It's 4 p.m. and the market just closed. You are in a great mood because you just had one of the best production days of your career. This morning you met with a client and after a two-hour meeting you both agreed that he should invest $300,000 in an annuity. You jumped through all the hoops the compliance department demanded, including the mountain of paperwork and signatures.

The client clearly understands why he is liquidating his aggressive growth mutual fund to purchase the annuity. He purchased that mutual fund three years ago when his financial situation was very different. He has a clear understanding of what was paid in commissions to purchase both products and any early termination penalties. He has since had many changes in his life and wants something more conservative with less volatility.

After meeting with you the first time a week ago, he went home and did his own research on the annuity you suggested. This morning, he had more questions. He truly wants to understand all the details about it.

He seemed excited to learn about annuities and wondered aloud why nobody had mentioned them before. You explained that all advisors are a little different in their approach but based on his current situation, you feel an annuity would be his best move. You also feel good because you were the first advisor who was able to get him to truly open up and show his overall financial situation. As you know, many clients keep financial secrets, but this client finally opened up.

So now you're trying to wrap up your day before taking your family out for a nice dinner, and the phone rings. It's Harry Smith, the compliance officer for your region. You know this won't be good—it never is when he calls. Like other advisors in your region, you have had your share of run-ins with him. Harry has never worked on commission. After speaking with him a number of times, you have concluded that he is truly lacking in his understanding of financial planning. But some middle manager made him the compliance officer.

Harry informs you that he just got off the phone with the client and the trade for the annuity will not be run. He spoke to the client at length and went over (again) all the early termination fees and surrender charges, and reminded him how much was paid to originally purchase the mutual fund.

He explained to the client that he could just switch to a more conservative fund in the same family and not pay any fees. Even though you covered all of this with the client, and it was not what the client wanted, he now has become very suspicious and nervous. Anyone would be when a "compliance officer" calls them. To add insult to injury, Harry then proceeded to lecture you on how to do your job.

You are so angry you can't see straight. This compliance officer, who you feel doesn't really understand the business, has just cost you a small fortune. You know that calling your manager won't help because even when she has tried to help you in the past, little was done. At this point the client is suspicious and you have lost the hard-earned confidence he had in you, not to mention thousands in commission. In fact, there are three losers here: You, the client and the bank.

Few would argue that banks are more conservative than wirehouses or independent firms. Most bank brokerage programs are more conservative for the very reason illustrated in the scenario above: They are run by someone who thinks like a banker and has never sat in the broker seat.

My firm (Rummage Group), looks at the FINRA report of all advisors we help. We have not seen any trend of higher FINRA issues at either a bank or wirehouse program. Most of the managers we deal with have worked at several firms and at least two models. They have told us many times that banks, in general, tend to be much more conservative than other models—at least from a compliance standpoint.

Bank programs also tend to have high turnover and they wonder why. According to one senior manager with 25 years at a large regional bank, "It's as if compliance runs the place." He went on to say, "When I was with a wirehouse, they were never this conservative and rarely let the compliance department bust trades and call the clients without speaking to the advisor first."

To be sure, not all banks are equal. Some do not second-guess every decision an advisor makes. And it doesn't appear that these banks have any higher rate of client complaints.

But the anecdotal evidence shows a lot of frustration. Just last week, I talked to an advisor at a mega-bank who finally decided to throw in the towel on the bank-based model after 10 years of service. Having only worked in the bank channel, she told me a long story regarding a busted trade very similar to the hypothetical one mentioned above. She could not believe that compliance would treat her with such little respect and that her management team could do nothing about it even though they agreed with her. She now wants to go independent and will never consider a bank program again.

Banks don't have to be this way, of course. But they are more afraid of lawsuits than anything else.

I think we can all agree there are a few rotten apples that call themselves financial advisors. Based on my conversations, I would estimate about 5% of the advisor population puts themselves before the clients. That means that 95% are honest people just trying to make a living by doing what is in the best interest of the clients they serve.

We do need some government oversight. And yes, we do need compliance officers. Indeed, not all compliance officers are bad, either. Most of them feel they are doing what is in the best interest of the client and firm—and sometimes the advisor too.

Bank-based programs, in many ways are like that parent who never trusts their children to make a decision. They are constantly hovering. The best parents—and the ones that end up with the happiest and well-adjusted children—are the ones that educate and then trust.

When it comes to helping clients, it is not a black-and-white issue. Most decisions are a shade of gray. Every client is unique in personality, goals, time horizon and financial situation.

An advisor can recommend two very different strategies to two very similar-looking clients. This is not a bad thing for the clients, firm or advisor. We have thousands of different investment options available to clients today. With every client being unique, and thousands of investment options available, it only makes sense there will be similar clients with different investment recommendations.

Jay Aman is another advisor who moved away from the bank channel to Waddell & Reed, a hybrid firm. Aman spent six years working for two different large banks. He says that he had a better experience at one of the banks more than the other, but "when it came to compliance... I felt like I was swimming upstream." He felt like he did about 50% more compliance paperwork at a bank than he does now, he explains.

He notes that he didn't leave the banks specifically because of compliance, but it was a big contributing factor.

When it comes to compliance, I feel strongly that no one should be hired until they spend a minimum of one year as an advisor. This way they will truly learn how hard it is when dealing with various personalities and all the unique client situations. And it will enable them to see things from the advisor's point of view.

That would give a compliance officer a greater appreciation for what happens in the field. They can learn how hard the advisors work to find the business and then educate and close the business. Turnover is very costly to any organization. The biggest reason advisors leave a bank program is either something the manager or compliance department did. Sure there are many other reasons, but the thing that most often puts them over the edge is a bad manager or compliance officer.

As with most legal matters, there are strict and loose interpretations of the law. Banks could be the best programs out there if they really wanted to be. But they need to make good hiring decisions and then trust their advisors. They should block and then get out of the way. They should have a clear understanding that no matter what they do, there will be client complaints and lawsuits.

Most client accusations are unfounded. You will lose more revenue because of lost production and constant turnover than you ever will because of settled lawsuits. Lost revenue is hard to study but settled lawsuits are not, so that is where they focus their attention.

Financial advisors know that in order to make a living in this industry, they must maintain a license. That alone will prompt the majority to do the right thing. Otherwise they will be out of the industry.

Stuart Barth of Barth Financial, an independent firm through Wells Fargo FiNet in Rockville Md., came from a large national bank program where he spent eight years.

He characterizes the philosophy of compliance at a bank with a rhetorical question: Why have a compliance process that takes two easy steps when you can have it take six cumbersome ones?"

By contrast, he says his current compliance department feels like a partner to help him conduct good clean business. At the bank model he felt many times like he was working very hard to secure new business and fighting compliance even harder to keep it.

Barth is convinced that the reason many bank-based advisors leave business on the table is because it is so complicated and time consuming to get compliance approval for anything beyond the very basics. He did not even realize what the industry allowed him to do because his bank did not make it available. In fact, he says that even if he were not doing well, it would be nearly impossible for him to go back to a bank model now because he now knows what you can really do as an advisor.

In fact, one case in point is the approval process that Barth went through to contribute to this article. It took him just three hours to have written approval.

If it were a wirehouse, it could have taken weeks. And if it were a bank, the approval may never have come at all.

Rick Rummage is the founder and CEO of the Rummage Group.