The Equity Factor: Why Big Teams Keep Breaking Up With Wall Street

Wirehouses are experiencing their own version of the “great resignation” as the move to independence has become a secular trend over the past five years. Billion-dollar teams are leaving their corner offices weekly to start their own RIAs or join the growing ranks of established independent firms.

These teams are often led by veterans who have logged decades at the big firms, and they’re turning down lucrative offers of more than four times revenue to leave the captive ecosystem. Elite teams have grown weary of compliance overreach, deteriorating economics and marketing constraints that have become increasingly common at the big firms.

Rebalancing a client portfolio outside the firm’s model means facing compliance reviews and extra paperwork. Dedicated sales assistants are usually reserved for those with at least $3 million in revenue, but requirements can change without warning including hiring freezes. Any deviation from rules may lead to heightened supervision or financial penalties. Expressing personality on LinkedIn could lead to a pink slip. Even strict compliance by any one advisor doesn’t guarantee your team will remain intact, as unexpected firings can still disrupt your business.

As the push and pull between autonomy and corporate control intensifies, many advisors are reevaluating what it means to serve clients—and themselves—on their own terms. The shift isn’t purely about escaping bureaucracy or unlocking more creative marketing; it’s about reclaiming professional identity and redefining success.

The appeal of independence has never been greater: the ability to build something lasting, shape one’s own culture, and deliver client experiences that aren’t dictated by the priorities of a distant executive committee and shareholders who demand consistent quarterly profits.

Moreover, the barriers to entry have fallen. With technology enabling seamless client transitions, robust compliance support and turnkey operational platforms, the independent path is less daunting than it once was. Advisors are finding that they can deliver all the sophistication and security clients expect but with greater agility and a more personal touch. As one $5M producer we helped lift to independence from Morgan Stanley said, “my time is now dramatically freer to focus on my clients and my business vs. satisfying the needs of the bank.”This evolution signals not just a migration, but a quiet revolution—one where control shifts from institutions to individuals, and where value is measured by ownership, flexibility, and the capacity to innovate.

What further enhances its appeal is that advisors are recognizing equity as substantially more valuable than any upfront payment, which often involves lengthy contracts extending beyond 13 years, significant hurdles beginning within the first six months, high interest rates, and taxation at ordinary income rates. Additionally, inefficient back-office operations and increasingly burdensome compliance requirements—now consuming up to half of their revenue and regarded as a commodity service anyway—contribute to an overall tough trade.The economics of ownership are highly compelling. The average net operating income for an independent advisor runs roughly 70%+/- of gross revenue, including 1099 income after deducting your own business expenses.

More importantly, the equity value of that practice typically ranges from six to eight times annual net income. For a $10 million producing team, this means potentially tens of millions in equity value on day one. And how you leverage that equity is entirely up to you. You can retire and cash out at long-term capital gains rates, use it to acquire other practices and build an enterprise or bring on a strategic partner.

Most advisors believe they “own” their clients while at working at banks. They don’t. Technically, those client relationships belong to the firm. When they go independent, they truly own their client book, no one can call your clients, and that’s where the real equity value lies.

Another catalyst driving the breakaway movement is the realization that back-office services, technology and custody have been commoditized. Whether you’re at Schwab, Fidelity, Pershing, Goldman Sachs or Morgan Stanley, the core offerings are remarkably similar.

The difference is that independent advisors obtain custody, compliance and administrative support for 8% to 10% of their revenue, not 50%. The technology available to independent advisors is measurably better, leading edge when compared to any old mainframe computer technology that addressed the masses of 15,000 advisors. Apps and advisor desktops offer a superior user experience, and product menus are completely open architecture without restrictions of system issues plaguing big firm platforms. That ultimately translates into happier clients, which means happier advisors.

Leaving a big firm is difficult. But the job itself won’t change. Advisors nationwide are breaking free from the employee mindset and embracing the freedom, control and the benefits of equity ownership.