The job of a stockbroker is certainly one of the more coveted ones. Many people see it as a path to wealth and it is true that this profession can indeed be lucrative. However, you should have a clear understanding of what the job entails if you want to learn how become a stockbroker.
What is a Stockbroker?
Other terms for a stockbroker include financial advisor or securities broker. Both terms refer to registered representatives. A registered representative is someone who is acting on behalf of a broker or dealer and who is paid commissions on trades that the firm makes on behalf of its customers.
What Stockbrokers Do
The stockbroker’s job is to make money for their clients. They do this by:
- Buying and Selling Stocks
Stockbrokers purchase stock on behalf of their clients. If the client has a discretionary account, the stockbroker is able to buy stocks without consulting the client. If the client has an advisory account, then the stockbroker will only provide advice to the client on which stocks to buy. With an execution account, the client will tell the stockbroker which stocks to buy. The type of client/broker relationship will similarly control the selling of stocks.
- Stock Research
A stock broker cannot make money for their clients without knowing which stocks to buy and when to sell them. Much of a stockbroker’s life will revolve around research stocks.
- Acquiring Clients
Stockbrokers are expected to create their own client list by calling potential clients. Networking is therefore another one of a stockbroker’s important tasks. Some brokers may also get referrals from clients who are satisfied with their services.
The job is intensely competitive and requires brokers to be highly motivated. This is especially so when the broker is still a rookie. They will have to face difficult targets and daily stress.
Stock Broker Salary
According to the Bureau of Labor Statistics, the median annual stock broker salary was $71,720 for 2012. In most cases, stockbrokers are paid a minimum salary by their firms along with commissions on the products they sell. Rookie stockbrokers are usually paid a salary until they are able to acquire clients. As their client list grows, their salary is reduced.
Stockbroker Skill Set
If you want to learn how to be a stockbroker, you will need to master certain skills; essential stockbroker skills include:
- The Ability to Analyze
Stockbrokers have to look at many stocks every day. Having good analytical skills can give you a significant advantage.
- A Love of Numbers
It is not necessary for a stockbroker to be a mathematical genius, but is good to be competent and confident with numbers.
- Good Communication Skills
As so much of the job involves interacting with clients, the ability to do so effectively will go a long way towards your success.
- A Good Understanding of Financial Markets
Stockbrokers act as guides to their clients, helping them to gain a better understanding of finance and investing. A thorough understanding is necessary to be able to fulfill this role effectively.
- Sales Skills
At its core, being a stockbroker is all about making sales. The ability to sell is the main skill that stockbrokers use to earn their living. If a stock broker is unable to call up a client and pitch a stock, they will have a hard time succeeding.
Education for Stockbrokers
It is possible to become a stockbroker without earning a degree; however, it will still be necessary to become qualified. In order to offer general securities, you will need to take the Series 7 Exam. Only registered representatives who have passed this exam are called “stockbrokers.” The Series 7 exam was created by the New York Stock Exchange and is administered by the Financial Industry Regulatory Authority.
Other examinations are available for registered representatives who want to offer a specific set of securities; for example, a representative who wants to offer only corporate securities would take the Series 6.
While it is not necessary to take a degree course to learn how to be a stockbroker becoming a stockbroker, having a degree can greatly improve your chances of getting a job from a reputable firm. It is important to remember that you will be competing with many other people for a limited number of jobs. Employers prefer hiring individuals who have earned degrees in relevant areas.