HighTower CEO and Founder Weissbluth Steps Down
(Updates with quote from former HighTower manager.)
Elliot Weissbluth, who founded HighTower Advisors almost a decade ago, is stepping down as chief executive of the company, a spokeswoman confirmed.
The Chicago-based aggregator of small advisory practices, which in January sold a controlling stake to private equity firm Thomas H. Lee Partners, has hired a search firm to replace Weissbluth, who is 51, the spokeswoman said. Weissbluth will move into the nonexecutive role of chairman once a successor is chosen, focusing on acquisitions and branding, the spokeswoman said.
“This was a collective decision made as part of the company’s long-term leadership plan and growth strategy for the firm, which was agreed upon by Mr. Weissbluth and HighTower’s Board of Directors,” the spokeswoman said in an emailed statement. “This transition, part of the firm’s long-term leadership plan, will support HighTower’s growth and expansion.”
The decision to replace Weissbluth before a successor is named is somewhat unusual, said a person close to the firm who spoke on condition of anonymity. It came as the founder had been negotiating with the Board to renew his contract for three years, the source said.
The HighTower spokeswoman declined to comment on specifics of the Board’s decision. A spokeswoman for Thomas H. Lee did not return a call for comment.
Gurinder S. Ahluwalia, a Thomas H. Lee “executive advisor” who is chairman of HighTower’s board, will assume a new more activist role as lead director of the board. Ahluwalia was the former chief executive of AssetMark, a “turnkey” asset management platform for independent advisors. Ahluwalia did not return a call for comment.
HighTower under its new ownership structure has shifted its strategy from Weissbluth’s original concept of partnering with wirehouse advisors setting up independent practices to one where it acquires registered investment advisory firms with growth potential. Many of the recruiters and senior officials who Weissbluth had hired have left in the months since Thomas H. Lee agreed to recapitalize the firm with $100 million.
The executive shifts began In April, when the private equity firm named Ahluwalia to replace former Charles Schwab & Co. chief executive David Pottruck as chairman. Pottruck was one of the original backers of HighTower.
The Lee investment is aimed at accelerating growth of the firm, which now has 87 practices and 190 advisors who manage around $42 billion for customers, according to HighTower’s website and regulatory filings.
HighTower acquired Salient Wealth Partners, a Houston-based investment advisor with $4.5 billion in assets, in April, but some insiders said the new owner considers the ten-year-old firm’s growth rate too slow.
“They wanted to move this thing forward, and move it forward a little faster,” said another source who is a HighTower partner and identified himself as a long-time supporter of Weissbluth’s leadership.
Mike Papedis, a former HighTower recruiter, said Thomas H. Lee Partners is taking a calculated risk in removing the executive most closely identified with the firm.
“Many current [HighTower] advisors will carefully watch the CEO replacement to determine if their personal business goals are compatible,” said Papedis, an RIA consulting firm in San Diego. “Advisors in their pipeline today will take pause until they can understand who is at the helm.”
Weissbluth initially recruited advisor-partners with the pitch that the firm would float an initial public offering in a few years, enabling them to profit from their equity stakes. He shifted a few years ago, saying plans for an IPO were delayed.
“Elliot is so synonymous with the name HighTower,” said Jeff Spears, a consultant to the independent advisors in San Francisco. “It will be interesting to watch if the intellectual property of Elliot will live within the new HighTower.”
The changes at HighTower were reported earlier by “Investment News.”