Back in the early 1980s, almost all independent advisors were former brokers or insurance agents, or both. And, even though they knew they would make less money, they went independent mostly because they felt it would enable them to provide better service to their clients.

This financial step backward was so dramatic and so widely known that some brokers used to refer to the Financial Planning Association’s forerunner, the International Association for Financial Planning, as the “International Association of Failed Producers.”

As a result, I developed a soft spot for independent advisors that’s lasted all these years. But the world moves in mysterious ways, and two things happened in the mid-1980s. The stock market that had been wallowing since the early 1970s took off, and Charles Schwab & Co. launched its financial advisor services division.

With the stock market rebounding, investors turned their attention away from tangible assets (gold, real estate and oil & gas) toward stocks and bonds. And, Schwab responded with FAS, and changed forever changed the independent advisory business.

Financial advisor services enabled independent advisors whose clients opened Schwab accounts to have their quarterly asset management fees deducted from their accounts and paid directly to their advisors. This eliminated the need for advisors to bill clients every quarter and allowed them to direct their client accounts — essentially moving the independent advisory industry into the asset management business, and away from product sales.

As we all know now (and private bankers have known for centuries), asset management is a much better business model than sales. This is primarily because instead of starting each new year with zero revenues, advisors who manage assets can expect their same AUM fee year after year — hopefully with the underlying asset base growing.

However, by the late 1990s, the large Wall Street brokerage firms realized these financial advantages and jumped on the asset management bandwagon — once again positioning independent advisors as the ne’er-do-well relations.

Perhaps, then, you can understand why reading “Advisors Find Increased Revenue, Happiness in Independence: Schwab” on ThinkAdvisor warmed my heart and put a smile on my face.

Schwab — monitoring the industry it helped to create — recently surveyed brokers who had left Wall Street or smaller broker-dealers within the past two years, to start or join independent RIA firms. Most advisors surveyed say that after they made the move their revenues increased, they were happier, they had better, longer-term relationships with their clients, and they would make the move again.

The responses Schwab received dovetail with what I’ve been hearing from independent advisors over the years. As a final bit of corroborating data, I’ve never met an independent advisor who went back to working for a brokerage firm. Have you?