Loyalty. It's a hot topic when you're talking about investor-clients and their loyalty to their financial advisors. But it's also a real issue for the large, elite brokerage firms who are fighting to keep their advisors in their current seats.

Arthur Levitt, the former chairman of the Securities and Exchange Commission (and former chairman of the American Stock Exchange), was on Bloomberg radio this morning discussing the dispute over the valuation of the merged Morgan Stanley Smith Barney and how it may be adversely affecting the firm's advisor force. The big brokerage houses have a huge problem, he says. The clients are loyal to the advisor and not really to the firm.

The companies haven't been able to build that loyalty more directly between themselves and those investor-clients, Levitt said in the radio interview. And that puts the advisors in the driver seat. If they walk out the door so do those client assets. He predicts that more brokers -- if not kept happy, if needs aren't met - will head to regional rivals or start their own small investment firms.  

The Big Four - Morgan Stanley Smith Barney, Bank of America Merrill Lynch, UBS and Wells Fargo -- have been watching their advisors play musical chairs among their quartet in the last several years. But, they've also been watching some of their talent head to regional firms such as Stifel Nicolaus, RBC Wealth or Raymond James.

True, some advisors have started their own registered investment advisory firms but wealth management industry analysts aren't sure if wirehouse advisors are really making an exodus into the RIA space. It's the regionals that seem to have the appeal right now.

But as Arthur Levitt says, it's a matter of loyalty and the firms have their work cut out for them if they want to retain their advisors and their clients and the assets that come with them.