7 Tips for Advisors Planning to Break Away

When Brett Bernstein broke away from wirehouse Merrill Lynch in 2004, there were few alternatives for advisors at the time. "It was not very common to leave a Merrill Lynch and not take a big check and go to another firm like Morgan Stanley, or UBS," Bernstein, who chose LPL Financial at the time, said in an interview. Two decades later, it's become much easier for advisors to go independent. "There's a lot more choices … whether they're going to an IBD, whether they're choosing to start their own RIA, whether they go to an aggregator," said Bernstein, who is now a Focus Financial advisor and the CEO and co-founder of XML Financial Group in Bethesda, Maryland. In 2023, the independent advisor channel saw the greatest net gains among channels when recruiting experienced advisors, according to a report last month by recruiting firm Diamond Consultants. While a net 563 experienced advisors joined the independent channel last year, wirehouses collectively saw a net loss of 348 advisors. Recruiter Phil Waxelbaum, the founder and principal at Masada Consulting, said in an interview that two "colliding" factors are at play in the breakaway movement: entrepreneurial younger advisors who don't expect to stay for life at one firm, and older advisors within five to 10 years of retirement who perceive that "the net economics of breaking away will yield a significantly greater enhancement to their estate value than just taking another deal." ThinkAdvisor spoke to several experts on what advisors pondering independence should know about breaking away. See the accompanying slideshow for seven of their top insights. (Image: Adobe Stock)