business.  That said, if we hit our growth projections, there will be plenty of opportunities for liquidity for our partners.”

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