The Rise of the Independent Advisor

Contents

1. The world of 1995
2. What changed after the financial crisis
3. The count today
4. What the leavers say they want
5. The limit, honestly stated

Brent O’Mara is a cofounder of WealthPlan Group, an Omaha based organization that supports independent financial advisors, and the independent advisor is a figure with a short, well documented history. Picture an ordinary version of it. On a weekday afternoon an adviser in a mid sized city walks into a manager’s office at a national brokerage and resigns, having spent the previous months quietly forming a company, filing its registration and choosing a custodian. By evening the adviser is at a leased office with a new name on the door, and over the following weeks clients are asked, one by one, whether they would like to move their accounts. A national newspaper told a version of that story in 2014 about a four person team in a Pennsylvania town, and called the trend of brokers breaking away to form their own firms one that was reshaping the industry and eroding the dominance of Wall Street.¹ Multiply the scene by thousands and the result is what this entry describes.

The world of 1995

The starting point can be dated. An industry consultant who began his career that year recalled that in 1995 the independent contractor adviser was still a novelty, that the typical adviser was a salaried employee of a large wirehouse, and that the independent model was regarded by many as the wild west of wealth management, reserved for people who either could not make it inside a big firm or were fiercely entrepreneurial.³ The long history is longer still: the SEC’s registration list of February 1941, in the first season of the adviser statute, ran to 709 names.⁷ On the radio in January 2006 a newspaper columnist estimated 300,000 self described financial planners, 660,000 brokers and nearly two million insurance licensees, and observed that advertising still steered the public toward the largest brokerages.⁹ The registration that defines the independent firm is explained in the registered adviser entry.

Figure

Counting advisers across eight decades

investment advisers on the SEC's registration list in February 1941

709

people describing themselves as financial planners in 2006, alongside 660,000 brokers

300,000

independent advisory firms across the country by 2023, in an industry consultant's count

35,000

What changed after the financial crisis

The newspaper’s 2015 wealth adviser briefing located one cause in equity. Through the financial crisis and its aftermath, the stock that big firms granted their brokers lost much of its value, and some brokers began asking for cash instead; the independent practice offered another kind of stake, equity in a small private company, which a consultant quoted in the briefing said could again make an adviser wealthy, at a different risk.² A transition consultant writing in 2025 listed the other motives: control over pricing, branding, technology and the way advisers work with clients, freedom from layers of approval, and the economics of keeping more of what they earn while building equity.⁶ Independent broker dealers offered a parallel path, supplying technology, compliance and products to advisers who affiliated as contractors rather than employees.¹⁰

The count today

By the 2020s the consultant who remembered 1995 could write that the independent model had become the preferred choice in the industry, numbering more than 35,000 independent firms across the country, and that business owners and clients alike cited transparency and the avoidance of conflicts as reasons.³ A trade magazine’s 2026 survey of business models described the independent model’s gains over the previous decade as coming mostly at the expense of the traditional wirehouses, alongside consolidation and acquisitions driven by private investment funds.⁴ The shift shows in how advisers are paid. An industry research firm reported that commissions had fallen to 23 percent of the average advisor’s revenue by 2024 while fees accounted for 72.4 percent of compensation, and it said the wirehouse and broker dealer channels were leading the shift away from commissions toward fees on assets.⁵ Measured against the whole advice business, though, the registered adviser remained a minority: a 2016 television report counted such firms at about 15 percent of the industry.⁸

Figure

What a team does before resigning

1. 01
   EntityForm the new firm and file its Form ADV.
2. 02
   ComplianceBuild a compliance framework before anyone leaves.
3. 03
   AgreementsReview employment agreements, including non solicitation and confidentiality clauses, in detail.
4. 04
   PlatformChoose a custodian and technology that work together and support growth beyond launch.
5. 05
   ClientsPrepare clear, early communication so clients hear directly from their advisers.

What the leavers say they want

The 2025 transition guide is the closest thing to a manual. Before resigning, its author wrote, a team must form its entity, file a Form ADV, build a compliance framework and read its employment agreements in detail, since a missed non solicitation clause can undo weeks of work; the custodian and technology choices carry real weight; and clients want to hear directly and early from their advisers, without spin.⁶ He described one team that trained early, assigned roles and moved its whole book in six weeks without interruption, and another that failed to flag a product that could not be transferred and spent weeks recovering.⁶ What surprised most teams, he said, was how quickly clients said yes, because the name on the door had never been why they stayed.⁶ He added that transitions now run faster than they once did, with virtual onboarding and electronic signatures standard, and that the emotional side of leaving, the loss of routines, colleagues and a sense of identity, is the part teams most often underestimate, though most come through tired and clear headed, having made deliberate choices they do not wish to reverse.⁶ The forms a new firm can take are laid out under the entry on practice structures, and the institution that holds the moved accounts under what a custodian does.

Figure

Advisor revenue by source in 2024

• Fees72.4
• Commissions23

percent

The limit, honestly stated

The growth figures are real but they measure different things. A count of firms is not a count of advisers or of clients; a share of revenue from fees says nothing about how good the advice is; and the 2016 report’s 15 percent sits awkwardly beside the consultant’s 35,000 firms because the two sources drew their lines in different places.⁸ The consultant himself noted a countertrend, in which independent broker dealers that had built their businesses on the contractor model began acquiring their own advisers and turning them into salaried staff as the founding generation of firm owners neared retirement.³ Independence, in other words, is a direction the industry has moved rather than a destination it has reached, and whether an independent firm, a brokerage or a hybrid suits one household, plus whatever tax and estate consequences a plan carries, turns on that family’s own circumstances, a question qualified professionals, not a trend line, should answer.