You’ve likely seen a Hollywood movie that features Wall Street, the mecca of the stock market, and shows the excitement and chaos of the trading floor. But have you ever watched a movie that teaches you how to become a stockbroker? Probably not.
If this is a career path that interests you, we here at Career Karma want to make sure you can fully consider becoming a stockbroker by using this comprehensive guide.
What is a Stockbroker?
Stockbrokers are market experts who specialize in trading stocks for companies. They usually work for brokerage firms on trading floors, which are very fast-paced, often high-stress environments. They can also specialize in specific markets, like real estate.
What Does a Stockbroker Do?
A stockbroker is a financial services professional who manages stock portfolios and makes trades to grow and optimize their clients’ investments. They work for large companies and private clients.
Analyze Financial Markets
A stockbroker must know the stock market like the back of his or her hand. They need to be able to analyze the markets based on historical trends and future volatility. Having a pulse on the global economic situation is very important when it comes to being a stockbroker.
Manage Stock Portfolios
Stockbrokers manage company and client portfolios. This means they should know exactly what holdings they are working with and what trades could be most beneficial at any given time.
This is a stockbroker’s ultimate responsibility. Without buying and selling stocks, a stockbroker would not be doing his job. A broker trades securities on behalf of their firm. Whether the market is doing well or poorly, a stockbroker should be making trades to secure their portfolios.
Essential Stockbroker Skills
A lot of strategy goes into life on the trading floor. Without a keen sense of strategy, a stockbroker would not do well in their portfolio management. Stockbrokers should be strategic in how they trade stocks and other securities.
Analytical skills are prerequisites to strategic skills on Wall Street. Without the ability to analyze the markets and predict future scenarios, stockbrokers would have a hard time applying their trading strategy.
Brokers spend much of their day on the phone or communicating online to make their trades. They also work on teams with many other brokers, so they need to have strong communication and listening skills.
Stock Broker Salaries and Job Outlook
According to PayScale, the average annual salary for a stockbroker is just over $56,000. That said, this is an average base salary. Stockbrokers make a good portion of their earnings through the commissions they earn from trades. The average annual commission is $25,000.
The demand for stockbrokers is increasing as the financial services industry continues to grow. However, demand is not the same throughout the country. Some local financial services industries are growing faster than others. According to the Bureau of Labor Statistics, demand for traders who specialize in commodities is set to grow faster than other specializations.
How Long Does it Take to Become a Stockbroker?
Most firms will only hire aspiring stockbrokers with bachelor’s degrees, usually in finance or business administration. Most full-time bachelor’s degree programs take four years to complete.
You can get an entry-level position at a brokerage firm straight out of a bachelor’s degree program and can expect to get on-the-job training. This means that on the whole, it will take just over four years to start your career as a stockbroker.
How to Become a Stockbroker: A Step by Step Guide
Here is our step-by-step guide to the steps you should take to launch your career as a stockbroker.
Step 1: Get a Bachelor’s Degree
There are no specific education requirements if you want to become a stockbroker. The general requirement is a bachelor’s degree which could technically be in anything. The most applicable bachelor’s degrees are in fields like finance, business, and math.
Step 2: Get an Internship
If you get an internship during or just after your undergraduate studies, you can get training in the field before pursuing licensure. You may even find a firm that will pay the costs of the licensing exams and employ you after you pass.
Step 3: Take and Pass the Licensing Exams
To buy or sell stocks, you have to pass two licensing exams, the Series 7 exam and the Series 63 exam, also known as the Unified Securities State Law Exam. The exams give brokers registered representative status so they can make trades on behalf of a brokerage firm. All stockbrokers must pass these two exams in order to manage the buying and selling of stocks, bonds, and mutual funds for their firms.
Step 4: Get Additional Certifications
After passing the mandatory Series 7 and 63 exams, professionals can opt to get a few other certifications. You can pursue the Series 55 exam, which makes you a licensed investment advisor. If you know you want to be a licensed investment advisor right off the bat, you could consider taking the Series 66 exam, a license that combines Series 63 and Series 65.
Should You Become a Stockbroker?
If you follow financial markets closely and want to sink your teeth into the finance world, this is a great career path to pursue. It is also a field with high earning potential.
FAQs About Becoming a Stockbroker
Stockbrokers make excellent money. Though the mean annual salary of a stockbroker is about $56,000, average commissions are about $25,000. Stockbrokers with more years of experience have a higher average annual earning potential of $99,000, not including commission.
All you need is a bachelor’s degree, ideally in a related field like finance or business administration. Then, you need to get, at a minimum, the Series 7 and Series 63 licenses.
Stockbrokers are dealers in buying, selling, and trading stocks, bonds, and mutual funds on behalf of brokerage firms. They work to optimize their clients’ investments.