Some thirty years ago, the President of Smith Barney, Joe Plumeri, II, was speaking to about 500 of the firm’s top Financial Consultants (advisors) at an offsite meeting when he said the following things to them:

• It’s your business, no one else’s.
• What makes your business grow is your passion and commitment to what you do for your clients
• Our products are commodities; stocks, bonds, mutual funds, you can get them anywhere, but what makes them different is your heart and dedication to always doing what is right by our clients. They depend on you and no one else.
• To be successful, you have to think and act like entrepreneurs. It’s your reputation that’s on the line every day, not the reputation of this firm.

At the time, I didn’t realize he was telling us his vision for an independent Advisor, not a financial consultant. I listened intently to what he said and thought he was either very brave or very stupid, because in the early 1990s, the wirehouses had all the power and even the top “brokers” were employees that were set-up by the large brokerage firms to sell products to their clients.  I was sure that no one at Primerica or Travelers or later Citigroup truly believed that their consultants were any more than highly paid employees and that Joe was considered a heretic for his views.

However back then, the technology, product development and back-office was expensive and time intensive to manage. No individual or team of consultants could afford to support their businesses with essential services like legal, marketing, advertising, platform technology, custody and human resources, let alone office space and furniture.   The wirehouses had a lock on their business and Joe Plumeri was not going to change that. If anything, he would just make them more productive. No one was going anywhere.

But it turns out, Joe was right.   Advisors are entrepreneurial by nature and it also turns out because of their dedication to their clients’ interests, their clients will follow them anywhere, even if it means leaving the large wirehouses.   The connection between the advisors and their clients is undeniable.

Over the last 10-15 years, the decreasing costs of technology, product development, open architecture has created the Registered Investment Advisors (RIAs) movement. It was slow at first, because many advisors grew up thinking they were not equipped to run their own businesses. After all, that’s what “Mother Merrill “ and the rest were there to do.

The turning point came in 2008 – 2010, when Wall Street and their self interests blew themselves up. Suddenly, the sterling reputations of firms like Merrill Lynch, Smith Barney, UBS, Bear Sterns, Citigroup, Lehman Brothers and Goldman Saks were lost.   It was not the fault of Financial Advisors that the investment bankers and mortgage departments at their banks outsmarted themselves, but none-the-less they were all tied together.

Suddenly, Advisors realized their reputations and businesses were no longer in their control. As a result of the mortgage crisis, the banks not only clamped down on their product developers, but in large part on their advisors, limiting them in doing or saying anything to their clients.

This did not go over well with Joe’s entrepreneurial army. They have rebelled in great and growing numbers. Over the past five years over 950 advisers or adviser teams with $258.8 billion in assets left the wirehouses for a different platform, according to Investment News.

I have worked with many of these newly minted RIAs and they tell me they want to be in control of the relationship with their clients again.

As increasing numbers of advisors realize that they are living in an age of enlightenment and that Joe Plumeri was right, the number of RIAs will keep growing and the flow of assets away from the large wirehouses will keep steadily growing.

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Joe Plumeri went on to become Chairman & CEO of Primerica, the CEO of Citibank North America and the Chairman & CEO of Willis Group. He is an author and philanthropist.

David Westcott is the CEO and President of Westcott Associates, a boutique marketing and media firm that specializes in helping Advisors transition to independence.