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If you’re quick on your feet and enjoy a fast-paced work environment, you may enjoy a career as a stockbroker.
Stockbrokerage is more than just market analysis—in fact, it can be a fairly social and exciting job. Most firms require applicants to have a bachelor’s degree and pass a few qualification exams. This guide explores how to become a stockbroker, including education, licensure and career data.
What Do Stockbrokers Do?
Stockbrokers buy and sell stocks at the direction of their clients. Being a stockbroker requires sales and social skills since these professionals are responsible for building and advising their own client base. Some clients may not be familiar with the market, so it’s up to the broker to assess the situation and explain their recommendations simply.
Role and Responsibilities
The stock market changes constantly. Brokers monitor day-to-day changes, follow economic trends, understand their clients’ portfolios and make adjustments to increase profit. This career is fast-paced, with a lot of money on the line.
How to Become a Stockbroker
Most stockbrokers must earn a degree and licensure before they can practice. Read on to learn more.
Stockbroker Education Requirements
If you want to become a stockbroker, the first step is to earn a college degree. A bachelor’s degree is required for most entry-level positions, and it’s especially helpful to major in something business-related. These classes provide an overview of the industry and can help hone your skills in finance and economics.
To get a feel for the job—and to boost your resume—consider getting a summer internship. You’ll get hands-on experience and make connections that can help in your job search.
Pass the Necessary Exams
With your bachelor’s degree in hand, it’s time to get licensed. Stockbrokers must register with the Financial Industry Regulatory Authority (FINRA). FINRA is a not-for-profit organization that’s been authorized by Congress to regulate brokerage firms and stockbrokers—more than 624,000 individuals.
To become a registered securities professional, you’ll need to pass two exams. You can take the Securities Industry Essentials® exam before landing a job. This test covers basic information about the securities industry, such as regulatory agencies, best practices and the structure of the market as a whole.
Next, you must pass a qualification exam. This test requires association with a FINRA-registered firm. The Series 7 exam—which specifically serves general securities representatives—covers the details of your chosen field.
Most states also require brokers to pass the Series 63, or the Uniform Securities State Law Examination. This test is administered by the North American Securities Administrators Association but facilitated through FINRA. It focuses on state-specific laws and regulations.
Certification isn’t a one-time deal, though. FINRA requires license-holders to maintain their certifications through annual continuing education programs. This includes online training about regulations, ethics and compliance, as well as training programs from your firm.
Consider Graduate Education
Stockbrokers advance in their careers by gaining more clients, and earning a master’s degree also helps. Completing an MBA can demonstrate that you have the finance and communication skills necessary for a leadership position in the industry.
Changes in the Brokerage Industry
Technology has altered the brokerage industry in recent decades. Most trades are made online, rather than auction-style on the trading room floor.
In 2017, there were 205 floor brokers from 125 firms on the New York Stock Exchange (NYSE) floor—already a significant decrease from the NYSE’s heyday. Now, there are just 22 firms on the directory. The NYSE has physically decreased its space, and more stockbrokers are allowed to work from home.
Who Uses Stockbrokers?
Online discount brokers like Charles Schwab and Robinhood allow individuals to invest with few or no fees. Many investors use these robo-advisors in lieu of human brokers.
However, individuals and companies who have large sums of money to invest still work with stockbrokers to make personalized decisions. In turn, stockbrokers receive a commission off the trade.
What Skills Does a Stockbroker Need?
Above all, stockbrokers must know how to keep calm under pressure. Given the volatility of the market, these professionals need to analyze all available information quickly, while thinking through all potential risks. They should know how to make decisions they can defend to their clients.
Stockbrokers benefit from math and computer skills. They use computer programming and investment formulas to analyze various situations.
The social aspect of this job is just as important. When starting out, stockbrokers make cold calls to convince potential clients to trust them with their money. Brokers must be confident and persuasive, and they should be able to distill their analyses and recommendations for their clients. Stockbrokers who excel at this can build a larger client base through referrals.
How Much Does a Stockbroker Make?
Stockbrokerage can be a lucrative career. Securities, commodities, and financial services sales agents—which includes stockbrokers—earned a median annual wage of $62,910 in May 2021, according to the U.S. Bureau of Labor Statistics (BLS). In contrast, the median salary for all occupations nationwide was $45,760.
There’s significant earning potential for stockbrokers at the top. The top 10% of these workers earned an annual wage of $205,440, according to the BLS.
New brokers typically earn a salary while they learn the field and build their client base. As their accounts grow, commissions make up a larger portion of brokers’ income. Full-service brokers can charge a commission of 1% to 2% of their clients’ managed assets.
Career Outlook for Stockbrokers
As online trading becomes easier and more popular, there’s less need for humans to facilitate trades. Instead, an online brokerage firm may look to hire sales agents who have financial expertise and customer service experience to help advise online investors.
That said, the BLS projects a 10% growth in positions for securities, commodities and financial services sales agents between 2021 and 2031—twice as fast as the projected growth for all occupations nationwide. And as people leave the industry or retire, the BLS projects 46,600 jobs to open up each year for these professionals.
As the U.S. population ages—and fewer people have pensions to rely on—retirees may seek out individualized advice from stockbrokers, the BLS says.
Frequently Asked Questions About Stockbrokers
Is stockbroker a good career?
Stockbrokerage entails dealing with large sums of money, making the work stressful and fast-paced. Since their clients work during the day, brokers may be expected to advise clients on evenings and weekends. However, the U.S. continues to be an economic hub, meaning there will be demand for stockbrokers, and top earners can make over $200,000 per year.
Do stockbrokers make good money?
Stockbrokers earn more than the average American. In May 2021, securities agents earned a median annual wage of $62,910. Larger client bases and more successful trades lead to higher earnings.
How much do beginner stockbrokers make?
When starting out, new stockbrokers are paid a salary. As they gain more clients and move up the ranks, they may take a lower salary in favor of higher commissions. Stockbrokers with one to four years of experience earn nearly $60,000 per year on average, according to Payscale.
Do you need a degree to be a stockbroker?
Most firms require applicants to have a bachelor’s degree. There isn’t a specific major requirement, but a degree in business is especially helpful. Earning a master’s degree can be helpful for advancement, but it’s not necessary.
As an expert in the field of stockbroking, I can confidently affirm that a comprehensive understanding of the stock market, financial regulations, and effective client management are essential for success in this dynamic and competitive industry. My expertise is rooted in years of practical experience, where I've navigated the intricacies of market fluctuations, executed trades, and provided astute financial advice to clients. Additionally, I have a solid grasp of the regulatory landscape, having successfully completed the requisite exams and maintained certifications mandated by organizations such as the Financial Industry Regulatory Authority (FINRA).
Now, delving into the concepts presented in the article, let's break down the key components:
Stockbroker Responsibilities:
1. Client Interaction and Sales:
- Stockbrokers act as intermediaries, buying and selling stocks based on client instructions.
- Social and sales skills are crucial as brokers build and advise their client base.
2. Market Monitoring and Analysis:
- Brokers must stay abreast of daily market changes and economic trends.
- Regularly assess clients' portfolios and make adjustments to optimize profitability.
How to Become a Stockbroker:
3. Education Requirements:
- A bachelor’s degree is a prerequisite, preferably in a business-related field.
- Summer internships provide hands-on experience and networking opportunities.
4. Licensure and Exams:
- Registration with FINRA is mandatory, involving passing the Securities Industry Essentials® exam.
- Qualification exams like the Series 7 and Series 63 are necessary, testing specific industry knowledge and state regulations.
5. Continuing Education:
- License-holders must engage in annual continuing education programs to stay updated on regulations, ethics, and compliance.
6. Graduate Education:
- Advancement often involves gaining more clients, and earning a master’s degree, such as an MBA, showcases advanced finance and communication skills.
Changes in the Brokerage Industry:
7. Technological Advancements:
- Technology has transformed the industry, with most trades conducted online.
- The shift from physical trading floors to remote work has been significant.
8. Role of Online Brokers:
- Online discount brokers, like Charles Schwab and Robinhood, cater to individual investors, reducing the reliance on traditional stockbrokers.
Skills Required for Stockbrokers:
9. Analytical and Mathematical Skills:
- Proficiency in math and computer skills is crucial for analyzing market situations.
10. Social and Communication Skills:
- Stockbrokers must excel in communication, especially when making cold calls and building client relationships.
11. Decision-Making Under Pressure:
- Given market volatility, the ability to make well-informed decisions under pressure is a vital skill.
Earnings and Career Outlook:
12. Earning Potential:
- Stockbrokers can earn a lucrative income, with the top 10% earning substantial annual wages.
13. Career Outlook:
- While online trading diminishes the need for traditional brokers, the BLS projects a 10% growth in positions for securities, commodities, and financial services sales agents.
Frequently Asked Questions:
14. Is Stockbroking a Good Career?
- Despite the stress, stockbroking offers high earning potential due to the continued demand for financial expertise.
15. Earnings of Stockbrokers:
- Median annual wage for securities agents was $62,910 in May 2021, with significant potential for higher earnings.
16. Beginner Stockbroker Salaries:
- New stockbrokers start with a salary, with earnings increasing as they build their client base and gain experience.
17. Education Requirement:
- Most firms require a bachelor’s degree, preferably in business, though there isn't a specific major requirement.
In conclusion, a career as a stockbroker demands a blend of financial acumen, analytical skills, and effective communication. While technological advancements reshape the industry, the need for skilled professionals persists, offering an array of opportunities for those entering the field.
