When you dance with the devil, expect to get burnt.

So the saying goes. Having blindly danced into the 2008 global financial meltdown, the mega-brokerage firms are now paying the price.

Lower margins? Damaged brand names? Talent exodus? Affirmative. But, there’s more. It now appears that the top four brokerages are losing the target market they covet most: multi-millionaires.

According to a recent Reuters article, the share of high net-worth client assets held by the four mega-brokerages–Morgan Stanley Smith Barney, Merrill Lynch, Wells Fargo Advisors and UBS–has dropped precipitously since 2008. A report by research firm Cerulli Associates expects the decline to continue.

Once upon a time, the mega-brokerages dominated the affluent client segment. Burnished brand names and sterling reputations seemed to lend these firms the Midas Touch when it came to working with the affluent.

In 2007, the four mega-brokerages owned 56 percent of the multi-millionaire client segment. As of last year, that market share had dropped to 45 percent. Further, the decline is expected to reach 42 percent by 2014.

Ironically, this comes at a time when the brokerage houses have largely turned their backs on average American households with assets in the range of $250,000 or less. Relegated to call centers, dropped by their brokers, or simply overlooked in the brokerage’s current marketing activities, the average Joe’s of Main Street have been ignored by Wall Street, as the firms focus on attracting the nation’s wealthiest households.

The problem? The wealthiest households seem to have developed a sudden distaste for the very firms pursuing them.

Cerulli reports that boutique firms, trust companies and family offices have been gaining market share at the expense of the Wall Street behemoths.

Not encouraging news for firms like Merrill Lynch, which has been discouraging brokers from taking on clients with less than $250,000. Why? So that brokers have more time to find and work with million-dollar accounts.

Only, these million-dollar households are increasingly filling their dance cards elsewhere.

Cerulli’s report shows that these shifts in attitude were originally driven by Merrill’s takeover by Bank of America. As well as the tax payer bail outs of Morgan Stanley, Citigroup and UBS.

While the private client groups at some of the banks have benefited by the industry’s shifting tectonic plates, it is the registered investment advisory firms (RIAs) and family offices that have benefit most. These smaller, independent wealth management concerns grew assets under management by 18 percent in 2010. That compares with a two percent increase at the big four brokerage firms.

Just as depressing, if you happen to be an executive at one of the brokerage firms, is continuuing exodus of top talent . Increasingly, advisors are choosing to work at smaller, independent wealth management firms in a search for “greater stability or fewer conflicts of interest.”

For some time, the industry’s “free-agent mentality” held that an advisor could accept a big check, move to another firm, and then bring clients along for the ride. Even though clients rarely accrued any additional benefit–but for the fact that their financial advisor was more financially secure.

Now, many of the top advisors are opting to buy their independence instead of feathering their nests.

The destruction of brand image and perception suffered by the large firms has not helped matters.

Merrill, once among the proudest corporate cultures on the street, has seen an exodus of top talent since the firm was taken over by Bank of America.

Yet, this talent exodus is hardly exclusive to Merrill. Financial Advisor magazine recently reported a Charles Schwab & Co. survey of advisors at major brokerage firms. The results are stunning.

Growing numbers of brokerage firm advisors are considering a move to independent RIAs. Citing higher income, more freedom, and time to interact with clients as their primary motivation, the study was revealing in some of the following ways:

-51 percent of respondents found the idea of going independent appealing.

-65 percent of respondents under the age of 40, those advisors with the longest careers ahead, expressed a strong interest in independence.

-Repondents cited the ability to place a higher priority on client needs as a primary benefit to going independent.

-Advisors cited the ability to offer a broader set of investment products and services as potential benefits to joining an independent firm.

Very revealing. Yet, any way you look at it, the industry is shifting. The Reuters piece credits much of the shift to a more level playing field.

“Smaller firms are competing with Wall Street’s biggest banks in terms of investments and technology,” the article explains.

Makes sense. Technology has greatly enabled smaller firms to offer the same resources as their much larger competitors, while doing so within a more objective, independent framework.

The mega-brokerages have recruited sales skills, often at the expense of well-trained, less sales-oriented advisors who could not achieve the rigorous asset accumulation goals demanded by the firms.

Meanwhile, RIAs have been able to integrate many of these well-trained, finance-oriented advisors who were let go by the Big Four. They are provided an environment in which they can serve clients without the anxiety of production quotas, and the inflated expectations of branch managers who are paid a piece of the office’s assets under management.

Our firm is testament to this trend. Our clients have, and will continue to benefit by the available talent moving forward.

Because we can pay advisors more than the brokerage firms do for the work done on behalf of clients, our advisors are not pressed to accumulate three to four hundred relationships. They can offer asset, risk and wealth management solutions in a white table cloth setting–as opposed to a drive-through window approach.

Of course, as these trends evolve, clients will be the biggest beneficiaries. Technology, investment options, firm sizes, open architecture and degrees of specialization will continue to place the emphasis back on Main Street.

The average family wishes to achieve a modicum of financial autonomy. They aspire to do so without having to worry about conflicts of interest, isolation from the firm, lofty fees and questionable practices.

As the industry continues to offer greater choices, and technology continues to level the playing field, perhaps the balance of power will finally shift back to Main Street.

Still, don’t expect Wall Street to simply roll over.

In the movie Wall Street, Gordon Gekko explains that “Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit.”

Gekko was correct. Greed has been present at every inflection point in the evolution of Wall Street, and all of its ascendant industries. Let us hope that greed, in the case of the 2008 financial crisis as well as the continuing hangover, will serve as a reminder that Main Street must remain the nation’s top priority.

Anything towards that end is positive, and worth fighting for.