The Wealth Management Industry: A Full Circle Journey
Penny Phillips, the president of Journey Strategic Wealth, believes that the wealth management industry has come full circle in many ways. After years of advisors breaking away from large firms in pursuit of independence, there is now a growing appreciation for the benefits of affiliation with a larger partner. Phillips envisions a future where wealth managers can provide independent advisors with essential services while still allowing them to maintain their entrepreneurial spirit.
In a recent move, Phillips and her colleagues decided to sell Journey Strategic Wealth to the large RIA aggregator Hightower Advisors. The acquisition, which saw Journey Strategic Wealth and its $5 billion in client assets joining Hightower’s Signature Wealth unit, represents a strategic partnership that aims to combine the strengths of both entities. As part of the deal, Journey’s 16 advisors will now work as direct employees of Hightower, rather than independent contractors, under Phillips’ leadership.
Phillips, who is recognized as the first female millennial to co-found an RIA roll-up, has been instrumental in Journey Strategic Wealth’s growth from $2 billion to $5 billion in client assets. The firm’s success can be attributed to its ability to attract nine advisory teams over the past few years while allowing advisors to maintain control of their businesses. With the support of Hightower, Journey Strategic Wealth aims to continue its growth trajectory while preserving its advisors’ independence.
One of the key factors that led to the acquisition was the realization that there were certain services, such as tax preparation and estate planning, that Journey Strategic Wealth struggled to provide independently. By joining forces with Hightower, the firm gains access to specialized expertise in these areas, enhancing its service offerings to clients. Additionally, Hightower’s majority stake investment in NEPC, an investment consultant, further strengthens the firm’s capabilities.
Hightower’s approach to growth, which includes acquisitions and partnerships, has been supported by private equity investments. The firm has successfully leveraged capital from private equity firms like Thomas H. Lee Partners, Coller Capital, and Neuberger Berman Group to fund its expansion. While private equity involvement in the industry has led to consolidation, Phillips acknowledges that some advisors have had negative experiences with private equity-backed firms. However, she emphasizes the importance of transparency and understanding in any partnership to ensure the continued success of the business.
As the wealth management industry continues to evolve, partnerships and affiliations between firms like Journey Strategic Wealth and Hightower Advisors will play a crucial role in shaping its future. By combining resources, expertise, and a shared vision for growth, these collaborations have the potential to drive innovation and create value for clients and advisors alike. With a focus on maintaining independence while leveraging the benefits of a larger partner, firms like Journey Strategic Wealth are well-positioned to thrive in an ever-changing landscape.
Understanding the Shift Towards Independence in the Financial Planning Industry
As the financial planning industry continues to evolve, the concept of independence has become a key focus for many advisors. One company leading the way in this shift is Hightower Signature Wealth, which aims to provide advisors with the support and resources they need while allowing them to maintain their independence.
The Importance of Independence
According to industry expert Phillips, independence is crucial for advisors to focus on doing what they love – helping clients achieve their financial goals. This means being able to spend time on client relationships and financial planning, rather than getting bogged down in administrative tasks.
Building a Supportive Environment
Phillips predicts that the future of the industry will belong to firms that can offer advisors the same level of support and resources as a wirehouse, without compromising their independence. This is where Hightower Signature Wealth comes in, providing advisors with the tools they need to succeed while allowing them to maintain their autonomy.
At the same time, Phillips emphasizes the need for capital to build out the services that clients are looking for. This balance between independence and support is key to attracting and retaining top advisors in the industry.
The Role of Hightower Signature Wealth
Hightower Signature Wealth is designed to be a reflection of what advisors truly value – the ability to focus on their clients and their craft, rather than getting caught up in administrative tasks. By offering the necessary support and resources, Hightower aims to empower advisors to do what they do best.
With a focus on providing advisors with the accommodations they need to thrive, Hightower Signature Wealth is paving the way for a new model of independence in the financial planning industry.
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