What's in a name? We in the securities industry make a big deal of classifications for our firms. From wirehouse to boutique to regional to independent, we seem compelled to fit every firm in a neat category. However, over the years these categories have become blurred, as have their advantages and weaknesses.

For starters, can anyone really define the wirehouse label? Sure, the term was originally coined as a reference to the system of communication that larger firms were using between home offices and branches. This is hardly a modern concept. It came into being before computers, fax machines and even overnight mail. Today's technology allows every firm to rapidly disseminate information and the term wirehouse is now used to refer to the largest brokerage firms.

Currently, the "Big Four" (Morgan Stanley Smith Barney, Bank of America Merrill Lynch, Wells Fargo, and UBS) are exclusively wearing the wirehouse crown, while many of the largest competitors are called regionals. The origin of that label dates back to a time when there were many firms that focused their efforts in a specific part of the country.

In the 1990s, I worked for a true regional, Sutro and Co. We were based in San Francisco and did business primarily in California and the surrounding states. Like many of its peers, Sutro was bought by a larger firm, RBC Dain, which wanted to increase its footprint. Today, RBC Dain has over 200 branches in 42 different states, yet it is also referred to as a regional. Maybe it's called a regional because it's not based in New York. (Although, neither is Wells.) Some may say that the term regional now refers to the total number of brokers. RBC's 2,500, for example, is relatively few compared to the big four. But consider Ameriprise. It is often referred to as a regional and it has more than 10,000 advisors. Confused yet?

Continuing this category of confusion; behold the boutiques. These are the small upscale brokerage forces attached to powerful investment banks. Firms like Goldman Sachs, JP Morgan Securities, Deutsche Bank and Credit Suisse occupy this space. They ask their financial consultants to focus mostly on the market's wealthiest clients. However, three of the wirehouse firms have boutique-like, high-net-worth divisions that attempt to offer a similar environment in pursuit of the same ultra wealthy clientele. So if you work for PBIG (Merrill's high-net-worth group) do you work for a boutique or a wirehouse? Clearly, the answer is yes.

Without a doubt, the independent space has significant momentum as well as several subcategories of its own. Those of you considering going independent will come to understand that there are independent firms like LPL that self-clear and a long list of others that clear through third-party providers such as Fidelity or Pershing. What's the difference? Some prefer the self-clearers so that they relate to only one firm and broadcast a singular brand. Others feel that those who clear away are truly independent and create a more free workplace for reps. It should be noted that there is a group of self-clearing firms that offer multiple channel solutions. Wells Fargo, Raymond James and Ameriprise offer both traditional branch offices as well as an independent alternative.

Lately, we have been fielding a lot of questions about what it means to be a register investment advisor (RIA). One might argue that this is the most independent stance a financial advisor can take. RIAs create their own firms, select clearing partners, file their own registration and are responsible for their own compliance oversight.

If you are willing to take on the responsibility and overhead cost, the payout is 100%. However, you are now a fee-only advisor and by definition you cannot participate in commission business.

Advisors who find this limiting might seek a hybrid solution. This allows one to grow one's own RIA while affiliating with an independent broker to facilitate commission-orientated business. Under these hybrid arrangements, financial advisors can maintain their Series 7 license to offer clients a pricing choice, and often make use of their broker-dealer's compliance department.

In fact, the compliance piece is sometimes not optional. An increasing number of so-called, hybrid-friendly independent firms are concluding that they must, for legal and regulatory reasons, perform oversight on both the commissions done through the affiliated broker-dealer as well as the fee business done in their RIA. This service also comes at the advisor's expense.

If you are considering changing firms, the first step is to find which of our somewhat confusing categories best suits your business. Wirehouses represent brand recognition, robust platforms, state of the art technology and the most aggressive transitional compensation programs. But, they tend to have the most rules and regulation. If your business does not fit their script, you might find life there rather oppressive.