The Role of the Retail-Direct Channel in a Growing Financial Planning Profession

The Retail-Direct Advisor: Retail-direct advisors work directly with consumers of all income levels. Key characteristics of the retail-direct advisor:

• Has the opportunity to directly influence how the American public directs their investments.
• Often work in call-centers handling large volumes of calls per day.
• Offers advice to vastly different consumers on a daily basis.

Source: CFP Board Guide to Careers in Financial Planning

Retail investors make up the largest sector of investors in the American market, one which has grown significantly over the past few years, fueled, in part, by the evolution of lower cost products and services by companies like Charles Schwab and Fidelity Investments and Vanguard. And these investors increasingly are seeking advice beyond just their investment portfolios.

This retail-direct channel employs advisors who play an essential role in how many Americans receive financial planning advice. Many of these employers strongly prefer, or in some instances require, CFP® certification for client-facing advisor roles — a selling point for firms looking to attract new clients. Roles in the retail-direct channel offer the stability and growth paths of large firms, while providing direct experience with a wide variety of clients — aspects that make the channel attractive to many advisors.

An Increased Desire for Credible Financial Advice

The growth of the retail-direct channel is tied to the increased demand for financial advice from the American public, along with the increased interest and accessibility of new financial products and services. In fact, according to data from Fidelity Investments, appointments at Fidelity Investor Centers were up 33% year over year as of Q3 2022.

“We know this deeper planning engagement is timely and needed now more than ever, especially given today’s climate,” said David Coyne, Head of Distribution at Fidelity Investments “[This is a] key reason Fidelity continues to expand and ensure that local branch teams are supported by a dedicated team of specialists.”

An April 2021 survey from Charles Schwab discovered that 15 percent of all current U.S. stock market investors said they first began investing in 2020, a cohort it called “Generation Investor.” It also found that 82 percent of this same group were interested in access to an investment professional to provide ongoing help and guidance. CFP® professionals have an important role in working with new investors to help them understand the complexities around the mechanics of investing and how to effectively manage financial risk.

“Financial planning has evolved from being a product to being an ongoing process over these last 10 years,” said Stephanie King, Managing Director Wealth Solutions at Charles Schwab. “Critical to that evolution has been a shift from planning as simply a discovery tool or sales funnel to a true roadmap that guides clients over the long term.”

Addressing a Broad Variety of Financial Planning Needs

With retail-direct firms increasingly staffing their teams with CFP® professionals, their clients have access to CFP® professionals even from the first engagement— an arrangement that plays an important role in increasing the public’s access to competent and ethical financial advice, as well as ensuring client satisfaction.

Advisors who start in the retail-direct channel often support clients from call centers, connecting with their clients by phone or video. The phrase “call center” may have negative associations for some advisors. In reality, CFP® professionals who work in call centers or serve clients remotely have the opportunity to advise a diverse range of investors with varied portfolios, different levels of financial assets, preferences and strategies.

CFP® professionals in the retail-direct channel advise clients on a broad spectrum of wealth management topics including investment planning, retirement, risk management & insurance planning, estate planning, tax strategies and more. This can provide a valuable opportunity for both early career and tenured CFP® professionals to develop subject matter expertise, while continuously building client-relation skills in a growing, supportive environment.

“Whether they first reach us digitally, through a phone call or a visit to one of our 200 nationwide investor centers, clients come to Fidelity from a wide variety of life stages and with a range of needs,” said Coyne. “Our teams build relationships with these individuals and their families in order to understand their needs and provide them with the education, advice and insights to put them on a path to achieve their goals.”

Advisor Development Opportunities in the Retail-Direct Channel

The stability and resources provided by a larger firm, as well as the ample numbers of existing firm clients who are interested in financial planning services, are reasons some financial planners find the retail-direct channel a good place to build their careers.

Many advisors in the retail-direct channel also administer 401(k) plans for employers, giving these CFP® professionals a direct connection to many investors who might not traditionally seek out financial advisors. Often, these investors have accumulated significant wealth without the services of an advisor, and may also possess investable assets held at other firms. Once an advisor gets in the door with these clients through their 401(k) account, they may find opportunities to work with those clients to address their entire portfolio.

“I tried a different model, and it did not work for me,” said Shawn Liu, CFP®, Vice President and Financial Consultant at Charles Schwab on the value of the retail-direct channel for early-career CFP® professionals. “I love the fact that I can now focus on taking care of clients instead of marketing. I think this model is the best way for a young person to enter this profession.”

Typically, retail-direct firms provide resources and continuing education programs to ensure that CFP® professionals are providing the best advice possible.

“Whether it’s Fidelity’s student loan repayment benefit, tuition reimbursement, or generous parental leave policies for advisors growing their families, we know that how you value your team has a meaningful impact on driving a supportive culture,” said Coyne of Fidelity’s benefits. “Additionally, the beauty of a CFP® professional’s career at Fidelity is the boundless opportunity to not only apply your skills as a financial professional but expand outside of the day-to-day work and learn new areas of Fidelity's business.”

“Schwab provides tuition reimbursement for mid-career and advanced career designations that promote specialization within the financial planning profession in areas such as special needs, insurance, behavioral finance, trust and estates,” said King. “The CFP® certification is table stakes for any professional who is a fiduciary and required to act in the best interest of the client.”

CFP® professionals attracted to working with a broad range of client needs from the accessible and low cost to the sophisticated and complex within the stability of a large firm may find exciting opportunities within the retail-direct channel.

“Building an investment strategy remains a foundational element of our work. But today we're able to offer clients so much more — including bringing the peace of mind that comes with having a well-defined plan to help them meet their life's goals.”

The Retail-Direct Channel’s Impact on the Financial Planning Profession

CFP® professionals working in the retail-direct channel benefit from engaging with a variety of client issues that can provide a unique insight into the needs of investors. Particularly for early-career advisors, the holistic approach now embraced by the retail-direct channel is invaluable for building client relations skills while perfecting subject matter expertise.

As Fidelity’s Coyne says, “building an investment strategy remains a foundational element of our work. But today we're able to offer clients so much more — including bringing the peace of mind that comes with having a well-defined plan to help them meet their life's goals.”

The retail-direct channel's connection with millions of retail investors has played an important role in making financial planning advice accessible. These firms have helped many CFP® professionals develop rewarding careers, while enabling investors to increase their wealth and financial security. The continued success and growth of the retail-direct channel has empowered both the growth of the financial planning profession and the diversity of Americans served by financial planning professionals.