Another HighTower Executive Leaves Amid Sale Rumors
Another senior executive, Thomas H. Brown, who had led recruiting on the East Coast for aggregator firm HighTower Advisors has left, according to several sources familiar with the move.
Brown’s departure is at least the fourth of a senior executive this year at HighTower, which was founded by former Charles Schwab Chief Executive David Pottruck and other wealth management notables with hopes of attracting powerhouse brokers to careers as fee-based advisors and firm partners.
Although HighTower has grown to 189 advisors in 69 offices, it has modified its “partnership” business model amid mounting pressures from its private equity backers to cut costs while growing in an effort to attract a buyer, according to several sources who spoke on condition of anonymity.
Recruiters such as Brown, who joined HighTower in 2013 from a consulting firm following a 15-year career at Smith Barney, UBS Financial and Morgan Stanley, have figured prominently in the wave of recent executive departures. That is viewed as a sign that HighTower is in no mood for a growth spurt that could dent profitability when private equity firms or other potential buyers may be scrutinizing its books and weighting future strategic plans.
Michael Parker, who was in charge of all recruiting in his role as head of business development, stepped down from the post in April and this week was named to run advisor recruiting at Royal Bank of Canada’s growing U.S. wealth management business.
Hightower President Michael LaMena left two months ago to join an independent advisory firm as chief operating officer. In April, Michael Papedis, another senior recruiter who like Parker had been with HighTower since 2010, left to form a consulting firm.
Brown, who sources said left on Friday, could not be reached for comment, but a person at HighTower’s New York office, where he was based, confirmed that he recently left the firm.
A HighTower spokeswoman declined comment, citing the firm’s policy of not responding to market rumors.
In its early days, HighTower had been offering brokers equity stakes in the firm with expectations that they would be able to cash out along with the firm’s founders and original investors through a public offering as the firm built brand equity. But the financial crisis and competition from a growing array of wealth management platform providers and small-firm aggregators slowed its growth plans and blocked the exit strategy.
In recent years, firm co-founder and CEO Elliot Weissbluth has moved from offering equity stakes to creating options for new advisors to affiliate without ownership or to simply pay on an ongoing basis for using its business and trading services. To generate new assets and replace those from senior advisers who left to start their own firms.
HighTower, using borrowed bank credit, also in April bought the assets of 10 of the 12 RIA practices under the umbrella of competing aggregator WealthTrust in an attempt to keep the corporate cashflow flowing and growing.
—Jed Horowitz contributed to this story.