By Norb Vonnegut

Oct. 15, 2015 7:00 a.m. ET

Let’s make a deal.

I’ll assume your three-person team manages $1.5 billion in total assets at a wirehouse, generates $10 million in annual revenue and splits compensation equally. You’re sick of the mothership and want out.

Door No. 1 is a “3x” deal from another wirehouse, potentially giving you three times your annual revenue. You sign a nine-year employee forgivable loan and your team gets $15 million up front. If you hit your numbers, you get another $15 million. After income taxes of 40%, your deal could be worth $18 million in total.

Door No. 2 is an “RIA in a box.” You dig into your pockets and start a registered investment advisory company. The payoff here is more uncertain—but it may add up to a lot more. I assume revenue is flat and your team sells the new firm after five years for 10 times pretax earnings. In this case, your team splits $35.7 million after tax.

What’s your vote?

Before I explain my hypothetical example in more detail, let me say flatly: Compensation is the wrong way to make your decision. The decision starts and ends with clients, as highlighted in these four questions you should be prepared to answer:

Will clients follow you to a startup?

About 75% to 90% of clients move with their financial advisers, estimates John Straus, chairman and chief executive of FallLine Securities, which provides transition services, a broker-dealer, and a technology and services platform for independent advisers. Breakaway advisers “design the client experience” and improve it, says Mr. Straus, explaining the high retention rates.

By contrast, wirehouse systems sometimes force advisers to “shoehorn a client into a client experience that the client doesn’t always want,” says Mr. Straus, who previously ran the wealth-management units at UBS Group, J.P. Morgan Chase and Morgan Stanley.

Can you grow your business?

As much as we love to hate wirehouses, their banking operations create wealth and, consequently, opportunities for financial advisers. There’s nothing like referrals from investment bankers to grow assets—if you can get them.

On the independent side, meanwhile, there is potential consolidation with other practices, particularly as financial advisers get older. “About 75% of RIAs in the United States have less than $100 million in total assets under management, and many of these firms lack a succession plan or the ability to recruit a successor,” says Jay Hummel, a senior vice president at Envestnet which provides wealth-management services and software to financial advisers.

Talk about the range of possibilities. If you have significant relationships with private-equity managers, you might be able to join forces, roll up smaller RIAs and align your interests in a way that would never fly at the wirehouses. And when’s the last time you picked up $100 million in assets?

Does your team have the right stuff to go independent?

Some firms help advisers break away with as little as $50 million in client assets, says Mr. Straus. But he adds, “$400 million to $500 million is necessary to deliver a tailored client experience.”

Mr. Hummel concurs with those numbers but recommends advisers have a plan for getting to $1 billion after going independent.

Both men say teams should expect to invest $75,000 to $300,000 before they can open their doors for business—with real-estate decisions being a big part of the swing. Importantly, this range doesn’t include “leave behinds” like deferred compensation or employee forgivable loans. Yikes. Not them again.

Figure that it takes roughly six months for teams to build the infrastructure necessary to break away. And that’s once you decide to go for it, says Mr. Hummel, who notes that teams generally first spend a year thinking about it.

‘Why are you doing this?’

This is the one question that all clients ask, says Jack Petersen, the managing partner at Summit Trail Advisors. His firm opened for business in New York, Chicago and San Francisco in July and worked with Dynasty Financial Partners to structure the move.

According to Mr. Petersen, advisers who go independent must start with the mind-set that “I’m in this for the client.” They must be driven by a personal need to improve the client experience, which is possible he says, because “when you start brand new, you can leverage the latest technology.”

Now, back to my math for going independent.

To adjust for risk, I projected flat revenue at the RIA. What happens if you break away, the market crashes 37% (shades of 2008) and it takes five years to recover at the shop you create?

I created a scenario for a team serving ultra-high-net-worth clients. The head count includes three advisers, four support staff, a compliance officer and a chief operating officer.

Importantly, adviser compensation at an RIA equals the adviser draw (shown as $1.5 million in the table) plus whatever profits are distributed. Adviser draw, therefore, shouldn’t be compared with, say, 45% payouts from wirehouses.

In the year of the sale, the buyer and seller are likely to negotiate the adviser-draw number hard, with advisers pushing for the lowest number possible to maximize the enterprise value of their firm. Conversely, the buyer will argue, “We need to compensate somebody for the valuable services you provide clients, either you or your replacements.”

The numbers and scenario are mine, although I drew extensively on my discussions with Mr. Straus of FallLine Securities. I would also note that expenses vary according to capabilities, assets under management and target client niches.

My take: For whatever reason—risk profile, overhang of EFLs, the state of your career—the RIA route isn’t right for everyone. But given the potential to create better client experiences unencumbered by legacy technology, I think financial advisers owe it their clients to investigate the pros and cons of going independent.

“I’ll take Door No. 2, please.”

Norb Vonnegut built his wealth-management career in New York and now writes thrillers about financial malfeasance. Email him at norbert.vonnegut@dowjones.com. Twitter: @NorbVonnegut