Instead, Leventhal brought his team of five to HighTower in Bethesda, Md., within three months. "The home-office visit was the number one thing that solidified my decision," he says.
Leventhal started his career in Merrill Lynch's training program in 1995 and stayed at the firm until 2003, when he moved to UBS. As he learned more about the industry beyond the wirehouses, Leventhal started to wonder whether he was in the best place to serve his clients. The meltdown of 2008 brought this idea into stark relief. Leventhal no longer wanted to be at a firm attached to an investment bank, and he found the fiduciary standard attractive.
Leventhal's advisor team was one of eight that HighTower brought on in 2011, and in 2012 there were nine more teams. This year, HighTower expects to add even more advisors.
The firm's recruitment successes include the Pagnato-Karp Group in Reston, Va., led by the veteran Merrill Lynch advisors Paul A. Pagnato and David W. Karp, who had more than $1 billion in assets when they moved to HighTower in July 2011. Other major additions were the Lerner Group—Eugene Lerner, Ann Rieder, Walter Gondeck Jr., and Mingdong Tan—which oversaw $600 million in assets when it moved from Morgan Stanley in July 2012, and the Dillig Bowen Group, named for Matt Dillig and Ted Bowen, with $1 billion in client assets under management when it made an exit from Credit Suisse in August.
Relocation by financial advisors has always been common, particularly in the employee channel, and the industry was especially unsettled by the product failures and brand damage experienced by investment banks during the financial crisis. The ensuing talent hunt has been intense among wirehouses, regional firms, and even registered investment advisors. Nonetheless, many advisors are still loathe to give up the backing and prominence of the firms that for generations have been household names.
HighTower, a national company serving high-net-worth and institutional clients, has been a benefactor of this ferment. It has added 37 advisory teams since its founding in 2008. Its model, which offers advisors an ownership stake in the firm and the opportunity to make independent decisions about products and services, has appealed to advisors in traditional large firms.
Where the Courtship Begins
HighTower is a place for an advisor who wants freedom but doesn't necessarily want to build his or her own firm, says recruiter Mindy Diamond, president and chief executive of Diamond Consultants, a search and consulting firm in Chester, N.J. "Advisors who are more entrepreneurial than the typical wirehouse advisor will like HighTower," Diamond says. The home-office visit shows advisors that HighTower's operations are as robust and cutting edge as those of the wirehouses, she adds.
Danny Sarch, president of White Plains, N.Y.-based recruiting firm Leitner Sarch Consultants, says the HighTower visit is a two-sided encounter. On the one hand, HighTower, a relatively new firm, needs to establish its credibility. But the firm is also evaluating the prospective partner. "It's not for everyone, and they don't want to be for everyone," Sarch says.
The process starts with dinner the night before the visit to the office itself. "Culture is important, and dinner is a chance for us to see if it's good fit," says Mike Papedis, executive vice president of HighTower Experience Group. Dinner participants typically include HighTower's chief executive, Elliot Weissbluth; the president, Andrew Kornreich; Papedis; and the regional business development person responsible for the relationship.
For a simulated home office visit, On Wall Street sat down on a crisp Chicago day for one-on-one meetings with Papedis and six other HighTower department heads. This visit lasted two and a half hours; for an actual advisor thinking of coming over from a wirehouse, it probably would have taken five to seven hours.
First up: Kristin Love, managing director of Capital Markets. Love spent time as a municipal middle market maker before moving into wealth management at LaSalle's ABN Amro. The major question she gets from prospective advisors is about access. How extensive are the investment products offered at HighTower? In nearly every conversation, she says, advisors become more comfortable as she digs into the details about specific product sets or transactions.