While the digital economy has created some incredible opportunities in the world of commerce, its rise has also sounded the death-knell for a handful of traditional markets and jobs.
You may well believe that stockbroking belongs to this group, particularly given recent advancements in technology and the emergence of fintech.
However, stockbroking continues to thrive in the digital economy through a number of various guises. In this post, we’ll explore this further while appraising the real role of stockbroking in 2018:
What is the Current State of Stockbroking?
As the digital economy has grown, we’ve seen stockbrokers diversify significantly while altering everything from the nature of their service to its delivery.
More specifically, we’ve seen a sustained rise in the number of online trading platforms, which combine typical brokering service such as connecting investors with various markets and executing trades. If you look at the traditional definition of stockbroking, which represents a service that gives retail and institutional investors the opportunity to buy and sell assets, you’ll see that this is now primarily available online.
These entities also offer access to real-time and historical analytical tools, while simultaneously lowering commission fees removing many of the barriers to entry that surround the financial market.
So, while clients can continue to access traditional stockbrokers and the class, full service that they deliver, this is considered to be less efficient and cost-effective in the digital age.
Are Some Stockbrokers Breaking this Trend?
This is not to say that more traditional stockbrokers are not able to succeed, however, particularly if they’re able to overhaul their service and align it with the demands of modern traders.
To this end, we’re seeing a number of established wealth management firms create new and progressive stockbroking models, in a bid to create a more diverse and competitive service. Take WH Ireland, for example, who recently announced that they were amending the structure of their broker bonus pool to ensure that payments are based on profit rather than revenue.
At the same time, this firm is set to introduce stringent clawback rules, in a bid to enhance the relevance and the perception of the industry while also delivering direct benefits to clients.
The combination of stockbroking services with a wider range of wealth management guidance is also a key industry trend, as it has created companies that are focused on optimising the wealth of individual clients across the board (rather than simply enabling them to trade on the financial markets).
This is especially important in the current financial climate, with state pension funds increasingly stretched and private fund liabilities having recently peaked at £7.6 trillion.
The Last Word
While the traditional stockbroking market may have been challenged and changed by the rise of the digital economy, the demand for this type of service remains stronger than ever.
The key thing for modern service providers is that they offer a diverse and comprehensive value proposition, and one that hopefully combines traditional stockbroking with additional wealth management options.
