Rich Saperstein helps establish new strategy for HighTower Advisors as he transforms his own $10 billion practice
New York practice executes first 'tuck-in' with addition of Steve Bogner
5 min read- HighTower launches fold-in acquisition strategy, adding advisors to existing practices for faster growth.
- Saperstein's $10 billion practice in New York will absorb smaller teams like Steve Bogner's $80M book.
- Weissbluth affirms HighTower's commitment to recruiting both large teams and tuck-in RIAs.
- Tuck-in deals enable HighTower to expand and fulfill promises to build advisor practices.
Brooke’s Note: I kept my track record alive of interviewing Elliot Weissbluth while he was on the fly between working on deals. He was in a car, on Bluetooth, sitting outside a Chicago restaurant last night preparing to dine with a $1 billion-plus advisory team that he said had just flown in to town to discuss joining his company.
HighTower Advisors yesterday announced its first fold-in acquisition, as it added a small team to the New York practice lead by mega-breakaway Richard Saperstein. HighTower said the strategy of adding advisors to existing practices will help it grow even faster.
The Chicago-based aggregator of big advisory practices that service institutions and high net worth individuals recruited Steve Bogner, who gave his notice at Morgan Stanley Smith Barney on Friday. He manages about $80 million of assets and had been with his previous employer for 11 years.
Staggering sum
Saperstein and his team of 12 people were recruited away from JPMorgan Chase in April 2009 with about $10 billion of assets under management. It was a staggering sum, the vast majority of it from institutions that needed his specialized brand of cash management.
Bogner’s assets will be held in custody at JPMorgan Chase, which is Saperstein’s primary custodian. HighTower, which has about $18 billion of AUM, made the introduction of Bogner to Saperstein after another HighTower Advisor referred Bogner to the company.
“Steve’s addition to the firm is an important milestone for HighTower,” said Mike Papedis, HighTower’s managing director of business development, who oversees the company’s national recruiting efforts. “We are capitalized to grow by adding new advisors to our already established teams…This was part of our long-term strategy from day one.” See: Weissbluth lands war chest for HighTower Advisors [Updated].
HighTower Advisors nabs a UBS team and shifts to new recruiting gear
Mike Papedis: We are capitalized to
grow by adding new advisors to
our already established teams.
Getting to this milestone took time, because many smaller firms have wanted to join HighTower, said Elliot Weissbluth, CEO of the company. HighTower wanted an advisor with the right character, a focus on high net worth clients and substantial enough assets, he said.
Right landing place
It was also important that the advisor have the right landing place. Saperstein, who now has about 14 people on his team, has strong management skills, Weissbluth added.
“We passed on many, many opportunities that did not satisfy our requirements. We wanted to (launch this part of the company’s recruiting effort) the right way.”
Story Timeline
HighTower is in dialogue with scores of advisors seeking tuck-in deals (basically just becoming an employee of an existing RIA) nationally and it will now begin to execute on more of those as the year progresses, Weissbluth added. HighTower has 20 teams in 10 offices nationally.
Tuck-in strategies have begun to represent a significant number of breakaways across the industry. See: 9 things to know about the breakaway-to-RIA movement and why it’s likely to get bigger They are an elegant way to bring in smaller practices that might not otherwise have chosen to leave a wirehouse.
Weissbluth lands war chest for HighTower Advisors [Updated]
Signal?
But at roll-ups they have also become a signal that the company is no longer as engaged in the recruitment of mega-practices. See: Focus Financial looks more like a consolidator-of-consolidators as its partner firms go on buying sprees.
Elliott Weissbluth: The number of big
deals in 2011 will significantly outpace
the number closed in 2010.
In the case of HighTower, the advent of the tuck-in strategy comes in addition to accelerating recruitment of big practices, according to Weissbluth. HighTower recruited eight major wirehouse teams in 2010.
“The number of big deals in 2011 will significantly outpace the number closed in 2010,” he says. “We will augment that with a pipeline of RIAs and tuck-in candidates.”
The tuck-in deals help HighTower grow and help deliver on the company’s promise to build the practices of those who joined.
Effect of low interest rates
Saperstein joined with about $10 billion of assets under management; about 5% of those assets or about $500 million of AUM was from high net worth clients, sources say. Much of the rest were cash management assets it managed for institutions – a business that has been suppressed by the near-zero interest rate environment.
This has resulted in Saperstein shifting focus in the past year to build up the high net worth portion of his practice. It has doubled in size since he joined HighTower. Sources say this likely means his AUM on this side of the business is near to $1 billion.
“We’re very pleased to welcome Steve and are confident that he will be a great new addition to our team as we continue to grow our high net worth advisory practice,” said Saperstein in a release. He recently joined the HighTower Board of Directors.
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