Startup firm pulls in experienced advisors from all over the United States. Hybrid RIA-brokerage HighTower Advisors, a firm that launched last fall with backing from a consortium of high-profile investors, has added to its advisor roster with experienced big-book breakaways from UBS, Merrill Lynch, Morgan Stanley, Bear Stearns and Goldman Sachs.

Breakaways

"[Our] mission is to restore confidence with investors who have lost trust in the traditional brokerage model," says HighTower's president Drew Kornreich. "Our advisors are also owners in the firm, providing them with true independence and aligning their interests with those of their client."

HighTower is an alternative for big-firm brokers who want out -- because their stock options are dead letters, they're sick of being associated with rancid brands, they dislike being told what to sell or, more generally, they're tired of red tape. In traditional terms, brokers looking for a new start have four choices: join another full-service firm, plug into an independent broker-dealer, join an RIA or start an RIA.

HighTower, which targets advisors with at least a few hundred-million dollars in fee-generating assets and strong growth potential, offers advisors ownership stakes and practice support along with custodial and product neutrality.

"Our advisors want the freedom of independence and the benefits of ownership without the distractions or risks of running their own businesses," says Kornreich. "It's the best of both worlds."

New names

Or, as HighTower's CEO Elliot Weissbluth puts it: "Independence is of value as it relates to products and services." In this sense, full-blown, hands-on, own-shingle independence "can distract advisors" from serving clients and building a business, he adds.

In New York, besides the team of Richard Saperstein -- whose friendly departure from JPMorgan Chase's Bear Stearns opened the door to HighTower advisors having JPMorgan Clearing Corporation as a clearing option in addition to Fidelity's National Financial -- HighTower has added former Morgan Stanley brokers Michael Bapis and Nick Bapis -- with Nick Bapis heading for Salt Lake City to establish a HighTower office.

In Palm Beach, Fla., HighTower has added Curt Lyman (from his own RIA Alpha Wealth Management) and ex-Merrill Lynch broker David Wisehaupt.

In the Midwest, ex-Goldman Sachs advisor Larry Gilbert joins HighTower in Chicago, former independent Tim Scannell joins in Valparaiso, Ind., and ex-UBS broker Blair Anderson joins in Traverse City, Mich.

Former Morgan Stanley broker Todd Lyon joins HighTower's San Francisco office.

Scale

For Lyman, an attorney who has been a successful UBS broker and held senior-management positions with Wilmington Trust and Raymond James, the move to HighTower is a return -- of sorts. After leaving UBS in 2005, he spent two years with Houston-based US Fiduciary, a now all-but moribund wealth-management platform that Weissbluth helped run until early in 2007.

"The transition has gone exceptionally well," says Lyman. "Elliot has a feel for the direction this business is taking, and he's put a remarkable team around him."

This faith in HighTower's operational ability and in its ability to attract gifted advisors with robust practices adds up to a "belief in our collective ability to drive additional growth," adds Lyman. "And then I recognize that being part of a larger organization brings with it economies of scale -- that in this case benefit everyone involved. It's a combination of a conflict-free environment with no pressure around product with operational effectiveness."

A move to HighTower also relieves worry about succession planning, according to Lyman. "The question of what happens to the clients if something happens to the principals is a big one."

HighTower's answer is to pull in help from home-office staff and other affiliates to ensure continuity. And for longer-term succession planning it provides buy-out financing for senior principals heading into retirement, and buy-in financing for next-generation leaders.

Ownership

HighTower is designed to be one-quarter owned by its advisors. As more advisors come in, the size of stakes owned by individual HighTower advisors will decrease as portions of the 25% set aside for them. But, as incoming advisors add to the firm's overall cashflow and as economies of scale make themselves felt, the value of each advisor's equity in the firm should increase, according to its CEO Elliot Weissbluth.

This ownership structure is a deliberate reflection "of the features from the partnership models that worked quite well for the early firms on Wall Street," says Kornreich.

HighTower has minority-stake financial backing from a group of investors that includes San Francisco-based Red Eagle Ventures, a private-equity firm owned by former Charles Schwab CEO David Pottruck, DLB Capital, a Wilton, Conn.-based private-equity firm run by former Morgan Stanley investment-banking chief Douglas Brown, Sydney, Australia-based M.D. Sass-Macquarie, San Mateo, Calif.-based fund manager Franklin Templeton, Chicago-based third-party investment-platform provider Envestnet, New York-based RIA Offit Capital Advisors, and -- it's rumored -- former Morgan Stanley CEO Philip Purcell.

Chicago-based HighTower's executives also have ownership positions in the firm.

HighTower has 15 senior advisors and eight offices in the U.S. It won't say how much its advisors manage -- but then Saperstein's team alone was managing over $10 billion when it left Bear Stearns for HighTower a few weeks ago. -FWR

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