Hightower has acquired a $2 billion wealth management firm and added the CEO to its executive leadership team as the firm ramps up efforts to retain its position as one of the industry's top RIA consolidators.
The Chicago-based aggregator has agreed to buy Farr, Miller & Washington, based out of Washington, D.C., for an undisclosed amount. Michael Farr, CEO and president of Farr, Miller & Washington, will join Hightower as chief market strategist while retaining his current role at the RIA he co-founded. As part of the acquisition, Farr, Miller & Washington will also hold stock in Hightower.
Hightower's acquisition of the RIA was a confluence of events, says Farr. His firm wasn't looking for a buyer, but Hightower proved to be a good fit for Farr, Miller & Washington to continue growing, he says.
Farr, Miller & Washington will offload administration and compliance work, giving Farr and his colleagues more time for research and client services.
The acquisition will give Farr’s employees and clients access to Hightower’s technology, including a client portal and financial planning software. And joining Hightower, a national firm with 115 advisory businesses in 34 states and the District of Columbia, expands Farr, Miller & Washington's reach, Farr says.
"It's a much larger firm. It's a much broader net, a much larger audience,” he says. "We looked at a number of different firms … [but] Hightower stood out due to its resources and technology."
Farr has an existing relationship with Hightower CEO Bob Oros, who called Farr, Miller & Washington “an impressive firm with years of experience” that provides “world-class client service.”
As chief market strategist, Farr will join Hightower’s investment solutions group and report to chief investment strategist and portfolio manager Stephanie Link. Though his new position is atypical of Hightower acquisitions, the firm wanted to leverage Farr’s experience as a high-profile advisor and CNBC contributor to boost Hightower’s media exposure, Oros says.
Farr, Miller & Washington's is Hightower's 17th acquisition in less than three years. The RIA aggregator has more than $100 billion in AUM, but its most recent acquisition may be just the first of a series of transactions that kicks off a solid finish for the year, says Brandon Kawal of Advisor Growth Strategies.
The firm's continued push for acquisitions is pretty consistent with industry-wide consolidation, but what may help Hightower stay on top is its strategy of splitting earnings with RIA co-founders and managers, and allowing acquired firms to retain their brand identity, according to Kawal.
"Hightower's having a lot of success. They've got a pretty unique way of going about things," he says.
Within the M&A space, Hightower is what Kawal considers "platform-driven investors," meaning the firm is flexible with how much it buys and invests in an RIA.
"You can do a transaction with Hightower, still maintain your brand, but leverage the scale that they've built on their platform,” Kawal says. “Others have decided that, 'Hey, when we acquire you, you become a part of our brand, our platform.'
"Hightower has found a pretty compelling way to integrate without disrupting brands, and in a lot of ways, that's resonating with the market."
