The combination of Hightower, its affiliates, and NEPC represents $258 billion in AuM. The move also speaks to continued vigor in the outsourced chief investment officer business segment, particularly as wealth firms seek to tap private markets expertise.

Chicago-headquartered wealth management group Hightower Holding, parent of Hightower Advisors, is to buy a majority stake in investment consultant and outsourced chief investment officer business NEPC.

Hightower said its combination with NEPC represents $258 billion in assets under management. NEPC is an investment consultant, private wealth advisor, and OCIO provider serving more than 400 retainer clients and more than $1.66 trillion in total assets.

The financial terms of the transaction were not disclosed in Hightower’s statement yesterday. 

“With this transaction, NEPC’s clients will continue to receive investment advisory and OCIO services while creating a new growth channel in partnership with Hightower,” Hightower said.

NEPC managing partner Mike Manning will join the Hightower board of directors when the transaction closes.

“This is a transformational combination that highlights the future of financial services and wealth management. Our relationship with NEPC stemmed from the exciting and distinctive opportunity that both businesses can offer the private wealth market when combined,” Bob Oros, chairman and CEO at Hightower Holding, said.

NEPC was advised about the transaction by Moelis & Company LLC and Goodwin Procter, LLP provided legal counsel. Hightower Holding engaged Berkshire Global Advisors to provide industry research on the institutional investment consulting and OCIO industry and Kirkland & Ellis, LLP provided legal counsel.

Hightower’s move comes at a time when wealth firms are ramping their capabilities to tap into rising demand for access to areas such as private markets' investing. It also speaks to the rise of the OCIO model in North America and abroad.

The OCIO space made headlines late in 2023 when Mercer bought Vanguard’s outsourced chief investment officer business, which comprised about 120 people. According to Cerulli Associates, the Boston-headquartered research and analytics firm, in August last year, OCIO assets, which stood at $2.4 trillion at the end of 2021, are expected to grow to more than $3.0 trillion by the end of 2026, an overall growth rate of 5.6 per cent, driven by both new adoption and expected capital markets movements. Some 14 per cent of asset owners say that over the next 24 months they are likely to start using an OCIO for the first time. An additional 11 per cent expect to expand their overall use of OCIO (either from a partial portfolio mandate to a full portfolio mandate or to fully cede final portfolio investment decisions to the OCIO provider).