The cynic in me really wants to suggest that the price retail investors will pay is that they may run into a broker who is able to pass an ethics test. Accreditation is a function of every industry but the financial sector has fought it at every step. In part, I think that this resistance is the realization that they are largely obsolete. In the last ASX Australian Investor Survey, only 27% of people stated that they use a broker or financial advisor to make to make a financial decision in the past 12 months and this percentage will only decrease as a new generation of investors/traders make use of the available technology and more passive forms of investment such as ETFs. The threat of increasing costs is an empty one since the quoted 100% failure of Bell Potter advisors will in no way impact upon online brokers who transact without giving advice.
This change in investor demographic and decision making is being driven by a wave of new first-time investors – in the last year some 265,00 new investors hit the market. The vast majority of these are under 40 – so the od days of dealing with someone you went to Scotch College with and talking about buying BHP whilst having lunch at the SavagClub are long gone. The piy is that the broking community and in particular older firms such as Bell Potter don’t realize their increasing irrelevance and the increasing irrelevance of their way of giving advice.