Wirehouses need to "move into the new world of financial advisors," says Erik Strid.

He worked at Wells Fargo Advisors for 11 years before leaving in February 2014 to launch Concentus Wealth Advisors in King of Prussia, Pa., with his brother and father. With Strid as chief executive, the RIA manages $415 million in assets.

The RIA structure ranks as critically important to his success since leaving the wirehouse, he says.

"This whole world of broker-dealer FINRA operations is so conflict-ridden," Strid says. Wirehouses "need to move rapidly to a day when they can truly say an advisor truly is a fiduciary," he says.

Advisors need to charge clients for advice, plain and simple and engage in no other less-straightforward compensation systems, Strid says.

He recognizes, however, that "this is a difficult thing for the wirehouses to do." The obstacles are numerous, including the challenge of retooling such large employee rosters to make those changes, Strid says.

But Strid thinks that no other realistic choice exists. "Otherwise, they are going to bleed market share," as advisors leave, taking their clients with them to establish RIAs.

Two decades ago, Mark Suszan left his employer, a national investment advisory company that sells proprietary products through its financial advisors, to start his own firm, an affiliate of Raymond James in Franklin, Mich. His former employer required advisors to offer both products and services to clients, based on its needs.

Suszan thinks that he has benefited from the opportunity to offer his clients "concierge" services.

When an ultrahigh-net-worth client needs a half a million dollars overnight to buy a boat, Suszan can use his own security line of credit and get the money there. That kind of customized service, possible as an independent, inspires loyalty. "He becomes a very sticky client," Suszan says.


Will the advantages of independence spell the end of the wirehouse world?

Not immediately, says Duane Thompson. He would be the first to say otherwise, having waged one of the toughest campaigns against that corner of the industry.

Now president and founder of Potomac Strategies, a consulting firm in Kensington, Md., and a senior policy analyst for fi360 in Bridgeville, Pa., a fiduciary training firm, Thompson previously served as managing director of the Washington office of the FPA. He held that position more than a decade ago when the FPA launched a battle with the wirehouses over a regulatory exception that the SEC allowed for that part of the financial services industry.

Some view that battle, which the wirehouses eventually lost, as the first significant one in a still-raging war to make all advisors adhere to the same fiduciary-defined conflict-free regulatory rules.

Thompson thinks that wirehouses will continue to see "a steady trickle of advisors leaving" but no floods yet. "They still dominate," he says.

Miriam Rozen is a reporter for Texas Lawyer who writes about financial planning and services.

This story is part of a 30-day series on going independent.

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