Most Advisors Want Independence, but Few Make Jump, Survey Says

“The quality of the advisors and teams going independent today is far greater than that of the past,” the recruiter said. “The quality is way up in terms of the size of the books of business, which is about $500 million to $1 billion in assets typically and $3 million to $4 million in revenue.”

As more teams make the jump to independence, their stories “help others realize that they too can make this leap and enjoy the freedom to design and grow their practices their way,” said Rajini Kodialam of Focus Financial Partners, a nearly $50 billion aggregator of RIA firms, in a statement. “In fact, Lori VanDusen’s recent move here, to form LVW Advisors, is a great example of an industry luminary who made the change and couldn’t be more pleased with the outcome.”

Still, the decision is a tough one for traditional brokers, Diamond admits, mainly because of the short-term financial concerns. First, the advisors don’t get the upfront bonuses—which can be as much as 200%of their trailing-12-month fees and commissions—associated with moving to another wirehouse. And, second, they may have to walk away from some deferred compensation, unamortized retention packages and other perks.

“I’m working with a super-entrepreneurial Merrill Lynch team that is committed to moving to independence,” Diamond said. “They were offered 200% cash up front by another wirehouse, which is, they’ve said, the last move they’d want to make. I don’t know the answer yet, but I bet they take it.”

Independence, she explains, is a long-term proposition that tends to happen when an advisor finds the “perfect timing.” Otherwise, advisors look at all the details, Diamond says, and decide “they’re not as entrepreneurial as they once thought.”