Employees have chosen to return to some of Hightower’s 90 offices in the U.S. but executives aren’t racing back to the Chicago headquarters. Management has been working from home since the Covid-19 pandemic’s rapid spread in March and Hightower CEO Bob Oros doesn’t expect they will return to the office until 2021.
“Safety and stability will always be our North Star,” Oros told RIA Intel, and there’s little reason to hurry back to cramped commutes and daily gatherings.
Hightower, an RIA with $61.6 billion under management and 300 financial advisors, has been operating and performing well during the pandemic, according to Oros. It has grown organically, created an in-house leadership training program for advisors, and bought eight other advisory businesses, making it one of this year’s most acquisitive RIAs.
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The pandemic iced second quarter deal activity, as wealth managers tended to portfolios, clients, and their own businesses. But activity involving RIAs was expected to bounce back and it did in a big way: deal volume hit a record high in the third quarter.
Most of the deals announced in 2020 are happening despite the pandemic, not because of it. Mergers and acquisitions of RIAs are months — sometimes years — in the making. Novel coronavirus or not, Hightower would have likely tallied eight deals so far this year (and it expects to announce more). But Hightower had an opportunity to spend time, in-person, with all eight of those sellers before the pandemic, an important box to check in the mind of its chief executive.
“We need to spend some in-person time with folks... I don’t think anything takes the place of being in the same physical space,” Oros said.
So, if it wanted to keep up its deal pipeline, something had to give. Either Oros needed to rethink the importance of in-person meetings with sellers, or the process of evaluating them had to evolve. The compromise was a little bit of both. “We’re going to be dealing with this for a while,” he said.
Since March, Oros has been on only one business trip to visit a “large” potential seller. He and his wife weighed the risks and benefits of him traveling and the decision was made that the trip was worth it.
He boarded a plane and joined the potential sellers for a meal outdoors. The next day, he and the sellers had their temperatures checked before a socially-distanced meeting in a boardroom.
“It’s a very personal decision, what you’re willing to expose yourself to. And I don’t think any of us would judge a person for what they are willing to expose themselves to,” Oros said. It is unlikely, but Covid-19 has killed young, healthy people, and the long-term effects of contracting the virus are still largely unknown. Someone might also choose to avoid in-person meetings for fear of spreading the virus to vulnerable others they interact with.
It’s not a replacement, but video conferences are helping Hightower keep a strong pipeline of potential sellers seeking a “Goldilocks” RIA, where advisors maintain control of how they run their business but gain technology, compliance, marketing, and other supporting services. “I for one don’t think every firm is the right fit for Hightower, or that Hightower is the right fit for every firm,” Oros said.
Advisors interested in Hightower find their way there and the RIA doesn’t have a specific deal goal in mind. Organic growth is “the most valuable growth,” Oros said.
But they potentially might still be able to convince the chief executive to take a meeting — he’s done it before.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.