A stock broker provides a vital financial advice service. It is in the best financial interest for clients to hire a stock broker when buying and selling. Brokers have access to cutting edge knowledge and investment strategies. Stock brokers buy and sell orders for shares, stocks and securities on behalf of clients. This may be through a stock market or over the counter, for a commission.
How To Become A Stockbroker
You do not need any formal qualifications to become a stockbroker, as long as you apply for and pass licensing certifications. To do this you will need to pass Series 7 and Series 63 examinations at the Financial Industry Regulatory Authority (FINRA).
It is recommended that you get a college degree. You will need to be a minimum of 18 years old.
Obtain Your High School Diploma
You can complete a high school diploma at your local high school or online. Alternatively, you may take and pass the GED test at an official GED Testing Center. You must be at least 16 years old to take the GED test.
Complete a Bachelor’s Degree with a Major in Business or Finance
Although a Bachelor’s Degree is not needed to become a stockbroker, it is recommended. You will find it much harder to enter the job market with a Bachelor’s Degree, also known as a College Degree.
Recommended paths of study are Bachelor of Business Administration, Bachelor of Finance or Bachelor of Financial Planning. Your degree will take four years to complete. Ideally, go to a college with a good reputation.
Complete a Stockbroking Internship with a Licensed Brokerage Firm
Some brokerage firms hire students who are completing their last year of college. Check with your college for any available internships, or contact broking firms directly to see if they have any vacancies.
Obtain a Sponsor to Take the Stockbroker Licensing Examinations
This will be a brokerage firm. It may be the firm that you are doing your internship through, or the firm that you are going to start paid employment with.
Complete and Pass the Stockbroker Licensing Examinations
You will need to take two compulsory examinations. Both tests are undertaken at the Financial Industry Regulatory Authority (FINRA)
- The Series 7 exam – This is is a 6 hour examination. .
- The Series 63 – Covers transactions laws and conducting business. This is a 75 minute examination.
Get Your Criminal Checks Undertaken
It will be necessary to undergo a criminal background and drug check upon passing your stockbroker licensing. Your fingerprints will also be taken.
The average cost of a college degree is $14,800 per year in a public college.
The cost of the Financial Industry Regulatory Authority Examination (FINRA) examinations are:
- Series 7 exam: $290
- Series 63 exam $96
Stock brokers provide a vital financial advice service. They trade shares, stocks and securities on behalf of clients. Clients may be individuals or corporations.
Job Description / Responsibilities
- Research the financial markets: The markets are constantly changing. You will need to be constantly researching new products and current prices.
- Find the best stocks for clients: You will need to communicate with your clients, and locate the best stocks for their portfolio.
- Locate the best deals for clients: Prices change constantly in the share-market. You will need to research the best times to buy and sell for your clients in order to get them the best deals.
- Liaise with investment analysts: Regular communication with investment analysts is a vital part of your role as a stockbroker.
- Interpret financial reports: You will need to read and understand financial reports. You will relay the report findings to co-workers and clients.
- Provide reports to clients: Easy to understand written financial reports will need to be sent to your clients.
- Handle the client’s trade: You will need to place the buy and sell transactions for your clients.
- Monitor client’s investments: Keep track of your client’s investments and ensure that their funds are making a profit. Advise them of any buy and / or sell recommendations.
- Make regular phone calls to clients: Inform clients of any changes to their portfolio. Advise them of new investment opportunities.
- Monitor any changes in client investments: Report any changes to clients.
- Sales: A large part of your role is to contact prospective clients and market your services.
- Undertake fair dealings at all times: Ensure that you always act in the best interests of your clients and in accordance with the regulations of the Financial Industry Regulatory Authority. Act with integrity and fairness – even when there is a conflict between your interest and your client’s interest.
The financial services industry has combined some of its practices recently. Financial regulations have moved employment positions from investment banks to hedge funds.
In spite of the above, job growth for stock brokers is currently 10%. In the next decade it is forecast that there will be 32,500 new stock broking positions. This is faster than average occupational growth.
Stock broking is a growing profession. The demand relates to growth in the economy. As the economy continues to grow there will be more demand for stockbrokers.
You can have a very financially rewarding career as a stock broker. With hard work, you may also advance to be an account manager, fund manager or a consultant.
Although not necessary, a postgraduate degree such as an MBA will provide you with more opportunities.
You will generally work full time as a stock broker. More than one-third of stock brokers work in excess of 40 hours per week.
Hours may include evenings and weekends, as many of your clients will work day shifts.
You will comply with Occupational Safety and Health Act requirements. These include taking regular breaks from the computer and ensuring that office equipment is not placed in an area where it can be dangerous. Correct and safe use of power cords and adapters, and proper lifting are all aspects of the Act that you will need to be aware of.
The work environment for a stockbroker can be very stressful. There is a high volume of work to get through, and a fast work pace. You may work in a call center or an office.
Meeting sales targets and deadlines can be very demanding. You will be under pressure from management to meet and exceed targets.
Pay can be extremely lucrative. It is often commission based. You pay will therefore reflect the effort that you put in.
You will communicate extensively with clients, managers, other stock brokers, analysts and administration staff. Much of your communication will be by telephone.
A challenge within the industry is that computers are quickly replacing verbal trading. Ensure that you are up to date with technology to protect your job security.
There are many helpful online resources for stock brokers.
- Industry Information: This site has information on industry analysis, finance, salaries and business valuations.
- Money Website: CNN Money provides constantly updated information on the stock market, the economy, companies, technology news and much more.
- The National Association of Securities Dealers official website: This official site provides an abundance of information of stock market activity, analysis, investing and personal finance.
- The New York Stock Exchange official website: A system of markets, clearing houses, data and listing services and technology. Complete access to global capital and derivatives markets.
- Dealing With Stress: This web page article “Tips to handle stress as a stock broker” discusses some of the high-stress aspects of life as a stock broker, and how you can deal with these.
- Certification: GAFM Global Academy of Finance and Management is located in Europe and USA. This organization awards certifications in the Finance Sector.
- Continuing Education: Investopedia Continuing Education helps brokers keep up with changes in industry rules, regulations and procedures.
- Investor Protection: Financial Industry Regulatory Authority (FINRA): This not-for-profit organization protects investors by ensuring that brokers operate honestly.
- Investment Forum: National Association of Stock Brokers (NAS) is America’s leading investment forum. NAS organize weekly Corporate Focus meetings in key cities. Here managers speak about their firms to head brokers and analysts.
As a stock broker you will need various professional and personal skills to succeed. You must have completed the required licensing examinations. You will need sound attention to detail, analytic skills and be capable of making quick decisions. Your communications and people skills must also be excellent.
- Licensing: You will need to have completed and passed your licensing examinations before you can begin employment as a stock broker.
- Analytical skills: A major part of your job will be to analyze reports and data and present them in a clear and easy to understand way to your clients.
- Decision making skills: You will be making decisions regarding your client’s finances. These decisions may need to be made quickly and while you are working under pressure.
- Detail oriented: You will be dealing with large amounts of data and client’s portfolios. It is vital that you pay attention to detail when buying and selling shares and communicating with analysts and clients.
- Mathematical skills: It will be necessary to use mathematics to add up client’s portfolio values and provide them with estimates and reports. You will need to calculate the number of transactions to process when you are buying or selling for your clients.
- Customer service skills: Stock brokers deal with clients for the majority of the day. You must put your customer’s needs as an utmost priority. Ensure that your clients receive the best possible service.
- Conversational skills: You need to be able to have a friendly and professional conversation with your clients and all external entities, contractors and analysts. Good conversation skills and clear communication will ensure that your clients keep coming back to you.
- Initiative: You will have various tasks to complete in your day. In order to complete your daily workload, work to a deadline, and meet client expectations you will need to be proactive in organizing your day. No one will prioritize your workload for you.
- Computer skills: Stock brokers use computers to analyze data, email, check prices and reports and more. You will need to have good computer skills.
- Report writing skills: Report writing for clients and managers is a necessary skill as part of your role.
- Sales: You will need to find your own clients and receive new business from your existing clients. Sales and marketing will involve cold calling.
- Ability to work under pressure: In this fast paced work environment you will need to meet sales targets, management targets and deadlines.
- Flexibility in working hours: Many clients will need to meet with you or talk to you by telephone after they have finished their day jobs. This may be evenings or weekends.