HOW TO BECOME A STOCK BROKER: CAREERS IN INVESTING

HOW TO BECOME A STOCK BROKER: CAREERS IN INVESTING

A career as a professional stock broker or trader can be exciting, stressful and financially rewarding. To become a stock broker, students need years of education and training, and a strong commitment to the financial success of clients, co-workers and the firm. Anyone seriously considering becoming a stock broker or trader needs to seriously think about the following questions, including: Do I need to complete a formal education to land a job? Is formal licensure or certification required? What skills do I need to develop for success? Do I want to work on the accounts of big businesses or trade for small investors?

The following “how to” guide helps those interested in the profession learn the basics and better understand the critical details. Topics covered include: the broker’s job duties and responsibilities; the skills needed for success in the stock trade; and the steps one may wish to consider when entering the field.

Stock brokers are those who connect the buyers and the sellers in financial markets all over the world. They understand money, investments and other financial situations, and strive to conduct trades quickly, efficiently and with the best possible outcome for the client. For example, they may negotiate deals, sell or trade commodities, stocks and other financial instruments for those clients, and advise clients on both short-term and long-term investments.

Anyone interested in becoming a stock broker should possess certain skills, traits and interests. They should be great with numbers and have close attention to detail. Being a very strong customer advocate is necessary, and that means that you must also have great people skills, including the ability to communicate detailed information in a very clear-cut way. The world of finance can be tough, so you should have a thick skin and the ability to take the initiative in any situation.

Many people choose to go into stock trading because of the salary the career promises. According to the Bureau of Labor Statistics, stock brokers made a median wage of $71,720 in 2012. The top ten percent of the profession made an average of $187,199 per year or more. Salary is typically based on a minimum paid by the firm and commissions on top of that. Experienced stock brokers with a large client base can reasonably expect to make more money than those who are just starting out.

EARN A DEGREE IN BUSINESS OR FINANCE

Although not absolutely necessary to obtain a broker’s license, most professional stock brokers start their career path by earning a college degree. Most brokerage houses, in fact, require that all of their entry-level brokers and traders hold at least a bachelor’s degree, preferably one in finance, accounting, business or economics. A special emphasis in mathematics, statistics or a related subject is also desirable. Additionally, a master’s degree in finance or business administration can prove extremely valuable for career advancement.

College students interested in the stock trade should think about joining a business-related fraternity or campus club. Such organizations provide excellent networking opportunities that can lead to internships or entry-level paid positions with local brokerage firms.

Business-related bachelor degree programs are very popular, and quality programs can be found at most major colleges and universities. Business degree programs are also among the most popular available through distance learning. Whether seeking a degree online or through more traditional means, it is crucial that the course program is reputable and fully accredited.  All stock brokers must be licensed to practice. In order to take the mandatory licensing tests (see below), an individual must be sponsored by a broker and complete a minimum of four months of brokerage employment. Paid starting positions at brokerage houses are few, and beginners may have to settle for non-paying internships. Whether salaried or not, these positions provide individuals with in-house classes that prepare them for their licensing exams, as well as real on-the-job experience.

Prospective brokers should also consider starting their own stock portfolios. Only a small amount of money is required to open an account, and the experience gained from trading within one’s own portfolio is invaluable.All stock brokers in the United States are required to obtain licensing. In most states, that means taking and passing the Series 7 and Series 63 examinations. The Series 7 is a six-hour exam designed to gauge one’s general knowledge of the brokerage field, and covers all types of securities, including stocks, bonds, mutual funds, annuities and more. It also deals with ethics and securities law. The series 63 exam is a shorter test and covers topics such as transaction law and business practices. Some states or brokerage firms may require additional licensure.

Once a broker has earned the necessary licenses, he or she will begin the process of applying to brokerage firms and interviewing for jobs. There are several brokerage house options (full-service brokerages, discount brokerages, independent brokerages, etc.) available to new brokers, each with its own unique characteristics and basket of client services. Prospective employees should honestly assess their individual talents, strengths, weaknesses and career goals in determining the type of firm for which they are best suited.

The finance industry has seen some tough times in recent years, especially due to the housing bubble and the economic downturn. As a result, growth in the finance and insurance industry is expected to hit 9 percent from 2012 to 2022. However, stock brokers will see a higher rate of employment – about 11 percent. As the economy recovers, the demand for financial experts is expected to increase. Competition for open positions is expected to be fierce, so those who have certification, an MBA, great grades in college and experience through internships will see much better opportunities.