Traditional Stockbrokers On The Rise

by Caroline Maxwell, Investors Offshore.com

13 June 2001

It is no secret that online discount brokers are having a lean time at the moment. Although everyone has had a tough year, investors stung by the events in the technology sector have decided that it is safer under the protective wing of a full service broker or wealth manager who has the knowledge and experience to run their winners, cut their losers, and never put all their eggs in one basket.

When their service debuted in the mid-nineties, E*Trade promised that one day we would all invest online, and there was a point when traditional stockbrokers feared for the future. Now, however, the roles are reversed, and many are wondering whether the newer, online contingent have deep enough pockets to survive the famine.

According to several recent reports there has been a significant upsurge in the popularity of full service stockbrokers, most notably in the UK and Europe, where major international brokers are scrambling to open new branches and begin dishing out advice. Online brokers on the other hand, are having to turn to parent companies, strike partnerships with advisory services, start their own investment banks, or risk going under as a result of declining trades.

However, there is hope according to experts, who believe that human nature may rescue them from their predicament. It's an age old scenario (think Dutch tulips, the South Sea bubble, and then more recently the technology surge)- when the markets are on the rise, the man on the street is invincible. If, as the prevailing wisdom suggests, America manages to pull back from recession, and carries the rest of the world on its coat tails to a new digital dawn, many believe that DIY investing online will be back on top again, and the current investor hunger for advice will be a thing of the past.

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