Some broker dealers have found a better way to retain more of their advisors, and attract new ones, by offering an independent channel for those who feel the entrepreneurial lure of being on their own while still having some of the safety of an established company.

Last week, Wells Fargo Advisors Financial Network announced the expansion and realignment of its independent arm to better serve the growing number of advisors interested in this channel. According to a company spokesperson, the number of advisors involved in the firm’s independent arm has increased by 24% over the past 18 months due to clients’ growing interest in dealing with this type of advisor. As a result, the company has undergone a major expansion in the supervisory structure of its independent arm.

Now, it consists of a director and three “team leads” that oversee the firm’s network of regional supervisors who serve as the main points of contact for the advisors. Previously, there was a more de-centralized operation where the branch managers didn’t have as much business support and it was more difficult to efficiently help advisors because of their locations. Under the old structure, an advisor in this channel may well have had a manager in a different city, said John Peluso, president of Wells Fargo Advisors Financial Network. “We made an investment in the supervisory team to geographically align branch managers with advisors in the independent space,” he said in a phone interview. “This provides continuity and the business is growing.”

In last month’s issue of On Wall Street, we reported that the “wire-to-wire” advisor moves were increasing as advisors sought out the support, and culture, they feel is only at the big companies. For Wells Fargo’s part, the independent model has recruited 75% of its 900 advisors from wirehouses, said Peluso. “Our goal is to look for experienced and successful advisors who have a track record and we define our model as simplified independence.”

RBC is another broker dealer that has rolled out a quasi-independent channel. "RBC rolled out a hybrid model recognizing a trend that advisors are clearly evaluating the independent space,” says Barbara Herman, a senior analyst at New Jersey-based recruiting firm Diamond Consultants, in a phone interview. It serves as both a recruiting and retention tool in the face of aggressive deals from some of the larger firms in the industry, Herman says.

RBC did not return phone calls by press time.

Meanwhile, the company that initially made the independent hybrid model popular, Raymond James, has recruited two million-dollar wirehouse advisors. Steve Jones and Seth Gunderson, who have formed Tenacity Investment Group in Colorado, joined from Wells Fargo.

While Jones served as a vice president and senior financial advisor, Gunderson worked as a financial advisor. Also, joining the group is Mindy Kennie, who worked previously at Morgan Stanley Smith Barney, Ameriprise and Bank of America. Together, the team manages $140 million in client assets and generated more than $1 million in annual production. “As independent financial advisors, we have the flexibility to create investment strategies that are unique to each client’s needs, values and goals,” said Jones, president of Tenacity, in a press release.

As it stands, industry experts have been tracking the vast movement of advisors from wirehouses to the quasi-independent realm. “There is an emerging multi-channel approach where advisors now have the choice of how they want to be affiliated,” Herman said.

“They are leaving the wirehouse but they still want another wirehouse and this does not surprise me.” Indeed, more than 22,000 registered brokers migrated from one broker-dealer to another within the previous year, according to industry analysts.

Herman added that Wells Fargo is one of the only wirehouses that have started to “bridge the gap” between the captive broker world and those curious about the independent space while having the security of a strong name.  “[Advisors] want the reputation and support associated with a top financial network.” She also pointed out that by providing this independent option for advisors, firms are moving forward with a competitive edge by retaining its best advisors.

“This option provided to wirehouse advisors that can allow them to choose how they wish to be affiliated with a firm is more meaningful today than before,” Herman said.

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