The public has lost confidence in traditional brokers whose fees and commissions became all the more glaring during the Bear Market of 2008. The Lehman bankruptcy last September shook up the concept of entrusting others to be fiduciaries on your behalf and giving you advice.
Today, investors are choosing alternatives to Wall Street banks that charge for financial advice and executing trades, sometimes with opaque pricing on fees and commissions. Many former wire house bankers have left their Wall Street jobs since the turbulence of last fall and have taken clients with them, creating investment advisory boutiques that direct new trades to online and discount brokers such as Charles Schwab, TD Ameritrade, E*Trade and the privately held Scottrade. There is now a trend toward self-directed investing that has come from the loss of trust in Wall Street. Retail investors are finding their information from many sources and making the trades themselves, eliminating fears about edgy and iffy banks or potential swindlers such as Bernard Madoff, who is accused of engineering a US$50B Ponzi scheme. Charles Schwab, the largest US online brokerage has attracted US$9.2B of net new assets in December alone.
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