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How to Become a Stockbroker

Stockbrokers owe much of their public image to blockbusters like “Wall Street,” “The Big Short,” “The Wolf of Wall Street,” and “The Pursuit of Happyness,” but these professionals’ real-life responsibilities aren’t as widely known as the exploits of their more glamorous Hollywood counterparts. Stockbrokers purchase and sell stocks to benefit the financial health of their brokerage and clients. A strong financial acumen, analytical skills, and an ability to make professional connections are valuable assets for anyone interested in becoming a stockbroker. While there is no set path to a career in this field, aspiring stockbrokers can take several steps that can prepare them to thrive in this role.

business meeting at desk

What Does a Stockbroker Do?

Stockbrokers buy and sell stocks issued by corporations to benefit their clients’ investment accounts. They are typically employed by brokerage firms. These brokerage firms can be located across the country and world, although some of the largest and most successful are located on New York’s Wall Street.

There are three types of brokerage firms: full-service, discount, and bank. Brokers at full-service firms, like Edward Jones or Raymond James, can provide advice to clients in addition to initiating their stock purchases or sales. Brokers at discount firms, like Charles Schwab or Ameritrade, conduct buying and selling on behalf of their clients but generally do not provide financial advice on which stock trades to make. Bank brokers work at banks and often provide safer investment options to their clients. The type of firm he or she works for will likely affect a stockbroker’s salary.

At full-service firms, the responsibilities of a stockbroker include determining which stocks to purchase by conducting frequent, extensive market and economic research. Brokers can meet with and provide advice to current clients on which stock trades to make and also find new clients for whom they can invest in the market. Throughout the day, stockbrokers keep close watch on any financial news or developments that may impact their trading activity.

Because stock trading is a competitive industry, brokers need to possess certain financial knowledge and skill sets to succeed. In a 2008 seminar held by the California Debt and Investment Advisory Commision, Deborah Higgins, president of Higgins Capital Management, Inc., noted experience in public funds investing, market knowledge, strategic and tactical ideas, and independent thinking as traits that clients should look for in brokers acting in an advisory capacity.

Steps to Becoming a Stockbroker

Professionals seeking jobs in finance may choose to pursue a number of paths toward a career as a stockbroker. Here are some key steps that could help you get there.

1. Earn a Bachelor’s Degree

Stockbrokers need to have an extensive understanding of finance, and most brokerage firms require candidates to have at least a bachelor’s degree. Earning an undergraduate degree in a business-related field like accounting, economics, or finance, such as an online bachelor’s in financial services, can help provide aspiring stockbrokers with a background in financial analysis and planning, investment techniques, financial institutions, and portfolio management.

2. Earn a Master of Business Administration

Many brokerage firms do not require candidates to have a Master of Business Administration (MBA) to become stockbrokers. However, the degree can be useful for stockbrokers who are seeking more competitive positions, looking to obtain a higher salary, or pursuing a more senior role in their firm.

3. Gain Professional Experience

Many firms require broker candidates to have professional experience in business or finance. This experience can be acquired through internships with brokerage firms or other financial organizations. It is also beneficial for interns and professionals to have other experience in finance or a related field, which can help raise a stockbroker’s salary expectations.

4. Pass Required Qualification Exams

All brokerage firms will require that employees obtain the necessary government licenses before they can become a stockbroker. Administered by the Finance Industry Regulatory Authority, each of these licenses certifies that a financial representative is able and registered to practice in a certain field. Stockbrokers are required to pass the Series 7 — General Securities Representative Exam to become licensed. Often, firms will offer training to help their stockbroker candidates prepare for these exams. While not a requirement for most entry-level roles, a Chartered Financial Analyst (CFA) certification can open even more professional doors for brokers. To obtain this certification, brokers need a bachelor’s degree or equivalent work experience and a passport, and they are required to pass a series of three exams, according to the U.S. Bureau of Labor Statistics (BLS). The Level I exam is a 240 question, multiple-choice format, covering the fundamentals of financial analysis. The Level II exam is a series of questions, covering the valuation of assets and the proper application of investment tools. The Level III exam covers all content areas along with assessing the ability to plan and manage portfolios.

Stockbroker Salaries

The salary range for stockbrokers fluctuates significantly, likely because many brokers work on commission. According to PayScale, the overall pay range for stockbrokers was $39,000 to $152,000, with the median salary reported as $57,000. The biggest factor impacting a broker’s salary was experience, with more seasoned professionals earning much higher salaries than the national average.

 

Where a broker works may also impact his or her earning potential. PayScale reported that stockbrokers in New York earned a median salary of $100,000, but the median salary for brokers in cities like Austin, Denver, Fort Worth, and Indianapolis was less than $60,000. What a stockbroker does, like working in a full-service capacity or at a discount firm, may also impact his or her salary.

Future Growth Opportunities for Stockbrokers

The expected rate of job growth for stockbrokers is 6 percent, with an estimated 23,300 new jobs to be created from 2016 to 2026, according to the BLS. “An aging population and the decline of traditional pensions may boost demand for these workers, as individuals approaching retirement seek brokers to facilitate securities purchases,” according to the BLS. However, the job security for a stockbroker is closely tied to the health of the financial industry. Many large brokerage and financial firms went bankrupt or out of business during the 2008 financial crisis, causing many financial representatives to lose their jobs and clients to lose their ability to invest in the market. Future economic downturns could negatively impact brokers as well. The BLS notes that consolidation in the financial services industry, as well as the increased automation of certain stock purchases, may slow hiring. “Financial firms will focus on hiring sales agents with specialized areas of expertise and strong customer-service skills,” according to the BLS.

Learn More About Becoming a Stockbroker

Stockbrokers work hard to help their clients achieve their financial goals. They stay on top of financial news and economic developments, provide sound advice to clients, and continually pursue new business. The field has strong growth potential and can be financially rewarding for those who are able to master the key skills of the trade.

Maryville University’s online bachelor’s in financial services provides students with courses in business and financial services, guidance from established professionals, and a strong professional network, enabling graduates to serve as effective leaders in finance. If you are interested in learning more about how to become a stockbroker, visit the program website and start your journey today.

 

Sources:

California Debt and Investment Advisory Commission, “Roles and Responsibilities of a Broker/Dealer”

Financial Industry Regulatory Authority, Qualification Exams

Houston Chronicle, “What Is the Role of a Stock Broker?”

Maryville University, Online Bachelor’s in Financial Services

PayScale, Average Stock Broker Salary

U.S. Bureau of Labor Statistics, Securities, Commodities, and Financial Services Sales Agents