James Steinberg/© theispot.com

Sometimes it pays to be a no one.

Advisors at name-brand firms like to leverage their status as a soloist for the best orchestra in town. But independent advisors take a different view: they are akin to the anonymous musicians playing in the background — aka the workaday folks mailing you your statements.

Independent advisors have a leg up on their wirehouse and other employee-model counterparts when it comes to being in command of client relationships. And wirehouse advisors would do well to pay attention to these skilled reps.

Successful wirehouse advisors typically position themselves as resident investment and financial planning experts, relegating their firm to a secondary, supporting role. It’s the advisor’s capabilities that are positioned front and center in the client’s mind.

And yet, independent advisors take the notion of client control to a whole other level. Their clients typically don’t even know who their broker-dealer is. They don’t pay any attention to the name of the broker-dealer emblazoned on the front page of their statements: the value lies with the advisor and not the folks bowing furiously in the background.

Clients of advisors at independent broker-dealers usually focus on their advisor and the firm where their assets are custodied — Schwab, Pershing, Fidelity, etc. When independent advisors change firms, they’ll often opt for another broker-dealer who uses the same custodian, since it minimizes the disruption for clients.

Even when broker-dealers become troubled or experience reputational challenges, independent advisors can afford to remain complacent. Negative headlines or adverse publicity don’t create anywhere near the same kind of pressure on advisors to flee to rival firms as is the case at the wirehouses.

Recently, a number of independent firms — both large and small — have dealt with various issues, such as declining share prices, speculation over their financial state and the possible change of ownership. Yet, this background noise has prompted very few advisors to depart.

They clearly don’t feel any sense of urgency to switch firms for the sake of their own reputations, despite the bad press. More fundamentally, since the clients of independent advisors tend to be kind of hazy about who their broker-dealers are, advisors feel no real pressure to respond to damaging news by jumping ship for the sake of these investors.

In contrast, when a wirehouse finds itself in these types of predicament, we usually see advisors quickly cutting deals with rival firms en masse. Why is this?

Wirehouse advisors typically leverage the household-brand status of their broker-dealer firms to help them attract large accounts while their independent counterparts do not. This is a fundamental difference between the wirehouse and independent business models.

There is a worthy lesson here for wirehouse advisors: simply put, advisors who can continually showcase their value in client relationships can successfully retain clients in good times and bad. Moreover, even when a broker-dealer’s reputation takes a hit, those advisors who have positioned their value at the center of the relationship can likely emerge unscathed.