What Lies Ahead For Stock Broking As An Industry In The 2020s?

May 18, 2023 at 14:16 PM EDT

It is undeniable: the world of stock broking is rapidly transforming – and new and emerging technologies are bound to leave their mark in the 2020s and beyond. Technology is changing how stocks are traded, enabling the trading of new digital currencies, and providing investors with new opportunities. But, in this fast-changing scenario, what will the role of stock brokers be?

In this guide, we’ll dive into what lies ahead for the stock broking industry as a whole and how new technologies are taking the sector by storm. Let’s get started!

Retail Investors Are Changing Investing Dynamics

New technologies have kickstarted the rise of retail investors. In turn, retail investors are changing the way investing is done. This class of investors is completing their trades online and using investment research tools more often than ever before.

This has caused shifts in demand and supply dynamics, as well as positive growth opportunities for retail investment firms looking to capitalize on this trend. On the other hand, new investors and those with a small investment capital no longer need to rely on a middleman – the figure of the stock broker – to get started with investing, which may put the job of stock brokers at risk.

Investment Research Is Now Accessible to All

Investment research was once an area of expertise that belonged to the pros only. Today, anyone with a good laptop and internet connection can access reliable stock analysis and investment research tools in seconds.

These online resources not only provide data-driven insights into trends in different industries but they also allow investors to access critical information about virtually any company. What’s more, advanced analytics platforms provide portfolio tracking tools that allow users to monitor various stocks.

Additionally, these sites offer ranking comparisons between stocks from all over the world in order, which enables retail investors to make more informed decisions about their assets.

The E-Brokerages Market Is Growing at an Unprecedented Rate

With over $10 billion in revenue reported just in 2022, there is no doubt that the e-brokerages market is expanding at a rapid rate. This unprecedented growth is certainly connected to the rise of retail investors and the need for more accessible investment tools.

However, the industry is now going above and beyond to make the experience even more exciting and engaging for users. Today, apps provide gamification options and even allow traders to test out their investment strategy with fictional capital. All of this is attracting a greater number of investors to these easy-to-use apps and e-brokerage platforms.

Fintech Companies Are Providing Investors More Opportunities

The fintech industry has witnessed phenomenal growth in recent years and, certainly, the world of investment has not remained immune to these changes.

Options such as SoFi’s stock investment online tools, which leverage advanced algorithms, are now challenging traditional brokerage methods. What’s more, these companies are providing individuals with online investment services, faster trades, more affordable account fees, tailor-made advice, and 24/7 customer support.

Automatic Trading and Trading Bots Are Becoming a Valid Alternative

Automatic trading and trading bots, which use algorithms to pick stocks based on criteria set by the user, are becoming a more valid alternative for investors. Automated approaches can help increase returns while reducing costs associated with brokerage fees.

For instance, it’s now possible for users to design their own portfolios based on their particular needs and risk aversion. Using dynamic tools that consider all variables, fintech platforms can offer tailored solutions with optimized returns.

The Role of Stock Brokers Is Changing

While it may seem that technology is englobing the broking industry as a whole, stock brokers are still needed. But their role is certainly morphing, from simply selling stocks to offering financial advice.

What’s more, they will still be needed by major investors with complex portfolios. Stock brokers can provide vital advice on taxation and specialized research to these investors, which a one-size-fits-all algorithm can’t match.

Although it is impossible to foresee the future of the stock broking industry, the way new technologies are being implemented and adopted tells us that emerging tools, AI-powered algorithms, and automatic investing will always be more prominent. This means that stock brokers must adapt quickly and focus more on offering solid financial advice and helping investors achieve their goals.

Featured Image: Freepik @ DCStudio

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