Financial Services _Çô Client Services RFC223 Lecture Notes - Lecture 5: Market Trend, Commoditization, Fiduciary
31 Oct 2016
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Document Summary
Discount brokerage is a non-advisory offering dedicated to the self-reliant investor. Assets in the channel are billion, 24% total brokerage assets. The proportion of discount vs. full-service (advisory) assets has fluctuated between 18% and 24% since 2009. This volatility is largely due to market effect, with equities accounting for a large proportion of discount assets, and the high use of leverage. The channel has 5. 3 million accounts with an average size of ,000, but is heavily reliant on the small proportion of active traders for commission revenue. The channel has struggled to increase client engagement, and has attempted to do so primarily with commission reductions, but also with technical analysis and financial planning tools. Spread revenue: discount broker taking cash balances and lending it to the bank parent who pays the discount broker interest. As a transaction business model, discount brokerage was heavily reliant on commission revenue during its high growth phase, and enjoyed significant operating leverage.
