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Did you just finish watchingWall Street? Well, being a stockbroker doesnt involve that much glitz and glam, but its pretty awesome. A stockbroker is a financial adviser who counsels clients (corporations or individuals) on appropriate investments to fit their abilities and goals.To be a stockbroker, one must work for a brokerage house — buying and selling stocks on the stock market is limited to members of the stock exchange. A broker is also known as a securities sales agent or securities and commodities sales agent. Heres everything you need to know!
It used to be that anyone with a knack for numbers and a lot of friends could become a successful stockbroker. Not so anymore! If you want to stay competitive, youll need to get your degree. Economics, finance, mathematics, accounting, or business management are all good fields to get your undergrad degree in. And the better college you go to the more prospects youll have later in the game!
Especially if youre going to grad school, keep your grades up. The better your grades, the more — and better — schools will open up to you. Not to mention knowing what youre doing when you hit the exchange floor!
Some brokerages hire interns during their last year of college. Hit up your campus Investment Club — or start one if it doesnt yet exist! Getting that dream internship could make your path to being a billionaire a
This is your best bet if youre not looking to get your MBA and want to get going as quickly as possible. But know that relaxing is totally a viable option. Plenty of people take a couple of years off, go back to get their MBA and get in the game a little bit later. Also: people are more likely to trust a 28-year-old with their money than a 22-year-old, so feel free to keep that red solo cup and package of ramen in your hand for a second or two more.
, but if you want to rise to the cream of the crop, having an MBA will put you at the top of that prospective employee stack youre bound to find yourself in eventually. More and more people are getting them, making them par for the course. This step could aid in job advancement, larger signing bonuses, and higher compensation.
Again, feel free to take a few years off between undergrad and your MBA. Getting some viable work experience (even if its menial labor at a bank or a firm) will make your options grow tenfold as well. Showing that you already have a grasp on what youre doing or want to do will get programs to take you more seriously.
Read. Watch. Expose yourself. Learn. This is a field where you can very much make yourself better on your own time. So read books! Watch financial news shows. Follow different stocks and see what rises and what falls. While Joe is off breeding ferrets and Jim is playing football, youll be ensuring that you walk out of school with a six-figure income to start.
Try William Bernsteins The Four Pillars of Investing: Lessons for Building a Winning Portfolio, or Mark Hebners Index Funds: The 12-Step Program for Active Investors.
The Wall Street Journal or NY Times financial section wont hurt either!
You probably know a half a dozen people who at least dabble in investments. Ask them about what they know! The only reason you need an education now is that thats the current academic trend. Back in the day, it was just people who took an active interest in it. So tap into all your resources as soon as you can, as often as you can.
When you get old enough, start taking care of some of your own money (if youre under 18, it will have to be in your parents name). Work with a family member whos doing it and see how you can start building proof of your know-how. If you wouldnt trust you with
money, why should someone else trust you with theirs?!
There are three paths your career could take:
. This would be working at a firm like Merrill Lynch or Morgan Stanley.
In order to succeed here, you must be very sales-oriented.
They will set you up with a space, get you trained and give you a salary to start off until you pass the trial period.
. Charles Schwab or Fidelity are two examples of discount brokers.
If youre more service-oriented, this is for you. You will generally always be on salary, making less commission, but mainly assisting those who come to you, buying and selling but
This is pretty straightforward — you work at a bank. The banks customers come to you to buy fixed annuities and to make other, often more conservative, choices.
Discount brokers generally have to know a little bit about everything (rollovers, stock options, margin accounting, derivatives, bond ladders, etc.), whereas full-service brokers usually specialize in one area, like IRA rollovers or employee stock options.
Full-service brokers are responsible for finding their own clients. However, they also are given workspace and a salary to start off. With discount brokers, you pay your overhead costs and make less commission.
If youve narrowed it down to what type of broker you want to be, youll still need to decide on which firms you want to apply to. Just like a pair of pants (one that youll be wearing for decades), it needs to fit you just right. The main thing to consider? Size.
A big firm can often offer you a competitive training package, making you feel more firm in your grounding and alleviate your financial start-up woes. However, you may feel like youre a teeny fish drowning in a large pond.
A small firm can give you the attention you desire and feel more personable (in addition to offering a higher commission rate), but they may not be able to offer you the clientele or training of a larger program.
Youll need to get a few months on-the-job training before you can take your license and be a full-fledged stockbroker, but you can still get to work. It all depends on where youre employed. Some may call it an internship, some will just consider it pre-training, some will offer more money than others. Whatever form yours takes, its a necessary step pre-examination.
General Securities Registered Representative Examination
. This test is given by the Financial Industry Regulatory Authority (FINRA) and is the most difficult test you will take (lasting 6 hours). After passing it, youll be a registered representative, or stockbroker. You have the authority to sell all securities and investments except for real estate, life insurance, and commodities futures.
. This one is just about conducting business and the various laws that govern transactions. Its a lot shorter (75 minutes) and much easier.
Theyre not exactly necessary, but they do make it so nothing is off-limits to you. Those exceptions mentioned in the Series 7? Those go away once these tests are passed.
. Your firm may require you to become a Registered Investment Adviser. You must take the 65 for them to use professional management platforms.
. This test is required to sell commodities futures contracts.
. To sell managed futures funds, youll need to take this test. Its usually obtained in lieu of the 3.
If youre in the UK, know that the testing process is completely different.
The Series tests just arent a thing. Across the pond, you could have either a CFA Society UK Level 4 Certificate in Investment Management, a CISI Level 4 Diploma in Investment Advice, a CISI Level 7 Masters in Wealth Management, a Fellow or Associate of the Faculty or Institute of Actuaries, or a Manchester Metropolitan University BA (Hons) in Financial Services, Planning and Management.
After your exams are in the bag, youll need to complete your registration with FINRA/NFA, and register with the Securities Commission of each state that you plan on working in. Here are the basics:
Pass a background check (anything beyond a minor traffic violation may disqualify you)
Complete paperwork for both state and federal levels
If only the hard part were over. Now that youre a legitimate broker, you gotta meet expectations. Depending on your firm, theyll probably give you six months to a year of a base salary to give you time to build up your clientele. This will be the hardest part. In fact, many take several years before theyre really comfortable. Its stressful, but its worth it.
The majority of people who drop out drop out now. The money doesnt come in like they want to, theyre not good salesmen, they cant stand the long hours prospecting, they get dropped because they dont make enough for the firm, whatever. If you can get over this hump, youre golden.
In order to maintain your license, youll need to attend seminars and take continuing education classes.
Your employer will facilitate this for you. Just keep up! The market is constantly changing.
Once more, there are three traditional ways you can do this:
Cold calling or door-knocking. You literally grab the phone book (those surprisingly
still exist) and start making phone calls with a smile plastered on your face. You could also get a list of names from the county clerk for a neighborhood and go door-knocking. Yes, dogs may chase you.
A list of possible clients. You can either buy these from a marketing firm or your employer may give them to you. Considerably better than being accused of trespassing.
Going through your own network. Hitting up friends, friends of friends, long lost uncles of friends of friends, joining exchange clubs and various organizations to hit their members, etc.
Quite obviously, the stock market is not a 2 + 2 = 4 kind of place. There are a billion factors going on at once that you have to learn to account for. Youll be giving people advice and risking their hard earn money. Theres quite a lot to get used to. Quite a lot being a vast understatement, of course.
The amount of money you bring home will increase with each year. The easier your job gets, the more money youll make, surprisingly enough. Its really getting the ball rolling thats the hardest part.
Initially youll be working all the time. Whenever you can get to clients, youll be working. That means nights, weekends, and holidays. But when you have a firm client base, youll find yourself working 6 hour days and taking time off whenever you need. It just could take years to get there.
Youll be meeting quotas from day one. If you dont get people to cave to your salesmanship, your job is on the line. Until you have a bank of people you can depend on to invest with you, the pressure will be on 24/7. It can be quite a lot for some people.
Again, if youre not a super salesman, a discount broker or bank broker may be more up your alley. Sales is
for everyone. You could also start at a bank or discount, build your network, and
Your entire job is about getting people to trust you. To trust you with their hard-earned money. Thats asking a lot! Not to mention youll probably be a complete stranger. How are you even going to get your foot in the door?
This is wheregetting a mentorcomes in handy. There are psychological tricks of the trade that all the pros use to keep people from quite literally hanging up on them or banging the door in their faces. Needless to say, youll develop quite the thick skin.
Lets put it simply: youre going to know a lot of terms and concepts that the average Joe doesnt. Thats how you have a job. Instead of rolling around all those acronyms and concepts that people dont understand, youll need to get on their level. Can you take everything you know and make accessible to everyone? Hope so!
Raymond James or LPL Financial are two examples of independent brokers. They offer virtually every project and their employees see payouts in the range of 80-95% (full-service may start you out at around 40% at the beginning of your career, working your way up slowly but surely).
You need an established client base to do this. A very, very large client base. For this reason, CPAs and tax preparers often have a leg up in this department. Its something to aspire to, for sure. After a while in the game, this is a definite possibility.
How can I get ideas for achieving my targets in stockbroking?
Contact as many people as you can who are qualified to invest. Target both existing and new investors. Market yourself in your spheres of influence and join groups with potential clients. Be ever mindful of the fact that you are not there just to sell but to acquire referrals.
Include your email address to get a message when this question is answered.
Brokers can also pursue certification as a Chartered Financial Analyst (CFA) after working four years and passing three exams.
Both FINRA and the NASAA require scores of 70%, except for the Series 7, 63 and 65, which have passing rates of 72%; the Series 66 has a passing score of 75%.
A stockbroker career is very competitive and stressful, resulting in a high turnover.
Many brokerage firms prefer to hire brokers who have demonstrated success in other financial fields.
Stockbrokers and sales agents often work more than 40 hours per week, including evenings and weekends.
To be a stock broker, start by getting a degree in economics, finance, mathematics, accounting, or business management and create your own investment portfolio if youre over 18. Decide whether you want to be a full service, discount, or bank broker, and research firms that youd be interested in working at. Apply to broker positions at a variety of firms, and get trained on the job. Then, take your Series 7 and Series 63 exams and fill out paperwork with the government to get fully qualified as a broker.For tips on trading and handling clients as a stock broker, read on!
wikiHow is a wiki, similar to Wikipedia, which means that many of our articles are co-written by multiple authors. To create this article, 30 people, some anonymous, worked to edit and improve it over time. Together, they cited6 references. This article has also been viewed 599,423 times.
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