An independent channel would also enable a wirehouse to keep a good advisor who decides to go independent in-house. Well Fargo Advisors says that since 2006, about 100 advisors have moved from its employee channel to FiNet, which has about 825 total advisors.
Were Merrill Lynch and Morgan Stanley Smith Barney to decide to create their own versions, they would have to find a way to "enable the world of independent brokers with the wirehouse capabilities without diminishing [the wirehouses'] current competitive advantage of having the best offerings out there," said Doug Dannemiller, brokerage and technology analyst at Aite Group.
"They could offer some of the capabilities to an unbranded service arm, or a sub-brand, there's a number of ways they could make money off the market. But they don't want to have lesser quality brokers using their brand," Dannemiller said.
Total market share for independents still is somewhat small: Cerulli Associates estimates the independent firms' share of client assets at 15%, compared to the wirehouses' 44%. But with more advisors and clients walking away from the wirehouses, partly in reaction to the market meltdown, it is expected to keep growing.
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