Last month HighTower’s current CEO declared a massive shift in the firms strategy. Abandoning the broker protocol was the first (big and eye popping) step away from a decade long march that fueled the growth and profitability of the firm.
Recruiting large scale wirehouse teams made for splashy headlines and stable advisor partners. Nearly all of the teams that joined the firm over the course of the last decade remained with the brand in some capacity. So why abandon a strategy that seemed to be working? Follow the money as they say.
HighTower essentially monetized the brand via several private equity cash infusions and began the painful process of changing direction. Now, recruiting has been apparently abandoned and a mergers and acquisitions strategy has been announced.
But would HighTower really say NO to a billion-dollar team from Merrill or Morgan Stanley at the moment? Really?
We think that the pivot had as much to do with ‘all-in-cost’ as any belief that M&A was a better overall strategy. With the broker protocol issue turning the industry back to its litigious roots HighTower had a choice. Fight the likes of UBS, JP Morgan, and Morgan Stanley on their chosen legal turf or choose a different path.
HighTower (and their private equity overlor- err… partners) chose the more cost-efficient path of once or twice a year executing an RIA acquisition rather than monthly legal battles with Morgan Stanley.
Still, we just can’t imagine the firm turning its back on billion-dollar teams from broker protocol firms like Merrill Lynch. Time will tell of course, but the pivot in strategy has made it clear they’d rather spend their annual allocation of legal fees for acquisitions rather than TRO’s.