In its 2012 Superbowl commercial, E*Trade depicts its savvy talking baby hanging with his dad in the infant ward of a hospital. Dad is worried about the financial future of his brand new daughter, the talking baby's little sister. “Relax. Relax. Look at me, look at me,” says the baby. Then, when he’s got Dad’s attention, “Three words, Dad: E*Trade financial consultants,” he says. “Just walk right in and talk to ‘em. Dude, those guys are pros. They’ll hook you up with a solid plan.”

It used to be that direct brokerage platforms like E*Trade were just that: direct to retail clients, no intermediaries, no advice, strictly do-it-yourself. But these days, everyone is in the financial advice business. Direct platforms like E*Trade, Schwab, Fidelity and TD Ameritrade now offer managed accounts, with a warm-blooded “relationship manager,” often called a financial consultant, who can walk clients through investment choices, help outline a financial plan and determine a proper asset allocation.

What’s more, their share of managed account assets is growing. According to a Cerulli Associates report out Wednesday, the direct channel accounted for 7.1 percent of the overall managed accounts industry, or $169 billion, in the fourth quarter of 2011. That’s up from 2.4 percent in 2001. And the research group estimates that their share of this market will climb to 9.3 percent by 2013. To be sure that’s still just a fraction of the market. But consider the share of managed accounts assets overseen by Wall Street wirehouse firms like Morgan Stanley will drop to 50 percent from 55 percent today, Cerulli says.

“It’s competition but in an indirect fashion,” says Katharine Wolf, associate director at Cerulli Associates. “When you think about the lifecycle of the client, they might start a self-directed account at a Vanguard, Fidelity or Schwab. In the past, when the account reached a certain size, or there was a rollover, they might decide they needed more advice and seek out a traditional financial advisor. Now, these firms are attempting to keep the client in the model by offering more of what they need when they decide they need guidance.” So it’s not that they will be stealing clients away from wirehouses; these direct clients just might be less likely to seek out a wirehouse advisor when they are looking for advice.

So what makes these platforms “direct” if they’re offering advice? Three things, says Cerulli. First, the client’s first contact is with the firm, not a financial advisor. Second, instead of a payout on generated revenues, “advisors” are paid a salary plus a bonus to compensate them for things like client satisfaction, retention and new assets. Three, all advice is corporate-driven—it is highly standardized and controlled by the corporate parent. The advisor can’t tailor his or her advice to the individual client and any changes to recommendations have to get run back through the home office, says Wolf.

While many wirehouse advisors also hew very close to home office model portfolios, they still have far more flexibility to deliver bespoke advice. “They have many more choices, levers to pull. They can manage a portfolio of individual securities provided they meet the firms’ requirements.”

Another difference: the target client of direct platforms is usually affluent or wealthy, with between $100,000 and $2 million in investable assets, not necessarily high-net-worth. But most financial advisors would not turn their noses up at clients on the upper end of this scale.

Captive Clients, Better Performance

Cerulli says the wirehouses will maintain their lead in the managed account business because of the infrastructure they provide to support their programs—research, large home office teams, marketing materials. But the direct platforms do have a couple of big advantages.

For starters, over two-thirds of all investing households already have a direct brokerage account, and a portion of very affluent investors consider direct accounts their primary investment advice provider. One third of households with $500,000 to $5 million in investable assets are using direct platforms as their primary provider. And between 11 percent and 28 percent of individuals with over $5 million in investable assets use a direct account as their primary account, Cerulli data from 2010 and 2011 suggest.

The data also suggests managed accounts that are tightly controlled by a home office perform better than those managed by a financial advisor with a lot of leeway. Packaged programs outperformed open programs in six of the eight time periods between 2008 and 2010 studied by Cerulli. In 2008, packaged portfolios controlled by a home office lost 30 percent on average whereas open portfolios lost 34.7 percent. Largely, this is because tightly controlled managed accounts allow for less panic-driven turnover. “It inherently ensures discipline,” says Wolf.

The cost of direct provider advice is also lower. Typically firms charge 1 percent or less on assets on a direct advice platform, whereas traditional advisory programs charge 1.5 to 2 percent, partly compensation for the advisor and the managed account sponsor.

“I think the wires will definitely maintain their lead,” says Wolf. “They have 15,000 advisors out there who are able to sell these managed accounts programs. The direct firms don’t have that, nor do I think that would be somewhere they would go, because they still have clients on their books who aren’t interested in ongoing investment management. The idea is to offer both.”

Of course Bank of America/Merrill Lynch has Merrill Edge, its own direct platform targeted at investors with fewer than $250,000 in investable assets. Merrill Edge just rolled out a new managed accounts offering on Feb. 29. Wells Fargo has WellsTrade, its online trading platform, and Wells Fargo Advisor Solutions, its mass market advice service. UBS and Morgan Stanley Smith Barney are unlikely to roll out anything similar, however, because they really want to be seen as high-touch providers for high-net-worth households, says Wolf.

Still, the competition from direct platforms is real. Some of them offer pretty sophisticated wealth management services, including attorneys on staff that will review a client’s estate and trust documents. “The level of service is approaching what a traditional advisor could offer, mimicking the advisor experience. It is a dedicated one-on-one relationship, who is a quarter back in all of the services they might want to work with internally.”

Will RIAs that custody assets with the likes of Schwab and Fidelity complain about the competition? Wolf says no. “When we look at the types of clients attracted to an RIA as opposed to the direct model, RIAs tend to work with clients who are very trusting of the relationship they have with the RIA, and tend to be very advisor-directed, and tend to turn over all decisions to the RIA. The direct model works well with people who are advisor-assisted or want advice for a particular event. The good RIAs aren’t going to care. There are plenty of clients to go around.” RIAs also tend to operate in the higher net worth reaches.

In any case, there will always be clients who want a local advisor who doesn’t work for a big firm, or someone they can golf with. The E-Trade baby may be cute, but it’s unlikely he’ll keep a tee time with you.