The algorithm ate my broker – but should it?
Brought to you by BULLS AND BEARS
Bill McConnell
Bulls N’ Bears Dollar Bill has been using (but often ignoring) advice from the same broker for nearly three decades. George was an old college friend who wasn’t very good at anything, but somehow he turned a shared love of cheap wine and bad poetry in the Club’s back room into a career dispensing financial advice to a narrow circle of members. None of us cared that he was a Muppet because he was our Muppet.
The ritual with Georgie was as tiring as the carpets in the Club. One of us was leaning against the leather, sipping some brownies and asking for advice. It was free and probably just as valuable. To be fair to the old boy, he had the sort of strike rate where a tenth could do well.
“Buy gold” was his constant contribution, and it was a phrase that required little thought. He also liked to chirp about “short the banks”, even though most of us suspected there was a personal grudge doing the heavy lifting there. Polite nods would follow throughout the room, along with an unspoken acknowledgment that our children could probably offer better understanding.
But the real theater happened over the phone. Dollar Bill, like many others, would reach out with a trade idea to get approval or at least “why not” constructive advice. Well-intentioned George would hum thoughtfully, pretend to be knowledgeable, and then do exactly as he was told, charging a very reasonable commission for good measure.
For a while this pantomime worked. The illusion that wisdom was on offer and, perhaps more importantly, that Club fees might one day be paid was comforting. But markets have changed faster than those of us who trade them. What was once tolerable has now become ridiculous.
The man who once provided little more than rote stock tips has been replaced by systems that don’t pause for breath and execute for pennies on the dollar. And even when George came across something useful, most of us would just hang up and type the instructions into CommSec, saving us the worry of getting half-drunk. I know, I know.
Broker advice and practice are gone like the fax machine, bowler hat and ashtray on a Qantas flight; but Dollar Bill still has one of each of the first two. In its “597 Report”, ASIC estimates that approximately 85 per cent of all transactions in Australian listed shares now originate through programs and applications. The vast majority of market-moving quotes, cancellations and orders are now triggered by an algorithm somewhere in the cloud.
But even with all this automation, there are still weird people who cling to commercial blotter like driftwood. Brokers haven’t disappeared completely; A quick look around the bars of Sydney’s Australia Square will confirm this point. But these days, at least when it comes to “buying and selling,” brokers are less talked about and less served by the algorithm.
Globally, the numbers are just as stark. JP Morgan estimates that more than 80 percent of global equity turnover is now programmatic, and European research house GreySpark Partners, a major advisor to investment banks with 1000s of employees spread across 40 cities, claims that algorithmic and quantitative strategies account for around 70 percent of European equity market turnover. Meanwhile, the advice has become a little more refined than small talk.
There were almost 28,000 licensed financial advisors in Australia in 2019. By mid-2025, fewer than 15,500 remained. To be fair, the AMP scandal charging dead people consulting fees and tighter regulations has taken a massive hit to the industry. But even allowing for this, the numbers represent a 40 percent collapse in just over five years. With the possible exception of taxi drivers, it is hard to think of another profession that has been technologically euthanized in such a short period of time.
Treasury’s 2023 report; “Quality of Recommendation Review” called it an “accessibility crisis.” Recommendations don’t get any scarcer anymore; it now looks more and more like a luxury good.
The human pause (that delicate gap between thought and business) disappears by becoming automatic. Armed with dashboards and dopamine, retail traders can push a young explorer 40 percent higher when the morning tea cart rolls into the Club. Often there are no new tests, just new labels.
CommSec now has more than three million users, almost half of whom are under the age of 40, and the vast majority of them conduct transactions without even making a single conversation. Add in Stake, Superhero and a dozen others, most of which Dollar Bill learned from his 19-year-old son; There are now more than four million app-based accounts in Australia, driving nearly three-quarters of retail flow. What used to be a phone call has become a finger swipe, not unlike the Tinder thing.
Today’s brokers increasingly survive on the oxygen of corporate financing, raises, IPOs and placements. Global ETF assets exceed US$13 trillion, while Australian ETFs manage approximately A$300 billion. Instead of recommendation there is automation, instead of instinct there is index.
But despite all this, some of Dollar Bill’s best trades still come from a hybrid model — a human whisper executed cleanly by a Club member through the app. And yes, from time to time Dollar Bill still follows a broker’s advice; however, he does not follow George’s advice.
ASIC’s August 2025 consultation paper on trading systems (Paper 386) proposed kill switches for runaway algos, and the US SEC has issued similar circuit breaker rules. When the plumbers start worrying about the pipes, you know the water is flowing too fast.
This doesn’t mean everything is bad. Information has never been freer, access has never been easier, and the new generation of investors is sharper and faster than Dollar Bill’s old-school party. But the tables have turned and advice givers have now become an endangered species.
When Dollar Bill conducted this dissertation alongside several knowledgeable colleagues at the Club, he shook more than one cage. While some laughed, especially brokers and good ones, they wanted to know whether Dollar Bill truly believed the human advisor was done. The truth is more complex, as we discussed late into the night.
Yes, algorithms dominate the tape. Yes, 80-85 percent of equity capital volume globally is now machine-generated. And yes, advisor numbers have collapsed, with more than half the country trading via an app while waiting for results.
But markets are not just about math. Their behaviors reflect panic, ego, denial, fatigue, optimism, and fear, and none of these have automatically gone away. In fact, if anything, they are reinforced.
When volatility rises, people don’t open an algorithm; They open a whiskey. They call someone who knows the difference between a barter and a tantrum.
And this is not nostalgia. Three of the biggest money managers on the planet—Vanguard, Fidelity, and Russell Investments—all released versions of the same finding: Clients were advised to outperform self-managers by 2 to 3 percent per year, largely because a human advisor kept them from making emotionally devastating decisions.
Panic selling, overtrading, and momentum chasing require constraints that no algorithm can provide. The broker’s greatest value is often not in executing a trade, but in blocking it.
Try to get CommSec to talk you out of this terrible idea. All you get is a pop-up box and a “How was your experience?” questionnaire. Try navigating a settlement without people. Try reading management’s body language from an algorithm during a site visit. Try calling an app after hours to ask if a CEO looks nervous or if the third row of the drill core tray looks suspiciously light. There are things machines can do – speed, precision, pattern recognition – but intuition still lives in the human spine.
There’s also the long lunch factor; The part that academics never model. Markets are built on relationships; whisper networks, dinner conversations, misread signals and gossip you hear at the bar. Cities have gone bankrupt on rumors and fortunes have been made on the shared intuition of a good filet mignon with pinot.
Maybe the algorithm didn’t eat my broker, just the routine. The rest—judgment, context, restraint, and the ability to read the room—is still in humans. And while poor old George will always be replaced, some of his counterparts, fewer and fewer each year, still offer something the machines don’t.
Only humans can guide and provide a filter to the endless chatter. Only humans can stand between investors and their worst impulses. In a market increasingly driven by algorithms and speed, this service is perhaps the rarest and most valuable.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
