Over the long, hot summer of 2008 as Luminous brought over their old clients, Fidelity typically had between three and five of their own people working in the office trying to make the client transition experience as seamless as possible. Schwab was selected as the second custodian because, as Sear says, competition means better pricing.

Given its size and scale, the experience of Luminous probably isn't representative of the thousands of advisors who have exited wirehouses over the last three years. Custodians like Fidelity, Schwab, TD Ameritrade and Pershing provide transition assistance, as do broker-dealers, but only an operation the size of Luminous warrants the full-time help of at least three people for several months.

Forming a business also requires financial sacrifice. The partners at Luminous had to pay their staff of 14 over the summer of 2008 while they had yet to receive any fees, so they took no salaries themselves.

But for Luminous, the RIA-only route made sense. The firm's average client has about $20 million in assets.

Ip argues that many of the asset managers she tries to find for client portfolios have little interest in spending their time marketing to a brokerage platform with 15,000 brokers. "The larger an investment manager becomes, the more closely their performance starts tracking the benchmark," she says. "Often, a brokerage firm doesn't make the lowest fee available to an advisor's clients. Here, we can negotiate a fee directly with the investment manager."

Luminous also makes alternative investments in an outside-the-box style more befitting a multifamily office. For example, the firm is approaching clients about investing in a fund that purchases U.S. farmland, reasoning that increased wealth in emerging markets is going to translate into much higher protein consumption on a global basis.

Ip has spent the last two years working extensively with agronomists who have conducted regression analyses to optimize seed varieties and has raised about $80 million to purchase two farms. She expects the firm will buy four more. "We want to be diversified geographically and by crop as well," she says. 

Independence isn't for everyone at a wirehouse, and Hamburger and his director of business development, Frank Pizzichillo, have learned over the years to spot the warning signs. Hamburger recalls working with a team whose leader failed to sit in on any of the calls about planning the firm because he thought setting up a business involved lots of little housekeeping details that were trivial.
"For folks like that, the wirehouse model works," he says. "How can we help design a firm if we don't know what you want it to look like? We've had ten projects canceled over the last year after it became apparent independence wasn't a viable option."

Other options Hamburger may recommend include affiliating with an independent broker-dealer or joining an existing RIA firm. Starting an RIA firm takes an average of 60 days and costs between $7,000 and $10,000, while forming a broker-dealer can take five or six months and cost $50,000 to $75,000. "Once they hear that, 99% of [MarketCounsel] clients don't want to set up their own broker-dealer," Pizzichillo says. "Ten years ago, you would see broker-dealers with just handful of people. Now it's too expensive."

Early in the engagement, Pizzichillo tries to gain a sense of what is the motivation or impetus behind a team's departure as he and Hamburger work to help clients create a business plan. "It can't be, 'I hate my branch manager.' We try to weed those folks out early," Hamburger explains. "You have to have a lot of drive to succeed."