With 140 financial advisory practices in across 35 states within the U.S., there’s no doubt that Hightower Financial Advisors is a national organization operating on a large scale that allows it to stay competitive in the financial services industry. However, the advisors at those individual practices are focused on serving their clients locally, and it’s vital for the central firm to bolster that mindset.
Chairman and CEO Bob Oros is certainly interested in driving growth and revenue through acquisitions and other smart business strategies—under the business executive’s leadership, Hightower has consistently almost doubled the industry’s 4.5% annual rate of year-over-year growth. Yet, one of the company’s key goals is to use Hightower’s scale and resources to support the advisors, allowing them to do more of what Oros thinks is vital: serve its client and local communities.
Rebranding Wealth
When Hightower was founded in 2008, America was deep into a recession, the most severe economic meltdown since the Great Depression of the 1930s. In some ways, Oros mused in an interview with CEO North America Magazine, you could say it was an absolutely terrible time to start a wealth management business. Instead, he gives the company’s founder a significant amount of credit for his foresight into what the industry needed.
“The landscape was shifting coming out of the crisis,” Oros explained in his executive interview, adding that the big financial advisory firms were greatly impacted by the economic environment. “Financial advisors were looking at new alternatives.”
Hightower had a different business model to offer—build a national firm, but give financial advisors the ability to control the experience that they gave to their clients—and it was attractive.
“With growth, you have to have infrastructure. You have got to have processes. You have to have human capital practices.”
But when Oros joined the group in 2019, the firm had grown to the point where it needed to be professionalized and institutionalized. With $142 billion in total client assets, as of December 31, 2023, Hightower, had come a long way from its start-up phase.
“We have a real business here that generates real revenues and profits, and we have a real ability to reinvest,” Oros articulated. “We can do it with a really keen eye on what clients need, recognizing that definition is changing.”
Oros also wanted Hightowers’ marketing to reflect his vision for the firm. In January 2020, the team launched a rebrand, coming up with the tagline “well-th. rebalance.” The “misspelling” of the word “wealth” wasn’t just to be provocative, Oros said. Rather, “we think that real wealth is more than just the value of your portfolio.”
The company’s financial advisors offer financial literacy education, and they also focus on mental and physical health. What does that have to do with wealth management? “I would tell you that it has a lot to do with it,” Oros expressed in his magazine interview to CEO NA. “All of those things come back to financial.”
Value-Added Growth Strategies
As a CEO, Oros shies away from setting “big, arbitrary numbers” for future growth, as he believes “it can create bad behaviors to go chase something.” Instead, Hightower’s core set of operating strategies focus on acquiring “good-quality firms” and helping advisors drive industry-leading organic growth.
“We can drive efficiency and reinvestment, but with our nimble attitude, we can try some things that big firms might not.”
In the half-decade or so since Oros took on the CEO role, Hightower has acquired more than 50 financial advisory firms. These are typically small- to mid-sized, privately held companies that need access to more resources to stay relevant for their clients. “They have got to have more capabilities, and they don’t have scale on their own,” Oros elaborated in the magazine interview. “The choice is: Do they try to create it—which is hard—or do they join a firm like Hightower and draft off of ours?”
Oros expects the advisory group to continue to acquire 10 to 15 companies per year, but even that is flexible. They need to be “good-quality firms that are a good cultural fit,” he caveated.
A key tenant of Hightower’s initial strategy was that it wasn’t going to be a financial services firm where advisors were expected to push proprietary products on clients. Instead, they focus on creating value-added services, such as chartering a national trust company in Houston, Texas, two and a half years ago. With that, Hightower’s advisors can offer the ability to set up a trust anywhere in the United States.
Not only does it provide an extra service that may sway a client to choose a Hightower advisor, but it’s also revenue-generating with the fees that go along with the trust.
Time, Resources, and Collaboration
Whether an individual advisory practice has been part of Hightower for years or it’s a recent acquisition, the company wants to make sure both the advisors and the clients succeed. They offer up an advisory engagement team that works with the firms to ensure that they’re taking advantage of all of Hightower’s services and capabilities.
Additionally, when Hightower acquires a smaller firm, it takes over all of the logistical departments—human resources, finance, compliance, technology, and so on. Then, Oros said, it looks for other opportunities that they think are outside the client value chain that Hightower could do centrally on a better scale, freeing up the advisors to use that time to serve clients and find new clients, as well as create efficiency in the business overall.
“It’s all wrapped into our culture, which we call the Hightower Way. That culture is our North Star.”
Most importantly, Oros said, Hightower fosters advisors to work together across the system to make each other better. As an example, he cited the Hightower Center for Leadership, an initiative that it developed four years ago. In this 18-month, next-generation leadership program, they bring future leaders from across the firm together in a cohort type of approach to learn more about how to run a successful advisory business. The center has graduated 75 future leaders so far, Oros shared proudly with CEO NA.
Between that and other practice management programs that bring advisors together to discuss specific topics, there’s a culture of collaboration that emphasizes working in a way that’s in the best interest of the advisor and the client.
“It’s not about functional units,” the business executive said. “It’s about how we put it together on behalf of the client.”
Curating Solutions
Hightower believes in providing advisors with choice and control over how they run their individual practice, and its vendor partnerships allow them to do so.
“We’re big believers in not trying to do everything ourselves,” Oros said. “We know what we’re really good at, so we want to find world-class partners that we can bring together to curate a solution.”
For example, Hightower has three key asset custodians, which hold 85% or more of the clients’ assets nationwide. If the company makes an acquisition of a firm that’s holding assets outside of those three custodians, they’re converted to one of the partners.
Because Hightower wants flexibility for its advisors and clients, Oros said they don’t feel like having just one asset custodian is the right answer. However, “we also believe in having a real depth of partnership,” he added in his CEO interview. “We are a significant client of each of those three asset custodians, which ensures that our advisors and clients are getting the best pricing and the best services.”
Additionally, Hightower teams up with five technology partners and allows the advisors a couple of choices with their financial planning technology. Oros described it as “constrained choice,” explaining that it’s not unlimited, but it covers a good variety of options. “The advisor can feel like they’re putting together a technology infrastructure that’s uniquely theirs, even though we’re driving and managing it across a much larger scale,” he explained.
Although Hightower employs a strong development team, the company’s tech partners have capabilities that the firm wouldn’t be able to add any value to building itself. Instead, the team focuses on development around the client experience and integration, bringing all the partners together in an integrated way so that advisors and clients don’t even realize that they’re dealing with separate companies.
“We have scale. We have real staying power. But we also have a boutique sort of approach, where we can deliver services in a very customized way.”
Standing out in a Crowded Field
“I’ve always loved the combination of ‘big enough to matter, but nimble enough to get stuff done,’” Oros shared, and he thinks that is a reason why advisory firm’s business model is so appealing to potential clients. If you’re a C-suite executive thinking about the advisory relationship that you already have or if you’re looking for a new one, Hightower can give you the “best of both worlds,” unlike the really big wealth management firms that drive a more uniform approach.
He believes that people want fewer business relationships, but ones with more trust. Hightower’s blend of value-added services and client-focused connections creates a strong bond. That, Oros said, goes back to Hightower’s tagline: well-th. rebalanced. “We believe deeply in that,” he said at the end of his executive interview. “It makes us unique.”
