When was the last time you heard the phrase ‘Stock Broker’ in the UK?
Why is that? Well, it’s because when we say stockbroker, we visualize a person with a pinstriped suit. Screaming into a landline phone with an 80’s hair cut.
The stockbroker rose in prominence during the ’80s because of the ‘Big Bang’. The Big Bang is the informal name for the significant loosening of regulations around share trading, investing and market making in the UK, and occurred during the time of Prime Minister Margeret Thatcher.
This loosening of regulation resulted in many new private companies popping up. And a general increase in public awareness of the stock market.
Unlike in the US and other countries. The stock market has never been viewed as the de-facto place for the working. And the middle class to save their extra money while they worked. Savings accounts have remained very popular for this purpose.
Stockbrokers became a symbol of the ‘yuppies’, a slang term for the young rich professionals which appeared alongside this new boom in the financial services sector.
A parallel development that also catapulted the stockbroker into the public consciousness was the privatization and listing of several previously publicly held businesses such as British Gas & British Telecoms (BT). This led to a wave of retail investors buying shares for the first time in their lives – probably with the help of a stockbroker.
Fast forward 40 years
40 years on, and the private boom in financial services from deregulation has been overtaken by the disruption from new tech-based start-ups trying to eat the lunch of the large existing brokers.
The new wave of companies called their products ‘investment platforms’. This name makes a lot more sense, due to the way that humans have been slowly but surely deleted from the process of placing share trades.
Indeed, gone are the days of people shouting down phones to place an order. Bid and Ask orders are now matched peacefully (and at rapid speed) using electronic exchanges. Removing the need for a stockbroker employee to assist the trade.
An investing platform emphasizes that the real product is the technology, not the workforce, of the institution. This is very close to the truth, and also implies that the role of the service. Is to merely connect you with another party. This is again, quite a refreshing point, as an efficient investment is one made with as few middlemen as possible. Taking their own cut of the deal.
The Investment Platform
And so, as companies phase out the phrase ‘stockbroker’ and relaunch their ‘investment platforms’, we see the word slowly dropping from use in the UK. It will still remain in the lexicon of the investment community. Of this I am sure, not only is this a fairly recent change but let’s not forget that the average age of an experienced investor is quite high. And I doubt that after 50-60 years of us calling brokers one thing, that this will suddenly change overnight!
Just remember that when you’re researching brokers etc. That you should consider searching for investment platforms instead – as you may be actually missing several new providers by using the antiquated term!