A Series of Timelines

The Trust Economy

Trust is, and always has been, at the core of the economy. For hundreds of years, that trust has been tested and reinforced, and it's now more important than ever.

Illustrations by Jamie Jones


From the first barter of goods, every exchange of value has rested on a foundation of trust. Globalization and new technology have led to a tangle of increasingly complex financial products and investment tools, making the trust of investors ever more reliant on the transparency, accountability, and high standards of investment advisors.

What follows are timelines of market changes in investing, accountability, and technology that have continually challenged investor trust throughout history and helped lead to the rise of specialized professionals that can help investors navigate those changes. Guidelines for responsible professional behavior, such as the fiduciary standard, which requires certain types of financial advisors to act always in the best interests of their clients, also developed to help reinforce investor trust.

  • Investment
  • Accountability
  • Technology

Timelines of Trust One of Three


  • investing
  • accountability
  • technology

As investing has grown more complex over time, investors have increasingly sought out second, third, and fourth opinions from their circles. For many of today’s individual investors, that means turning to trusted sources, such as family, friends, or professionals like independent Registered Investment Advisors (RIAs), who are held to the fiduciary standard. But even from its first iterations, investment has included an element of risk, and investors have leaned on the actions and advice of other parties to help guide and reassure them. In the following landmark moments in investing, investors and advisors learned lasting lessons about the role of trust.

in the years 1000-1500

Trust becomes money

Some of the first basic forms of investing emerge when towns develop along international trade routes. In these towns, people with specialized skills—blacksmiths and stonemasons, for example—begin trusting each other with trade secrets and pooling their money, in part to help poorer members in times of need or to invest in new tools or assets they could share. Early merchant groups follow a similar approach, sharing local economic information and business leads, investing in each other. With these circles of influence forming, people work and trade with those whose insights and integrity they trust, and everyone benefits as a result.

Those towns become cities whose financial power builds on itself. By the mid-14th century, as the Catholic church relaxes its regulations on money-lending, banking houses flourish across Italy, and loans become commonplace market tools that transform personal trust into institutional strength. Loaning and sharing money becomes commonplace, but it also means that people need a way to ensure their trust in their financial collaborators.

in the year 1792

Opening of the New York Stock Exchange

As the 18th century draws to a close, financial institutions are formal, established, and clustered in cities. Even in the early United States, everyday commodities like wheat and tobacco are available for investing and trading, and like their European predecessors, early American brokers find it necessary to form circles of trust. Twenty-four brokers bank on each other by signing the Buttonwood Agreement of 1792, agreeing to give preference to each other in trading and making themselves less vulnerable to speculation and manipulation. Their agreement leads to the New York Stock Exchange, which becomes the organization’s official name in 1863, a distinct space for trading and investing in stock where everyone must play by the same rules.

Like its founding document, the NYSE is an acknowledgment that sound investing requires a structure, a set of binding rules, and measures to secure the markets against fraudulent or otherwise illicit trading. The Wall Street crash of 1929, which destroys the assets of both investors and institutions, also demonstrates the need to set a high standard of professional care on the part of advisors towards their clients.

in the year 1940

The Investment Advisers Act

The signers of the Buttonwood Agreement would have been struck dumb by 20th-century markets, where increasingly complex forms of investing and waves of individual investors create the need for a new profession of experts to intermediate between them. New Deal legislation had addressed some of the causes of the still-fresh Great Depression. But when defense spending begins to revive markets and the economy in the run-up to World War II, the new Securities and Exchange Commission decides that financial advisors, to meet the standard of trust that everyday investors needed, required top-down regulation considering their rising popularity.

The result is the Investment Advisers Act of 1940, which imposes a duty—or “fiduciary standard”—on investment advisors to act always in the best interests of their clients, and not to maximize their own profit. It also requires them to register with the SEC, establishing the bona fides of the independent Registered Investment Advisor and a new foundation of trust and transparency for individual investors.

Investing Trends The number of financial advisors will grow by 32 percent between 2010 and 2020.from The Bureau of Labor Statistics

in the year 2008

The Great Recession

The economic meltdown of 2007 proves that such trust and transparency is needed from more than just advisors. A lack of broader market transparency combines with an explosion in dubious, dazzlingly complex financial instruments, particularly in the mortgage and housing markets, to enable a global depression. As they had almost 80 years before, powerful financial institutions collapse, taking major corporations and thousands of small businesses with them. Many millions of U.S. citizens lose their homes and their jobs, while individual investors watch their holdings plummet in value.

The Great Recession reminds us that enormous profits can corrupt the trust that underpins markets, that even the largest financial firms can be led by momentary success to suspend their better judgment. For good reason, people withdraw their trust—and their money—from the markets in 2007, and huge injections of public money are required to save some of America’s critical industries. A wave of new regulation was introduced in an effort to steady the economy and restore faith between investors and financial institutions.

in the year 2017

The Present Day

Though regulatory reform has helped boost public confidence in markets, the financial landscape continues to shift. Breathtaking advances in science and technology, the disruption of legacy institutions by ingenious start-ups, and the global connectivity of economies and markets: All are challenges to the expertise and agility of financial advisors. Investors are more aware than ever that they need advice from people they can wholly trust.

Demand for that advice continues to grow. The Bureau of Labor Statistics predicts that the number of financial advisors will grow by 32 percent between 2010 and 2020, and the Charles Schwab 2015 RIA Benchmarking Study found that RIAs are not only growing their client base, but retaining their pre-existing clients at a rate of 97 percent. New policies are addressing the practices that led to the recession, and investors need to make informed decisions now more than ever. However uncertain policy may be, investors are keeping trust at the heart of their financial relationships.

Timelines of Trust Two of Three


  • investing
  • accountability
  • technology

For every move a potential investor plans to make, they deserve a standard of reliability and transparency. Whether seeking sound judgment from an advisor or stability from an institution, an investor should be able to trust that their assets are secure and being used responsibly. With roots in ancient Babylonia but a firm foothold in the modern-day regulatory matrix, accountability allows investors to keep tabs on their assets—and history has made clear that there are consequences when it is absent.

in the year 1754 BC

Code of Hammurabi

The Babylonian ruler Hammurabi accompanies his eponymous code of nearly 300 laws with the declaration that he is bringing “prosperity to the people forever.” His code emphasizes integrity throughout and specifically requires it in financial exchanges. For example: “If any one give another silver, gold, or anything else to keep, he shall show everything to some witness, draw up a contract, and then hand it over for safekeeping.” Another injunction pertains to “agents” in the purchase of goods: “If a merchant entrust money to an agent...and the broker suffer a loss in the place to which he goes, he shall make good the capital to the merchant.” By demanding honesty and accountability, Hammurabi’s code sets an early cornerstone of financial regulation, one that would support and inspire market stability for the next four thousand years.

in the year 1550-1600

Joint-Stock Companies

Hammurabi’s idea of written contracts would still come in handy a few thousand years later, as exploration and trade in the New World become more commonplace and costly enough to need outside investment and funding. Enter the joint-stock company, in which multiple investors could acquire stock certificates of one company and pool assets toward an agreed-upon profit goal and keep watch on their common investment. Joint-stock companies are some of the first companies to be eligible for royal charters, which declare the Crown’s faith in an organization’s success and allow for incorporated bodies to be formed.

Entering a joint-stock operation means that responsibility is divided amongst stockholders, and that if any individual acts irresponsibly, the rest know. It also means that if the company accumulates any debts that the company itself can’t pay, the shareholders are accountable for making those payments.

in the year 1929

The Great Depression

There are other causes, of course, but the market panic that follows—in today’s currency a fall of 89 percent of U.S. stock market value—wipes out massive fortunes and small investors alike. Customers trying to salvage their assets find out that, without their knowledge, banks had been using their savings to invest in stocks and could cover only 10 cents on the dollar. An urgent push for greater financial accountability follows, with aggressive financial regulations in New Deal legislation, which include the founding of the Securities and Exchange Commission in 1934. The SEC still exists to protect investors and hold advisors and institutions responsible in the marketplace. Though financially devastating, the Depression helps spur greater transparency between investors and those managing their assets. Investors are understandably shaken after the crisis, and it takes the solidification of a number of new regulations, including the fiduciary standard introduced in 1940, to restore faith in the system.

in the year 1961

The case of Cady, Roberts

A healthy marketplace only exists when all investors are exposed to all the same opportunities and risks. When the aviation company Curtiss-Wright decides to reduce its dividend to shareholders, one of its board members tells an associate at the firm Cady, Roberts & Co. before the news went public, allowing the firm to cut its losses. Such blatant insider trading, in which an investor leverages proprietary non-public information for personal benefit, signals the need for new regulatory vigilance. Recognizing the inequality and risk inherent in insider trading, SEC Chairman William Cary rules that anyone with inside information must disclose it to the market at large or stay out of the investment altogether.

The practice, known as “disclose or abstain,” remains a cornerstone of financial accountability for investors, advisors, and institutions alike. It meant that advisors have a more transparent, comprehensive wealth of information on which to draw and investors can be assured that everyone has access to the same information.

in the year 2017

The Present Day

The Great Recession of 2008 shows that the quest for full accountability is a gradual, ongoing one. Immediately following the recession, the housing market sags, and investors, blindsided by how precarious some of their financial institutions actually were, push for new regulation. With the Accountability Act of 2009, for example, companies bailed out by public funds are required to disclose exactly how the money was used and to meet certain financial benchmarks. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 also steadies markets with new regulation that, among other things, applies the fiduciary standard to a broader range of brokers and advisors. But legislation is often reactive—investors increasingly realize that to preemptively protect themselves, they need to trust not in just anyone, but in the right people, including advisors that maintain independence and adherence to the fiduciary standard.

Timelines of Trust Three of Three


  • investing
  • accountability
  • technology

Financial technology has brought rapid, unpredictable changes to the way people organize, access, and talk about their money. It has also created new, low-cost opportunities for investors to participate in the markets and build portfolios based on a dizzying array of new tools, with tips and data available at any time and around the clock. The tech-driven evolution of markets has continually challenged the role and scope of investment advisors, whose sophistication must match the speed of change in order to keep the trust of their investors.

in the year 1950

The credit card

One of the first significant advances in electronic finance is the credit card, which quickly becomes an everyday staple after its introduction in the mid-20th century. Credit cards prove that financial technology can help spur the growth of consumer spending and the American economy as a whole. From the beginning, however, they demand more sophistication from consumers and investment advisors about a new form of spending that was largely abstract and easy to misuse. Issues from credit limits, interest rates, fees to issuing banks, and the optimal number of credit lines to keep open for a good credit rating are unprecedented investor considerations.

in the year 1971

Electronic trading

Stocks would go digital, too, mostly rendering obsolete the buzzing pit of traders and brokers barking out orders on the floor of the New York Stock Exchange. When electronic trading becomes possible, the process of buying and selling stock becomes less apparently hectic and in some ways more secure. In 1971, NASDAQ is established, and two decades later comes Globex, which allows electronic trading worldwide on a range of instruments, including derivatives, futures, and commodities contracts. Today, nearly everyone on both the buy and sell side uses some form of electronic trading, whether they’re individual investors or larger financial groups. When the market sped up dramatically as a result of the streamlined system, and as it kept getting faster, everyone involved in the investment marketplace had to adjust to being more agile and more responsive.

in the year 1983

Online banking

Banking is the next piece of finance to go online, shifting a longstanding control paradigm: After hours, on weekends, anytime and anywhere, customers can check account balances, view a statement, or transfer money without needing a bank employee to help them. To an extent, this change democratizes certain aspects of banking—people have more autonomy about when and where they could engage with their assets, thereby giving them the freedom to make decisions about their financial lives on their own time. So service roles in the financial sector—like consultation or customer service—make significant strides to keep up. Financial advisors begin to make themselves available through a simple phone call, or a text message, and later on, video-conferencing, making the investor-advisor relationship faster and closer than before.

Investing Trends 40 percent of respondents used information from social media to make decisions about their investments.from Sysomos

in the year 2000's

Social Media

Partly in response to the new online capabilities of banking, financial information, tips, and advice begin appearing online. Social media have become a primary source of investment information, sometimes faster with breaking news than the financial wire services—but also quicker with “fake news.” Company information, stock tips, industry rumors, and unsubstantiated tweets appear constantly on social sites without considerations for information filtering. The risk to casual investors is clear: A recent study from Sysomos showed that 40 percent of respondents used information from social media to make decisions about their investments. For people under the age of 40, that number was 60 percent.

In the age of constant, often un-vetted streams of information, it’s wise for investors to turn to advice reinforced by the fiduciary standard. At the same time, social media used wisely makes it simpler and quicker to get second and third opinions, as well as assess the reliability and success rates of different advisors or advisor groups.

in the year 2017 and beyond

Algorithms and automation

The rise of increasingly complex and diverse forms of investment now includes robo-advising, automated financial advice derived from algorithms, artificial intelligence, and the ability to access and analyze sources of big data. This kind of newly open access to basic investing advice is exciting for everyone from college students managing debt to high-volume traders working at blinding speed to investment advisors who see the potential in automating certain investment functions so that they can dedicate more time to focusing on their clients’ holistic financial picture.

The continuing challenge of fast-changing financial technology only enhances the value to individual investors of their human sources of market intelligence, which can account for their customers’ special circumstances as no algorithm could. Financial technology will continue to evolve, and the value that investment advisors bring to their clients must rise accordingly. Much of that value will have to do with trust, integrity, and the human capacity to choose what’s right over what’s immediately profitable, and the result will be a healthy market and investor confidence.