“We've launched multiple businesses that consist of a number of advisors,” said Shirl Penney, founder and CEO of Dynasty Partners.

Just last year, MarketCounsel transitioned a team of 13 advisors and the staff that supported them.

“They came to us to help them determine the team’s partnership structure, management responsibility, share of income and of the firm's equity,” Cohen told Financial Advisor.
The rising size of breakaway advisor teams indicates that the groups are aiming for a larger cut of the books of business and the assets they manage.

“We're seeing advisors' income increase from a 30 to 40 percent payout at wirehouses to a 55 to 70 percent payout on the independent side,” Cohen said. But no matter how eager, coordination and cooperation is key when a team of 10 or more advisors are lifting a multi-million or billion dollar book of business, according to experts.

“There's a very clear step-by-step process that advisors are required to follow to be able to do this successfully,” said Cohen. “Many advisors don't realize the intricacies of their employment agreement or the legal ramifications of departing their existing employment and soliciting their clients”

When he witnessed the culture deteriorate at Merrill Lynch after it was acquired by Bank of America, Branch Manager Steve Altman teamed up with four co-workers to launch an independent registered investment advisory called TRUE Private Wealth Advisors in Salem, Ore.

“We just got tired of defending Merrill Lynch Bank of America to our clients,” Altman told Financial Advisor Magazine. “There’s an inherent conflict when you have one firm that provides the custody, the advice and produces products.”

Altman isn’t the first branch manager to move from a wirehouse organization to form his own RIA. “In the last three to five years, we’ve seen a rise in former producing branch managers leaving large national firms to form their own business with an interest in recruiting advisors into their business,” said Scott Curtis, president of Raymond James Financial Services, the firm’s independent business model. “One potential pitfall is if the branch owner recruits a significant number of advisors from the same office, a collection of offices or even within the same complex, it may open the door to a raiding claim."

But Altman didn’t hire his breakway team from his former employer. His partners Todd Gesher, Jason Herber and Brett Davis had been working together for years at Merrill Lynch before they began to organize for better things every Tuesday at 5:30 a.m. at a local restaurant.

“We transferred $260 million in assets as a firm and today we manage $640 million,” Altman said.

What has become TRUE Wealth Partners required six months of planning before launching in September 2012.