These companies, which have a vested interest in the growth of the independent market because they custody assets for these advisors, offer tools and programs to help existing advisory firms create recruitment plans and find new advisors.
"Joining an established firm does take a lot of the weight off your shoulders," said Alois Pirker, a research director at research and advisory firm Aite Group. "For a lot of brokers that aren't as entrepreneurial-minded, it's a great option."
The trend is also sparking interest from recruiters who place financial advisors at financial-services firms.
Independent advisory firms attract a different breed of financial advisor, said Mindy Diamond, president of Diamond Consultants in Chester, N.J.
"Advisors going to independent firms have to be willing to be much more long-term greedy," she said.
That is because independent advisory firms rarely offer upfront money. Instead, Advisors are attracted to their ability to retain between 50% and 90% of their revenue at independent firms, compared with 30% to 50% at most wirehouses. advisors are also drawn to the chance to acquire an equity stake in the company and a seat on the firm's investment committee.
To truly be more competitive and attract the best advisors, independent advisory firms are going to have to create more defined recruitment plans, Diamond said.
"Right now many of them are going on a wing and a prayer, which can be a turnoff to advisors coming from wirehouses where everything is formulaic and spelled out clearly," she said.
Copyright (c) 2010, Dow Jones. For more information about Dow Jones' services for advisors, please click here.