Evolving business models present challenges but there is much to be excited about in retail stockbroking.

Predictions of the demise of the stockbroking industry have not only proved premature, but incorrect.  The truth is, retail stockbroking is an industry with a lot to look forward to and embrace.

But, like any industry or company, retail stockbroking operates in a competitive and changing environment with shifts in consumer behaviour, movements in the regulatory environment and new execution venues just some of the challenges.  However, while challenges will continue there are also clear opportunities.

Globally IRESS provides trading and advice solutions for a large number of retail stockbrokers and earlier this year our team in Australia engaged a selection of our clients to better understand the challenges and opportunities facing the industry and the technology required to meet these challenges.

Interestingly, the findings are almost identical to what our UK clients tell us which include:

  • rising compliance, regulatory requirements, communication and technology costs are putting pressure on margins.
  • the values and expectations of the recipients of intergenerational wealth transfer are likely to be different to those of the existing clients.
  • while stockbroking remains an important industry, there is an increasing focus on diversifying into strategic wealth advice and investment management services.
  • the transition of revenue models, from traditional transactional commission to fee based, is progressing at many firms.
  • digital service and engagement channels are becoming increasingly important to clients, while retaining personal service is also expected.
  • disparate technology systems lead to inefficient manual data entry (or re-entry), provide no single client record to underpin the service model and limit front office scalability.

Hearing directly from our clients was an insightful exercise and we have taken what we learnt directly into the formulation of our product and technology strategy to ensure we continue to meet the evolving needs of our retail stockbroking clients.

At the forefront of that strategy is our integrated wealth and trading solution which, with a single adviser desktop, seamlessly supports retail brokers operating in advice provision, discretionary management and execution services. In particular:

Advice creation - Tools to enable the end-to-end advice process supporting all entity and client types with the ability to perform risk profiling and suitability, and portfolio modelling and recommendations.

Portfolio management – One complete view of a client’s financial position across all assets, regardless of the type or product provider and the ability to design, construct and manage simple to complex portfolios suited to the client’s discretionary needs.

Order management – Comparison of portfolio holdings against pre-determined model holdings for any asset type in any currency with dynamic connectivity for order generation and trade allocation ensuring a fluid and transparent end-to-end process.

Client and business management - Collect, manage and store all client data, file notes and documents with alerts and actions to deliver clear and efficient workflow and compliance for the adviser and business

This may all sound like technology will play a more important role than people. We don’t think that’s what will happen. Our experience - and prediction - is that the demands of end-clients will continue to be both for technology and humans and the right combination will be crucial to enterprise success. We believe the retail stockbroking industry is well positioned to continue to evolve to meet these demands.