The Middleman Is Gone. Here's What He Used to Charge You.

In 1985, if you wanted to buy 100 shares of IBM, you called a stockbroker. Not an app. Not a website. A human being, typically in a suit, sitting at a desk somewhere, who had access to the market and you did not. He placed the trade on your behalf. For this service, you paid a commission that could run anywhere from $30 to well over $100 per transaction, depending on the firm. At Merrill Lynch, the full-service rate at the time could reach 2% of the total trade value.

You didn't question it much, because there was no alternative. The broker had the terminal. The broker had the license. The broker had the phone line to the floor. You had a checkbook and a polite request.

That world is gone. Completely, almost surgically gone. And the story of how it disappeared — not just in finance, but across nearly every major purchase Americans make — is one of the quieter economic revolutions of the past thirty years.

The Architecture of Access

To understand what the internet actually dismantled, you have to understand what those intermediaries were really selling. On the surface, they were selling a service: executing a trade, listing a property, arranging a car purchase. But underneath that, they were selling something more fundamental — access to information that you couldn't get anywhere else.

The stockbroker knew real-time prices. The real estate agent had the MLS listings, a database that was not public. The car dealer knew the invoice price, the holdback, the manufacturer incentives — every number that determined how much profit sat between the sticker price and what the car actually cost. You didn't know any of those things. That asymmetry was the business model.

And it was a very good business model, for a very long time.

The Stock Trade That Used to Cost $100

Charles Schwab launched its discount brokerage in 1975, undercutting full-service firms significantly. By the late 1980s, discount brokers had grown, but commissions still ran $30–$50 per trade at the lower end. E*Trade launched in 1992 and brought online trading to retail investors. By the late 1990s, online commissions had dropped to around $10–$15 per trade.

In October 2019, Schwab announced it was eliminating commissions entirely on US stock trades. Fidelity, TD Ameritrade, and E*Trade followed within days. The race to zero had been running for decades, and it finally finished.

Today, a 22-year-old with a Robinhood account and $50 can buy fractional shares of any S&P 500 company in about forty-five seconds, at no cost. The broker in the suit is not part of that transaction. He hasn't been for years.

What the Car Dealer Wasn't Telling You

The car dealership model is older than the interstate highway system, and for most of its history it operated on a simple principle: the dealer knew everything, and you knew almost nothing.

Invoice prices were proprietary. Financing terms were negotiated in a back office with no transparency. Trade-in valuations were whatever the dealer said they were. The entire experience was designed, not accidentally, to disorient buyers and extract maximum margin.

Then came the internet. Edmunds launched in 1994. Kelley Blue Book went online. Consumer Reports published dealer invoice data. Suddenly, a buyer walking onto a lot in 2002 could arrive with a printed sheet showing exactly what the dealer paid for the car. The information asymmetry — the entire structural advantage of the dealership — evaporated almost overnight.

More recently, companies like Carvana and Tesla's direct-sales model have pushed further, eliminating the negotiation entirely. Fixed prices. No lot. No salesperson on commission. Whether or not those models succeed long-term, they represent how thoroughly the old architecture has been called into question.

The Six Percent Question

Real estate has been slower to change, and the reasons are worth examining. For decades, the standard commission on a home sale in the US was roughly 6% of the sale price, split between the buyer's and seller's agents. On a $400,000 home — close to the national median — that's $24,000 leaving the transaction before anyone pays for moving trucks.

Zillow launched in 2006 and put MLS-adjacent data in front of every American with a laptop. The information gap that had justified much of the agent's value began to close. Discount brokerages and flat-fee listing services emerged. The conversation about whether 6% was defensible grew louder.

In 2024, a landmark legal settlement involving the National Association of Realtors resulted in changes to how buyer's agent commissions are structured and disclosed — widely seen as the most significant disruption to the real estate transaction model in generations. The full effects are still unfolding.

What Got Lost in the Translation

It would be easy to read this as a straightforward win for consumers — and in many ways, it is. Lower costs, more information, faster transactions. The friction that once defined major financial decisions has been substantially reduced.

But friction isn't always waste. The full-service broker who cost you $100 a trade also, sometimes, talked you out of panic-selling during a market drop. The real estate agent who earned her 3% also knew which neighborhood had the better school district, which block flooded in heavy rain, which seller was motivated and which was fishing. The car salesman knew which trim packages were actually worth the upcharge.

Not all of that knowledge transferred cleanly to a website. Some of it lived in experience and relationships, and some of it simply disappeared when the middleman did.

The transaction got cheaper. Whether it got better is a more complicated question — one that probably depends on how much you already knew before you logged on.