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History of Financial Advice

This page will explore the history of financial advice.

Many assume that personal financial advisors are solely focused on maximizing their own profits. This perception is often inaccurate.

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

Understanding the evolution of financial advice can provide insights into the improvements in the finance industry, which will allow investors to be better equipped to foresee future changes and adjust to shifting market conditions and regulatory settings.

History of Financial Advice

History of Financial Advice

Financial Advice Before the 1980s

Pre-1980s, the name of the game was only on huge commissions – for the personal financial advisor. The internet wasn’t available, and most people only chose stocks and bonds with few companies out there. Brokers tended to make high commissions on the stocks they sold.

However, in May of 1975, that all changes. May Day is when the SEC demanded that brokerage firms deregulate commissions. Before that, brokers charged a fixed price for any trade, regardless of the size. Small investors paid much more or just didn’t invest. Those with a high net worth had more access, but brokers bled them dry.

After 1975, it changed because trading fees now had to be set by the market competition.

Financial Advice in the 1980s

With the deregulation of commissions, broker fees continued to drop well into the 1990s. More discount broker companies were created to make it more accessible to invest for more people. The other brokers were threatened, but change was inevitable and already underway.

Financial Advice in the 1990s

The brokers who were mainly against the SEC’s mandate ended up adapting. They started to sell mutual funds, which saw an increase of 1,100 percent between 1990 and 2000. Mutual fund supermarkets were then born, so the spread of mutual funds on commissions declined. 

Financial Advice

From there, the first ETF backed by the SEC was born. Many companies waived fees, which forced brokers and product manufacturers to adapt. Brokers decided to offer asset allocations instead of individual funds. At first, they were commission-based, but they ditched that model and worked on fees.

In a sense, the 90s were a turning point. Personal financial advisers focused on diversification and risk management. They built customized portfolios for clients and addressed their needs instead.

2000 Financial Advice

With people having access to computers, advisers used TAMPs (Turnkey Asset Management Programs) to help them oversee investment accounts so that they could focus on other business areas. In a sense, the TAMP took care of billing, allocations, and account administration.

2010s Financial Advice

With the 2008 financial crisis, housing prices plummeted, and unemployment skyrocketed. The situation ended up disrupting financial services. Robo-advisors were on the rise, and most everything is automated now.

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.



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