Another HighTower ‘Partner’ Leaves Despite Re-capitalization
James Pupillo, a partner and six-year veteran of HighTower Advisors who ran a large practice in Arizona, has left to form an independent advisory firm.
The veteran broker, who joined HighTower in Scottsdale in 2012 from Morgan Stanley’s Graystone institutional consulting business, confirmed that he left in January as Hightower was closing on sale of a majority stake to private equity firm Thomas H. Lee Partners.
LDIntelligence Advisors, the new firm that includes Pupillo’s ten HighTower colleagues, oversees around $300 million in client assets on a discretionary basis, he said.
Pupillo declined to comment on how much HighTower equity he left behind.
His motivation for leaving is his plan to expand his retirement consulting 401(k) business with backing from what he called a “large investment firm,” which he said would have been difficult if he had remained at HighTower.
“We have a very, very well recognized publicly traded investment firm that is going to be investing in this future with us,” he said, declining to name the entity. He also said that his departure from HighTower was “amicable.”
A HighTower spokeswoman declined to comment on Pupillo’s remarks.
Pupillo’s registration with HighTower as a broker and registered investment adviser ended on January 25, six days before Lee Partners closed its deal to buy 50% to 50% of HighTower, which had backed off earlier ambitions to take the company public.
Advisors at HighTower, which was founded by Elliot Weissbluth in 2008 with a strategy of offering wirehouse brokers stakes in the company and an opportunity to operate with relative autonomy as RIAs, were offered slightly more than $1.80 a share for their stakes, according to several sources who received offers. The bid may have varied according to roles—advisors, managers, staff—that people filled at HighTower, they said.
Thomas H. Brown, one of several former HighTower executives and internal recruiters who have left in recent months, said a challenge for the aggregator business model is that larger brokers are calculating they can do better on their own.
“Part of the caché of joining HighTower and [competitor aggregators] is getting more independent and learning more about how to be self-sufficient,” said Brown, who was executive director of business development when he left last fall. “If you’re an entrepreneurial advisor, you have a high level interest in making that bet on yourself.”
In addition to Pupillo’s move, two large HighTower teams made headlines by leaving last year. Paul Pagnato of Reston, Virginia-based Pagnato Karp said that he gave up equity worth millions to make his move. Leo Kelly, who moved his 21-person team in Hunt Valley, Maryland to Kelly Wealth Management in July, said at the time that he was “excited about controlling our own equity and having a direct impact on the outcome.”
Pupillo’s decision was signaled last July when he formally registered the name LDIntelligence with the Securities and Exchange Commission. The name reflects the institutional investment strategy of “Liability Driven Investing,” he said. The firm has chosen Fidelity Investments as its custodian.
In a sign of shifts in HighTower’s affiliation strategy, it has not only winnowed much of its recruiting and marketing staff but is now pursuing acquisitions of larger advisory firms as a growth strategy instead of focusing on breakaway broker teams from wirehouses and smaller independent advisors.
The Chicago-based firm last week added Hummer Mower Associates, a Chicago RIA that had been part of Wintrust Wealth Management and that manages about $450 million of customer assets. The group, which manages $450 million in client assets, includes managing partner Grove N. Mower; partners Philip W. Hummer, David D. Cox, Rebecca J. Parr, Ryan J. Ross and an associate, Chapin N. Mower. Hummer is a scion of the family that owns 86-year-old Chicago firm Wayne Hummer Investments, which is part of Wintrust.