A Transformational Transaction: HighTower Acquires WealthTrust
Elliot S. Weissbluth
“So the problem is not so much to see what nobody has yet seen, as to think what nobody has yet thought concerning that which everybody sees.” ― Arthur Schopenhauer
We are very proud to welcome WealthTrust to the HighTower community. The transaction is the largest in HighTower’s history, bringing the company’s total client assets to nearly $46 billion—an almost four-fold increase in less than four years. For more details, please see this Reuters story and our announcement.
This is a big deal for HighTower that also speaks to a larger trend with significant implications for the financial industry and investors.
The traditional commission-based brokerage model is on its way out. Fee-based fiduciary advice is best for clients and for business. We believed this 10 years ago when we founded HighTower, long before the DOL proposed the fiduciary rule or John Oliver dedicated a show to the fiduciary standard. Milestones like the WealthTrust deal keep proving us right.
This trend—of investors shying away from brokers pushing products and seeking unobstructed advice from independent advisors—will continue whether President Trump manages to scuttle the DOL rule or not. And the numbers back it up.
The total assets of the independent RIA channel grew by 6.2% between 2014 and 2015, faster than any other advisor channel, according to Cerulli Associates (source: Financial Advisor IQ). The firm also projects that independent RIAs and hybrid RIAs combined will grow their market share from 23% in 2015 to 28% in 2020. At wirehouses, total assets shrank 1.9% between 2014 and 2015.
HighTower’s growth, and the shift of assets toward independent RIAs, proves that investors are growing ever wiser to the conflicts of interest that plague the financial services system—and actively seeking a better way.
Why ask a butcher for advice on healthy eating when a dietitian is the one who gets paid to have your best interests at heart?