Become a stock broker by understanding how the stock market works. The stock market is a marketplace where companies can sell their stocks, bonds and other securities. Stocks are shares of ownership in a company. If you own a share of stock, it means you own part of the company. You can also buy bonds, which are loans that companies give out to raise money for their businesses.
To become a stock broker, you need to learn about how the market works so you can understand how to find good investments for your clients. You should also know how to research companies so you can recommend them to your clients when they’re looking for stocks or bonds to buy.
How To Become Stock Broker
If you enjoy sales, are a self-starter and have an interest in the world of finance, a career as a stockbroker may be a great fit for you. With a high earning potential and fulfillment from developing your own base of clients, a stockbroker can be a good career for a hardworking and ambitious individual.
Learning about the primary responsibilities for a stockbroker as well as the educational requirements is a good place to start as you’re evaluating whether a career as a stockbroker is right for you. In this article, we explore what a stockbroker does, the steps you should take to pursue this career and the most frequently asked questions about a career as a stockbroker.
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What does a stockbroker do?
A stockbroker is a licensed professional who has the authority to buy and sell stocks and other securities on behalf of clients, either individuals or institutions. They receive their payment through a commission in the form of a flat fee or percentage of the value of the transaction. Stockbrokers must be well-versed in the markets and can offer advice on when is the right time to buy and sell. They’re responsible for finding their clients the best prices on stocks. Their primary duties include:
- Providing accurate investment advice to clients
- Managing client investment portfolios
- Accurately evaluating financial reports
- Staying up-to-date on the latest financial news
- Updating clients regularly regarding the status of their investment portfolios
- Making changes in investment strategies based on client goals and market conditions
- Finding new clients through cold calling and networking
Average salary for a stockbroker
The average salary for a stockbroker is $68,194 per year and ranges from $14,000 to $195,000 per year depending on geographic location, experience and industry. Many stockbrokers earn a commission based on the value of the products they sell, and most firms pay them a minimum salary in addition to their commissions. New stockbrokers usually earn a salary until they develop a base of clients, and then the salary gradually decreases and they earn more from commissions.
Related: Jobs That Pay Over $50k
How to become a stockbroker
Here are the basic steps you can follow to become a stockbroker:
1. Pursue a bachelor’s degree
Most employers require a bachelor’s degree to qualify for entry-level positions in securities, commodities or financial services. There is no specific degree required, although a four-year degree in business, economics, finance or accounting is preferred. Some of the coursework that will be most useful for this career includes statistics, mathematics and quantitative analysis.
To gain a competitive advantage over other candidates, you may also want to pursue a Master of Business Administration. Employers often reward candidates who have obtained their MBA with more advanced positions, better compensation and larger signing bonuses.
2. Complete an internship
As you are pursuing your degree, look for internship opportunities. Many brokerage firms will hire interns during the summer to work in their offices. In addition to providing a real-world application for their knowledge, internships also create invaluable connections for when you’re ready to find a job after graduation. This is also a great way to get access to additional job training that many brokerage firms provide to new stockbrokers, giving you a competitive advantage over other candidates in the job market.
Related: Definitive Guide To Internships
3. Get hired by a brokerage firm or investment bank
To become a licensed stockbroker, you must be sponsored by a Financial Industry Regulatory Authority registered firm or other regulatory authority. Obtaining a sponsor generally means being hired by an investment bank or brokerage firm. To become a stockbroker, you must develop and be able to demonstrate a deep understanding of financial markets, accounting practices and regulations.
4. Take and pass the licensing exams
To obtain licensing, stockbrokers must pass the National Association of Securities Dealers’ General Securities Registered Representative (Series 7) exam. The Series 7 exam consists of 125 multiple-choice questions that must be completed in 225 minutes. It must be combined with a separate Securities Industry Essentials Exam that consists of 75 questions and lasts 105 minutes. Other exams may be required for the stockbroker to trade certain things. Some states also require certain exams, such as the Series 66 or Series 63. You’ll have to check to determine which exams are required in your specific state.
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Frequently asked questions about being a stockbroker
Here are a few of the most frequently asked questions about being a stockbroker:
Is being a stockbroker a good career?
Stockbrokers can become very successful over the course of a career. One of the major pros of this job is that you earn a base salary that can be significantly enhanced by commissions and bonuses.
What skills do stockbrokers need?
A stockbroker needs a number of both hard and soft skills, including:
- IT and math skills
- Determination
- The ability to persuade others
- Communication skills
- Strong decision-making skills
- Negotiation skills
- The ability to develop lasting relationships
- The ability to work effectively in a high-stress environment
Related: Hard Skills vs. Soft Skills
Is a stockbroker job considered an in-demand career?
According to the Bureau of Labor Statistics, employment for commodities, securities and financial services sales agents is projected to grow four percent from 2018 to 2028, which is approximately the same rate as all occupations. The high pay that’s associated with these positions draws more applicants than there are openings, which is why there is intense competition for openings.
Should I get a certification as a stockbroker?
Certification can make you more competitive for jobs, as can obtaining an MBA. A good certification for a stockbroker is a Chartered Financial Analyst certification.
How do you build a client base as a stockbroker?
There are many ways to look for new clients. Some of the most common are:
- Making cold calls to open new accounts
- Contacting pre-qualified prospects who have been provided by your firm or a marketing firm
- Contacting relatives or friends asking for referrals
- Leveraging organization memberships, such as a local chamber of commerce
