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Seriously, What’s Going on at HighTower?

April 13, 2017

Financial Planning magazine has been doing some wonderful reporting on HighTower, a Chicago-based brokerage and RIA that recruits breakaway wirehouse teams, provides its service platform to independent firms on an a la carte basis, and buys RIAs.

In addition to calling into question HighTower’s financing model, the publication has pointed to legal wrangling between the firm and former executive Ed Friedman, who’s now with HighTower platform-business rival Dynasty Financial Partners.

Now, amid flattering rumors that HighTower is in talks to buy most of WealthTrust, a network of 12 firms owned by private equity firm Lee Equity Partners, Financial Planning reports that another top HighTower executive may be heading for the door.

According to Financial Planning, Michael Parker, HighTower’s head of sales, either has left, is leaving, or has jumped to a near-the-exit role as a “consultant” to HighTower.

FA-IQ can’t confirm that because HighTower didn’t return our calls. But when we telephoned Parker directly on Friday, we were told he was indeed available to talk – and then, abruptly, not.

If Parker is leaving, he joins Friedman and Mike Papedis, formerly head of HighTower’s RIA-rollup unit, in making high-profile exits.

Meanwhile, Financial Planning says HighTower’s prospective purchase of the WealthTrust properties would be a “game-changer” that puts it up there with wealth firm aggregators like Focus Financial Partners, United Capital and AMG Wealth Partners.

But then Financial Planning also recently reported that Edelman Financial Services plans to start buying firms.

That’s interesting because Edelman Financial Services is part of Edelman Financial Group, which is part-owned by Lee Equity Partners, which also owns WealthTrust (though it doesn’t see fit to list it as part of its portfolio of private equity holdings).

So, if the Edelman Financial Services part of Lee Equity-owned Edelman Financial Group wants to buy wealth firms, why doesn’t it buy Lee Equity-owned WealthTrust and nab 10 or 12 wealth firms in one go?

Edelman Financial Services declines to entertain the question. Ditto Lee Equity Partners.

But the circumstances – and the silence of the parties involved – raise questions about how much of game-changer WealthTrust actually would be for HighTower.

And here’s some irony: Houston-based WealthTrust was founded in the late 1990s as one of the first RIA rollups. It stalled out about a decade ago, and – other than some chuck-ins courtesy of Lee Equity – hasn’t made an acquisition since.