It has become fashionable to talk about the mass exodus from the wirehouse to the independent world.

However, the demise of the wirehouse through such defections has been greatly exaggerated. For years, pundits have forecast that a torrent of wirehouse advisors will go independent. But, from where I sit, this torrent has turned out to be a trickle.

Is it possible that we will see a movement in the other direction? Are we about to witness a flow of successful independent advisors to wirehouses?

The question likely begets nonbelievers on both sides. I've observed that independent advisors and their wirehouse brethren harbor misconceptions of each other's worlds. These stereotypes are, in almost all cases, inaccurate.

Independent folks tend to believe that wirehouse reps are still stuck in the stockbroker world of yesteryear. They imagine that transactional approaches are the norm, and advisors are urged to promote certain products. The most cynical assume that clients are being advised to engage in inappropriate risks and "take a ride on the Wall Street casino." In short, they question whether client interests are being put first.

Today's independents who are considering affiliating with a wirehouse, obviously, see a different picture. As in the majority of independent practices, the fee-based approach is the most common. There is very little product promotion at wirehouses as these institutions have sold their manufacturing arms, thus distancing themselves from such an appearance. Finally, with levels of compliance oversight at an all-time high, inappropriate advisor behavior is scant.

The wirehouse crowd tends to share an equally unflattering perception of its indie cohorts. Many of them believe that the majority are underachievers who could not make it in their world. Because the independents have not been similarly trained, the wirehouse population assumes that independent advisors are not as knowledgeable or informed on the intricacies of the economy and the ways of Wall Street as they are. They accuse independents of pushing annuities with high hidden fees and question the concept of fees for advice.

In reality, many of our industry's most successful producers reside in the independent space. A review of any credible industry ranking supports that fact. And a much higher percentage of independents are certified financial planners.

One could argue that the rigorous course work required to achieve that mark vaults the education level of this group to higher heights. Annuities, which, by the way, were a great place to be at the last decade's end, are becoming more sophisticated and transparent. As in the wirehouse world, compliance has become more vigilant and abuses are down. Finally, the fee for advice debate is two-sided. Many believe that one cannot be truly be objective unless fees and commissions are uncoupled.

In a general sense, business practices in both worlds are very similar. Regardless of their affiliation, the vast majority of advisors we know share several common themes. Fee-based practices commonly account for a high percentage of revenue. They compete for business by putting their clients' interest first. They strive to offer the best products and advice and deliver that package at a fair and competitive price.

After debunking misconceptions, the next objection an independent advisor typically has about a possible transfer to a wirehouse is payout. Whereas indie payouts hover around 90%, most practitioners find that their net after expenses is in the fifties or low-sixties. With payout and benefit packages exceeding 50% for top wirehouse producers, the payout gap is not as significant as one might first perceive. Factoring in the large transitional compensation bonuses being offered, and the overall compensation gap is insignificant.

With these compatibilities in mind, Merrill Lynch Wealth Management has been actively pursuing certain independent financial advisors. I recently spoke with John Dozier who is a 32-year Merrill veteran. During his distinguished career, he has served in a variety of senior management roles and now is the managing director of business development for U.S. wealth management.

When I asked Dozier why the firm was focusing on independent advisors, he said: "It's the firm's mission to attract the top talent in the industry, and there are very talented advisors in the space."

Dozier added that advisors should consider Merrill because, "we offer leverage. We help relieve many of the pressures of running their businesses and allow more time on the primary function of delivery advice."

Asked what specific method Merrill is employing to reach out to independents, Dozier replied: "We are learning by doing." The firm has held two seminars targeting independents to attend and hear their stories. The speakers included branch managers and a successful former independent advisor who has joined the firm and is prospering.

Dozier thinks independent advisors should consider Merrill for its value proposition. "We offer superior technology, superior brand, a large network of supporting specialists and analysts. In addition, we offer banking and lending which is a gap in many independent offerings."

One of the biggest obstacles that Merrill must overcome with independents, Dozier says, are preconceived notions about the firm. "Some think we are militaristic or push product," he said, "but nothing could be further from the truth."

Independents are considering wirehouse firms for a number of reasons. Knowing that business practices and compensation level are similar, leaves an advisor open to deeper exploration. In fact, the value of a well-known brand may indeed be more important than ever in the post-Madoff environment.

Cutting edge technology is vital to many practitioners, and it's logical that the larger firms will continue to spend more and deliver the best solutions. Wirehouses with their broader offerings and deeper support staffs offer significant appeal to advisors trying to grow in the highly competitive landscape. Finally, some current business owners might be drawn to the leverage to which Dozier alluded. That includes letting a firm relieve some time and pressure associated with running a business, so that one can spend more time with clients and new business development.

Clearly, not every independent advisor fits or wants to fit into the wirehouse world. Sometimes indies find that products they rely on, such as certain insurance, annuities and limited partnerships, are not offered or are discouraged. In addition, business practices, such as fees for advice, operating one's own RIA or certain outside business activities may not be permitted.

Be it practical or emotional, there are some advisors who will only find joy and success as an independent. For many others, it might be time to review your wirehouse options.


Bill Willis is the president and CEO of Willis Consulting, a recruiting firm in Los Angeles.