Now, a mixture of social and technological developments are likely to put the yuppie stockbroker on the endangered species list. The social developments are there for all to see. We are being increasingly exhorted to fend for ourselves financially, even by New Labour.
The state has more or less reached the limit of what it can do to provide for us all, which means more responsibility is being thrust on the individual. That means we have to look after our own pension provision, our own long- term care and our own financial security. The mesh in the safety net now has larger holes.
Add to that social imperative the technological developments of the cheap personal computer and the Internet - not only has greater financial responsibility been thrust on us all, but also we actually have the power to do something about it.
Internet penetration and the use of computers in the UK is following the path already trodden in the US. In percentage terms of market penetration we are now where the USA was two years ago and more of us have regular access to the Internet than any other two European countries put together.
You should already know that the Internet can be an incredibly powerful information resource. It is the ability to access this information, take advantage of the knowledge it confers, and make your own investment decisions, which will lead to the demise of many of the broad-braced brethren of the City.
Stockbrokers offer three types of service: execution-only, advisory and portfolio management. Unless you are sitting on a sum of money in the high six-figure region, the costs of having your portfolio professionally managed are unlikely to be worthwhile. Most of us must make the decision between execution-only and advisory services and, until the past couple of years, we had the choice of dealing over the telephone or by post.
However, in the past two years, the growth in Internet usage has seen an increasing number of stockbrokers setting up websites to attract clientele in cyberspace. Of the firms with presence on the Internet, a handful of UK brokers offer dealing services. They are not going to be in the minority for very long. The first online dealing services were little more than an alternate way of contacting your stockbroker. If you were going to buy or sell shares, instead of calling on the telephone, you sent what amounted to little more than a glorified e-mail.
On receipt of your message a stockbroker would read it and then make the trade for you. E-mail is obviously faster than the Royal Mail, but such services offer few attractions over existing telephone-based dealing operations.
What has changed in the past few months is that you can now execute your own trades. Instead of sending an e-mail to a stockbroker requesting the sale or purchase of shares, you are making the actual trade yourself. Through a link ultimately to the Stock Exchange's own computers you deal immediately at the price you see on your screen. The first such fully automated web-based trade in the UK market took place at 9.11am on Monday, 14 December, via the brokerage Charles Schwab Europe.
Let's take another look at developments in the US. Three years ago, Charles Schwab launched its online trading venture. It is now the biggest in the USA with 2.24 million online accounts and $174bn (pounds 110bn) under management via the Internet. In January, Schwab clients executed an average of 153,000 electronic trades every working day.
Schwab is not alone. There are now 112 online brokerage firms in the USA, offering individuals the ability to trade in stocks and shares. Between them they have almost 8 million individual customers.
Christos Cotsakos, chairman of the US's third largest online firm, E- Trade, says: "The old traditional brokerage model assumes people are dumb. They get charged a lot of money for the advice and counsel. Our model is: people are inherently smart. We liberate you with information, charge a value-added price, let you become self-directed and have you handle your financial services."
Charles Schwab, through the purchase two years ago of Birmingham-based Sharelink, now Charles Schwab Europe, is at present the leading online brokerage in the UK. E-Trade is also aiming at UK investors, having taken control of an online broking business, Electronic Share Information, in June 1998. One unlooked-for outcome of the explosive growth of individual involvement in the stockmarket in the USA is the "day trader" phenomenon. These are the people for whom a long-term investment is one they are still holding when the market closes.
This kind of frenzied market activity helped to propel share prices in the USA to record highs and, in particular, has allowed firms involved with the Internet and the worldwide web that make little or no profit to gain market capitalisations on a par with some of the largest and most profitable companies on the market.
Such activity goes against the accepted wisdom of shares being a long- term investment. Indeed, it is highly unlikely to be the way to long-term financial security, since day traders are solely relying on movement in the capital value of the shares. It takes no account of the income potential of the shares or of the quality of the business. If you plan on building a nest egg for the future, this is not the way to behave.
UK Stockbrokers Online
Real time online trades
Charles Schwab Europe:
Stocktrade (Brewin Dolphin Securities):
Barclays Stockbrokers*: www.barclays-stockbokers.co.uk
*launching in April
Other broking services
Caves-on-the-net (Cave & Sons):
Fastrade (Torrie & Co): www.fastrade.co.uk
James Brearley & Sons: www.jbrearley.co.uk
Xest (Charles Stanley): www.xest.com