Prior to 1601, fortunes were made and lost on the uncertainty of new business ventures. With very few individuals in a position to put their life savings on the line, big ideas to push society forward saw slim chances of coming to fruition.

The lack of support and protections made innovation near impossible. With no way to split the risk, it was all or nothing for the few intrepid investors.

That was before the Dutch East India Company became the first public company in the world to issue stocks as a means to spread the investing costs and risks. With this development, it became affordable to invest and grow wealth without putting it all on the line. Brokerages later emerged to facilitate these transactions.

In the four centuries since, investing has endured as one of the greatest ways to grow wealth and support progress. Aside from that one constant, however, more has changed than remained the same — and for the best.

The modern history of brokerages and the retail investor is one of democratization, or an ever-increasing shift toward accessibility and away from barriers to entry that limit consumer involvement.

Two primary challenges have historically (and still today) contributed to these hurdles.

The first is sophistication, or the notion that investing is simply too confusing and complicated for the average individual.

The second is money, the common conception that investing is best left to the Warren Buffets of the world, or that it requires a significant amount of existing wealth to start out.

Every generation or so, new advancements erode these obstacles a bit more. Each has played an important role in propelling personal finance forward, whether by reducing prices or increasing ease of use for the retail investor. With the brokerage industry moving continuously in the direction of increased accessibility, more and more Americans are able to increase their personal wealth and participate in economic growth through a variety of investment opportunities.

As a result, the investors of 2017 are a far cry from the obscenely wealthy, monocle’d men trading stocks in the coffee shops of a newly independent United States. Your savvy, hardworking coworker expertly diversifying her portfolio. Your scrawny 18-year-old nephew purchasing fractional shares in Amazon on his iPhone. Even your old-cat-lady neighbor, tucking a bit of money away each month in low-risk bonds.

As barriers to entry continue to fall away, M1 takes a look back at the milestones of the past 225 years that got us here and what the future may hold.

1792: The Buttonwood Agreement

Americans gather around a tree to establish a framework for the stock market.

Before Wall Street was Wall Street, there was a buttonwood tree. And on May 17, 1792, twenty-four prominent brokers gathered around the tree to sign its namesake agreement. The Buttonwood Agreement marked the birth of the organized financial market in the U.S., setting the standard commission at 0.25% and paving the way for the modern broker, an individual with the sole purpose of facilitating financial instrument transactions.

1840-1900: Communication Technologies

Investing no longer tied to a specific time and place. Buttonwood tree no longer required.

The invention of the telegraph in 1844, the transatlantic cable in 1866, and the telephone in 1876 revolutionized communication all over the world and opened new doors of opportunity for financial institutions.

These new technologies sparked more efficient and immediate communication between markets, allowing for more apt pricing by increased market size and available information.

1934: The Securities Exchange Act

New protections. Less risk. Collective sigh of relief from investors.

Five years after the stock market crash of 1929, President Roosevelt’s administration enacted a new set of laws regulating trades within the stock market in an effort to curb future financial crises.

Born out of the belief that reckless practices within the financial industry caused the crash, the Securities Exchange Act of 1934 created a new regulatory body, the Securities and Exchange Commission (SEC), to promote transparency, accuracy, and fairness while curtailing fraud within the industry.

1975: May Day

No set fees and the introduction of the discount broker.

In the years leading up to May 1st, 1975, the financial industry struggled with its traditional 2 percent fixed commissions. More than a decade prior, the courts had established in Silver v. New York Stock Exchange that the stock exchange was not exempt from anti-trust laws.

Five years later, in 1968, the Federal Trade Commission led by Chairman Paul Dixon pressed the SEC on why fixed commissions shouldn't be outlawed as an anticompetitive practice. With the high costs of trades deterring broad public participation, the SEC finally mandated deregulation of commission rates on the first day of May in 1975.

May Day also gave rise to discount brokers like Charles Schwab and TD Waterhouse. Public participation in the stock market skyrocketed, with nearly 25% more consumers directly or indirectly owning stocks within the first five years alone. By the beginning of the 21st century, commissions that averaged more than 80 cents per share in the early 1970s had dropped to only about 4 cents.

1988-2000: Rise of the Computers

Robots > humans. People enjoy fewer costs and easier access to investment opportunities.

Like the development and proliferation of new technologies at the end of the 19th century, computers allowed financial institutions to broaden their investor base and provided more effective communication between markets. In the early ‘90s, E-Trade and Scottrade paved the way for online brokerages, offering cheaper and simpler trades for anyone with a computer or phone access.

By the start of the new millennium, paperless account opening had taken center stage, and humans were no longer required to act as an intermediary in financial transactions. These new technologies had dealt a devastating blow to both key barriers as these efficiencies and savings were passed down to the retail investor. As a result, nearly 80 million households owned stocks directly or indirectly by the end of 2000.

Personal finance publications took notice of this shift and began regular coverage of online investing with editorials such as Theresa Carey's Digital Investor column in Barron's, originally called "Electronic Investor."

2010s: Mobile Trading and the Robo-Advisor

Everyone has a broker in their pocket. And the designs no longer suck.

The 2010s began with technology sprinting forward at a seemingly exponential rate, with smartphones continuing to build on the advances of computers from previous decades. Smartphones had reached 27% market penetration by 2010, ushering in an era of mobile investing and the rise of user experience. Robo advisors, which first entered the scene during the financial crisis of 2007-2008, began to thrive, offering consumers lower fees, intelligent automation and more flexibility.


Centuries of advancements in the brokerage industry have opened the door for more investors and, consequently, the proliferation of new technologies unfathomable a mere hundred years ago. The tools, conveniences and opportunities afforded to today’s average consumer dwarf that of even the richest, most powerful men and women of the 18th, 19th and even 20th centuries.

This exponential rise of innovation can be traced back to each individual’s ability to invest in the ideas of others, to both nudge society forward and grow their own wealth. Brokerages simply act as the middleman, seeking to provide the best possible investing solution for customers — new capabilities, more personalization, less effort, lower costs. The closer brokerages gravitate toward the ideal, the more people will participate and innovation will skyrocket.

We’ve certainly moved in that direction over the past 225 years, but we will continue to innovate until everyone is invested. With each advancement since 1792, we’ve chipped away at the deterrents that have kept investing out of the hands of more people.

In one week, on December 13th, M1 will announce the next step forward. We are excited to help lead the brokerage industry into a future of greater accessibility in personal finance and aid everyone in their quest to make their money work harder for them.

Check Out Our Announcement on December 13

Member of SIPC. Securities in your account protected up to $500,000. SIPC insurance does not protect against loss in the market value of securities. For additional information visit Securities and services are provided to clients of M1 by M1 Finance Inc., member FINRA/SIPC. Investments are not FDIC insured and may lose value. Investing in securities involves risk and there is always the potential of losing money when you invest in securities. Please consider your objectives and M1 fees before investing. Past performance is not a guarantee of future results. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdiction where M1 Finance Inc. is not registered.