Trevor Callan had been thinking about making a move for most of the 13 years he worked for Merrill Lynch & Co. Then, in January 2007, he and his two brothers, both of whom also worked for Merrill, decided it was time to act. "We found an office overlooking the ocean in LaJolla and opened our own firm, Callan Capital," says Callan, 37.

Across the country, planners and investment advisors like the Callan brothers are in motion. Competition is hot for brokers who can bring a big book of business to a new broker-dealer, with the country's largest firms willing to write checks of a million dollars or more as a signing bonus. The ranks of the country's ultra-wealthy continue to expand at an average annual rate of 8% or so—a rapid enough pace that advisors qualified to work with these high-net-worth clients and address their concerns can't quite keep up. "There aren't enough bodies to go around—or at least, not enough talented and experienced ones," says the manager of one such bulge-bracket firm, who asked not to be named.

At the same time, more advisors are interested in forsaking the world of Merrill Lynch, Smith Barney and other such firms, in part because of a growing reluctance to be associated with their troubles—or the toxic products they sold. "You are seeing a lot of shifts out there, a lot of people calling us," says John Furey, director of strategic development for Schwab Institutional.

Schwab Institutional, which offers custodial services and trading platforms, along with other support services to independent advisors, "is getting a lot more calls than we used to from people trying to figure out which model will be the best one for their business in the future," Furey reports. The wave of interest began three or four years ago, but has gained strength over the past 18 months. "It's a tough conversation, when your client grills you about what your firm has been up to, why it has lost billions and whether they are likely to lose money on bad subprime deals," he adds.

The Callans left Merrill Lynch before the subprime crisis hit the headlines, but recent months have left them grateful that they decided to break away. Launching an independent advisory firm was a revelation. "It's amazing how open the world of Wall Street is," Trevor Callan says. We can cherry-pick the best research, the best managers; we can go to one firm for the structures we need for our client today, and another tomorrow if the pricing or structure is better."

A Perilous Process

However compelling the vision and satisfying the reality may ultimately be, the harsh truth remains that for many advisors, switching firms or launching their own shop can be perilous. If the process is badly handled, clients can feel neglected or taken for granted. If it is badly planned, it can also be costly, requiring a lot of expensive transactions as positions are transferred to the new firm. Advisors must be prepared to address these realities, as well as counter a client's perception that the move might mean that service levels will slump or that the new firm won't offer them the same wide-ranging set of products.

The more affluent the client, the more likely he or she is to be targeted by rivals during this kind of transition. Not only must the advisor handle the logistics seamlessly-not forgetting to make a quarterly distribution to a client even if it is due only five days after launch-but he or she must also prepare a carefully reasoned explanation for clients. Within hours of an advisor's departure, representatives of that person's former firm will be on the phone to clients, lobbying to retain their business.

"Each client suddenly becomes a prospect again," says Chris Doughty, a financial planner who, along with partners Craig Pluta and Andy Ballard, established Alliance Wealth Management, an independent firm affiliated with Raymond James in Milwaukee, at the end of 2006. "You have to expect that they are going to interview you all over again. Be prepared to fight for their accounts. And there will be surprises: "One client I had been sure would follow us decided to stay behind" at regional brokerage firm B.P. Ziegler & Co, where the team had worked previously.

Because this was the group's second switch in less than a decade-Doughty and Pluta had left Morgan Stanley back in 1999 for Ziegler—logistics were simpler. But it put a different kind of strain on client relationships: "Moving from a giant wirehouse to a regional didn't change much about the way we operated, but opening our own independent firm was different," Doughty says. The Raymond James affiliation helped ease the concerns of some clients that the new smaller firm would have a strong enough infrastructure and access to products. And Doughty and Pluta spent a lot of time crafting an explanation for the decision, which had been made, they say, after years of pressure to market more proprietary products.