How To Become A Stockbroker

Stockbrokers manage investments for clients. Otherwise known as brokers or securities agents, stockbrokers work in a number of ways to ensure optimal financial return on clients’ financial aspirations. They provide advice and insight to guide clients toward achieving their goals.

Why Become A Stockbroker

While stockbrokers work on behalf of the investor, there are many different types of brokers whose focus and responsibilities differ from one another.

Full-service brokers work for investment firms, such as Merrill Lynch, and are the most common in the field. These individuals sell investment products to clientele and manage investment portfolios. Other services include retirement planning, tax advice, and investment research. Stockbrokers may also work for independent broker-dealers, such as Ameriprise Financial, in which they perform a different level of service and act as both the broker (agent) and dealer (principal).
Discount brokers work for firms, such as Scottrade, and are responsible for completing buy and sell orders. They do not provide financial advice to clients. While full-service brokers typically work with more wealthy clients, discount brokers provide services to walk-in clients and individuals with more modest trading aspirations. This aspect of their job does not negate the important work they do; being a discount broker requires a wider range of financial knowledge, such as IRA rollovers, charitable gifting, estate planning, bond ladders, stock options, and much more.
Bank brokers are similar to full-service brokers and work on behalf of banks. With their knowledge and experience, they help bank employees reach out to customers. Their objective is to provide modest investment services to customers, attract new customers, and reward and retain existing customers. They offer low-risk products to their customers, such as fixed-income annuities. Investment banks specialize in mergers/acquisitions, debt financing, and capital raising services.

Regardless of the duties and employment of these individuals, stockbrokers must exemplify a number of qualities and skills to be successful in their job:

Effective communicator
Confident
Competitive
Adaptive
Active learner
Observant and perceptive
Mathematical aptitude
Risk-taker
Action-oriented
Organized
Copes with high amounts of stress
Methodical
Divergent

Stockbroker Work Environment

Stockbrokers mostly work in offices, at various types of institutions. The work experience and conditions are quite different for each type of broker. Full-service and discount firms, as well as banks typically provide office space for their brokers, as well as many other amenities. Stockbrokers who work for independent broker-dealers will most likely not be granted any amenities, which include office space. These individuals are responsible for most costs and should consider themselves somewhat self-employed.

Stockbrokers should expect to work fulltime and under stressful conditions. Full-service brokers have the most stress, as they typically work for commission and have high sales quotas. Discount and bank brokers usually have fewer or no quotas. Sales is still a stressful occupation. Individuals who become a stockbroker should be prepared for a fast-paced and independent work environment.

Stockbroker Salary

The salaries of stockbrokers vary widely, mostly dependent on industry but also on independent success. Stockbrokers who work for full-service firms and independent broker-dealers must meet high quotas, but their pay is typically higher. Full-service stockbrokers not only earn a guaranteed salary, but they earn commission (based on large quantities of sales) and have the opportunity to earn bonuses (estimated between $34,000 and $49,000/per year). The overall compensation for a full-service broker is estimated between $34,000 and $153,000, per year, which is dependent upon experience and execution.

For stockbrokers who cannot meet the quota demands of a full-service firm or independent broker-dealer, discount brokerage firms and banks will provide adequate experience and compensation. These individuals typically earn a flat salary. Discount brokerage sales representatives earn between $35,000 and $53,000, per year, with a median annual salary of $43,678 as of March 2016.

In the past, bank broker salaries were performance-based—gathering assets, meeting production targets, etc. Now, especially after the most recent economic collapse, banks are offering their brokers a guaranteed salary, at least for the first few years. Starting salaries are typically between $30,000 and $40,000, per year, but bank brokers often make approximately the same amount in bonuses; therefore, a bank broker can expect to earn between $75,000 and $100,000, annually.

Stockbroker Career Outlook

Job growth for stockbrokers is expected to be at 11 percent. With the market having recovered from the recent crash and unemployment going down, more people are looking to invest their money. The health of broker institutions and banks is good.

Stockbroker Degree

Stockbrokers must have at least a bachelor’s degree, although a master’s degree is recommended, at least for top-positions. Managing client accounts also requires registration, and many positions also require licensure.

Step 1: Obtain a bachelor’s degree. A bachelor’s degree is an educational requirement to become a stockbroker. Degree programs in finance, business administration, accounting, and economics will provide the adequate training required of this occupation. Communication skills is also important in this job, so it is important to also take courses in communications and English.

Note: Most employers will provide in-house training that helps new employees learn about selling, communication techniques, and securities analysis. Seminars and other opportunities to continue education are available and encouraged.

Step 2: Become registered and licensed, per company and state requirements. In order to manage client accounts, stockbrokers must be registered representatives of their firms. The Financial Industry Regulatory Authority (FINRA) provides this registration, and stockbrokers must pass the General Securities Registered Representative Examination, or the Series 7 Exam, to obtain this registration. This can be done once an individual has worked for their employer for at least 4 months.

Many states also require representatives to pass the Uniform Securities Agents State Law Examination, and other positions may require licensure, depending on duties and products sold.

Step 3: Obtain a master’s degree (recommended). To become a successful broker and to work in higher-paid positions, aspiring stockbrokers should earn a master’s degree, preferably a Master of Business Administration (MBA). Most companies will seek individuals with this credential.