How to Become a Stock Broker
How to Become a Stock Broker
If you want to become a stock broker, you must understand what a stock broker does? Stock brokers timely buy and sell stocks and other securities on behalf of customers; those customers could be individuals or institutions. Stock brokers earn a commission by making the transaction for the customer. Stock brokers must pass exams and get licenses to legally buy and sell securities and stocks.
Even though stock brokers need to pass exams and get licenses, but there are no degrees required to become a stock broker. Most stock brokers would like to get a degree in order to keep competition in a very competitive market. Here’s what students can expect from the career and the degree pursuit.
What Does a Stock Broker Do?
Stock brokers, through their legal mandate (license) and understanding of investments and capital markets, buy and sell stocks for their customers. Here’s more about what their day-to-day work entails.
Stock Broker Career Basics
Stock brokers must have the ability and insight to analyze investment and fulfill customers’ needs in order to timely buy and sell the suitable securities. As a stock broker provides more correct advice and the customer will make more trades. Stock brokers get mainly paid by commissions, the more trades, the better. This is a high stress job, because stock brokers need to monitor the markets and manage the money of customers.
Stock Broker Careers In-Depth
In order to give timely investment advice, Stock brokers must regularly develop new customers and research the markets. They must have a deep understanding of securities and commodities, depending on their specialization. They also have to analyze company financial reports and provide recommendations to customers. Some stock brokers may not work with customers, but directly on a trading floor, buying and selling stocks pursuant to an order placed by a trader. Other stock broker may focus more on giving investment advice and helping customers find the best way to achieve their investment and financial goals.
Stock Broker Salaries & Job Growth
Stock Broker Salaries Across the US
The median income of a stock broker is well above the national average. However, the actual income of a stock broker relies on many factors, including years in the business, the firm they are working for, their level of educational attainment, and geographical location. These salary differences, based on geography, are highlighted in the below map.
Stock Broker Job Growth
Those interested in a stock broker career are in luck. The need for stock brokers is growing even faster than the national average. However, the growth rate isn’t uniform across the country. The following map will show where the new stock broker jobs are expected to be.
Steps to Becoming a Stock Broker
Working as a stock broker might require only a high school diploma to start, but students can’t stop there if they want to advance. Here are the best steps to take to get there.
1． Finish high school diploma
It is the threshold that a stock broker must earn a high school diploma. You may want to get a college education so that you can keep competition in the complex market. All base on that you finish your high school diploma.
2． Get a bachelor’s degree
The Bureau of Labor Statistics (BLS) reports that in most cases, a bachelor’s degree is required for entry-level securities, commodities, and financial services sales positions. The brokerage firm or investment bank will require a bachelor’s degree if you want to apply for the job. We recommend business or financial field but there is no particular major required. Common stock broker degrees include accounting, business, finance and economics. Taking additional classes in statistics, mathematics and quantitative analysis will also be helpful.
3． Complete an internship
Many Brokerage firms and investment banks will provide summer internship opportunities. Excellent performance during the summer internship will increase your chances to get a job offer.
Depending on the firm, these internships can serve as extended job interviews where successful summer interns will have a significant advantage when applying to these firms for post-graduate employment. This is a solid way to receive the intensive training that some of the bigger companies require.
4． Find a sponsor to take the necessary licensing exams
In order to sit for the necessary exams to become a licensed stock broker, an individual must be sponsored by a FINRA (Financial Industry Regulatory Authority) registered firm or other regulatory authority. Generally, this means getting hired by a brokerage firm or investment bank before getting licensed. Brokers registered with FINRA must complete continuing education classes to keep licensing current.
5． Take and pass the licensing exams
Practically all states require stock brokers to take and pass the Series 7 and Series 63 exams. The Series 7 exam covers financial topics relating to the trading of many different types of securities and Series 63 also covers the trading of securities, but focuses on state rules and laws. Depending on the firm, additional licensing exams may be needed. Some stock brokers may choose to pursue certification that, while not required, may enhance professional standing and earnings.
Preparing for Stock Broker Careers Degrees & Programs in Business & Finance
Though there is no particular major that students should focus on to reach the dream of being a stock broker, some are more advantageous than others. Here are a few options.
Business Degree
A bachelor’s degree in business is one of great choices for starting a stock broker career. A business degree will cover a wide range of business related courses; not only will graduates gain familiarity with securities and trading stocks, they will learn other aspects of a company, such as marketing, operations and ethics. Higher level courses a business major can expect to take include:
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Introduction to Marketing
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Business Law
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Introduction to Finance
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Managerial Accounting
Finance Degree
A finance degree is another universal degree for individuals interested in working as a stock broker. Although slightly less comprehensive than a business degree, a finance degree will go more in-depth into subjects likely to be encountered by a stock broker, such as investments, risk management and financial analysis.
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Valuation of Securities
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Investment Banking
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Business Quantitative Analysis
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Financial Accounting
Graduate Business &
Finance Program Admission Requirements
Although a bachelor’s degree is the de facto degree requirement for a stock broker career, a master’s degree in business and finance are very popular and highly recommended. In order to apply for a master’s program which means you have to meet certain requirements. Please note that the following list is not exhaustive and each school will have its own unique application requirements.
Master’s degree in business or finance admissions requirements:
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Completion of an application
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Payment of an application fee
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GMAT or GRE test scores
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Resume or curriculum vitae showing pertinent work in finance
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Personal statement
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Letters of recommendation
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Official undergraduate transcript (and graduate, if applicable)
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Evidence of general knowledge in basic business and finance related courses, such as quantitative methods, accounting and financial analysis.
Business, Finance & Stock Broker Degrees:
Courses & Requirements
Aspiring stock brokers seeking a master’s degree might be well-served with these two standouts:
Master of Science (MS) in Finance
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Time to complete: 2-3 years
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Basic requirements:
Typically a master’s degree in finance consists of about 35 to 40 credits, with classes taken year-round although school is different. Students will not only learn about more detailed and specialized business and finance related topics, but will take management courses as well.
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Why it’s different
The MS in finance provides an opportunity for students to concentrate in a particular area of finance, such as capital markets and investment. Different form business graduate programs, a MS in Finance are more tailored to finance-related subjects and less on leadership.
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Who this program is good for
Individuals who want additional instruction on specialized areas of finance or want to improve their level of knowledge in a specific area so that they may continue to grow in that specialty.
Financial Computing
Students will learn about different computer technologies that can assist in the process of financial analysis.
Skills Gained
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Ability to use financial analysis software
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Calculating pricing for securities by using computer models
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Ability to use database software in financial analysis
Advanced Financial Concepts
This course covers advanced and complex valuation models and financial decision analysis.
Skills Gained
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Familiarity with various investment valuation models
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Application of different valuation models to a variety of common situations
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Understanding of investment firm investment decision making process
Global Investments
Financial instruments from other countries are explained in this class.
Skills Gained
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Knowing how derivatives work
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Familiarity with various derivative risk reducing models
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Proper use of derivatives for a given investment approach
Risk Management
This course will focus on derivatives as a means of deducing investment risk.
Skills Gained
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Understanding of investment risk
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Familiarity with underlying principles that govern risk
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Understanding of derivatives in the ‘big picture’ of investments
Fixed Income Instruments
You will be familiar with different types of fixed income investments and how they work.
Skills Gained
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Understanding of price/yield relationship
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Knowing about various terms and definitions
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Ability to analyze a fixed income instrument and determine its applicability to a given investment strategy
Master of Business Administration (MBA)
· Time to complete: At least 2 years
· Degree Requirements
Most MBA program will last about two years, but sometimes less. The curriculum consists of a broad range of business, finance and leadership related coursework to prepare students for management and leadership roles.
· Why it’s different.
In an MBA program, students will not only learn additional business and financial concepts, but also but how to think strategically to improve the financial status of a business as well as how to take on a leadership role within a business.
· Who this program is good for
People who aspire to archive upper management level positions are perfect for an MBA degree. The MBA also provides an excellent opportunity for students to establish long-term and valuable connections with fellow classmates and faculty.
Business Operations
Students will examine business operations and recurring operations. Common issues and strategies will be reviewed.
Skills Gained
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Utilizing tools and methods to improve business operations
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Examining different perspectives of common business operations.
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Understanding of terms and concepts used in business operations
Strategic Accounting
Students are taught accounting methods and processes that can be used for major business decisions.
Skills Gained
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Familiarity with various managerial accounting methods for financial assessment
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Identification of business progress and performance using accounting concepts
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Ability to make business decisions based on accounting information
Business Planning
This class covers the overall process of how business decisions work to improve the value of the company or organization.
The class will
Skills Gained
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Knowing how to formulate business decisions
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Proper business assessment techniques for determining areas in need of improvement
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Understanding of business concepts and how they can affect business decisions
Microeconomics
This course is about the basics of consumer demand and business supply models.
Skills Gained
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Understanding of supply-demand concepts
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Application of cost curves
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Using economic tools to improve business performance
Business Analytics
How to use statistical methods to measure business performance is presented in this course.
Skills Gained
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Familiarity with multivariable regression
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Use of business statistical models
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Knowing how analytical models can assist in managerial decisions
Stock Broker Career Concentrations
Stock brokers can easily switch careers or engage in job duties that overlap with other financial professionals. Potential professional areas for stock brokers can include (with salary info from the Bureau of Labor Statistics):
Securities Trader
Median salary: $71,550
Securities traders buy and sell securities on behalf of their employer in order to make money for that employer. Traders often make high risk, high reward trades that can be worth millions of dollars.
Personal Financial Advisor
Median salary: $89,160
A personal financial advisor meets with their customer and provides financial and investment advice. Their job can entail listening to the customer to understand their investment and financial goals, then recommend financial instruments and investment strategies to best achieve those goals.
Financial Analyst
Median salary: $80,310
Financial analysts provide financial forecasts and data in order to give investment advice to others, usually organizations. Financial analysts typically work in one of two areas: giving advice to entities that are looking to buy investments and entities that are looking to sell investments.
Financial Manager
Median salary: $117,990
Financial managers are responsible for financial matters. More specifically, they manage the financial goals of an organization. Financial managers usually work in-house for a company and find ways to improve the company’s financial position.
Investment Banker
Median salary: $71,550
Investment bankers act as intermediaries for business and investors. Businesses need to raise capital and often do so by selling securities. Investors are looking to buy securities in order to make a profit. Investment bankers give advice to businesses to help raise the most money, and then help those businesses raise the capital they need.
COMPONENTS OF SUCCESSFUL STOCK BROKER CAREERS: SKILLS, CREDENTIALS, TOOLS & TECHNOLOGY
In order to be a successful stock broker, a particular set of skills, tools and credentials are needed. Some of these are essential while others are helpful for professional advancement and promotions.
Skills
Numerical skills
Stock brokers deal in securities and securities are measured and valued by numbers. Being sensitive to the numbers and know how to manipulate the numbers through financial formulas is important.
Attention to detail
Stock brokers must be familiar with their customers, in addition to knowing what the market is doing. Details can make a big difference between an awful choice and successful investment.
Customer service
Stock brokers trade securities on behalf of their customers. Often the stock broker will need to convince their customer on a particular investment decision or be available to answer investment questions.
Ambition
Stock brokers need to be willing to take the initiative to find new customers. Without the ambition to grow their customer base, stock brokers will quickly find themselves pushed out of the business by up-and-comers.
Analytical thinking
It is a necessary ability for stock brokers to analyze securities, which are often a series of numerical values, and be able to glean useful information that they can deliver to customers or use to sell more securities.
Tools
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Desktop computer with multi-monitor workstation
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Laptop computer
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Multi-line telephone
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Financial analysis software
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Spreadsheet software
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Smartphone
Credentials
There are plenty of credentials available to stock brokers. Many of the credentials come in the form of certifications and exams, which can expand a stock broker’s job responsibilities and allow them to interact more expansively with potential customers. Some of the exams and certification available include:
Exams
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Series 7 (required to be a stock broker)
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Series 63 (required to be a stock broker)
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Series 65 (to become a licensed investment advisor)
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Series 66 (combination of Series 63 and 65)
Certifications
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Certified Financial Planner
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Chartered Financial Consultant
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Chart
Related Careers at a Glance
What do related occupations make ?
There are other attractive financial jobs available similar with stock brokers. Like a financial analyst, a personal financial advisor, insurance sales agent, financial manager, or real estate brokers. These are the average salaries you might expect from related occupations:
Stock Broker and Related Job Salaries
Stock Broker Career & Degree Resources
National Association of Day Traders
The NADT is a professional association that works to improve the professional standing and education of day traders.
National Association of Stock brokers
Consisting of various chapters all over the country, the NAS facilitates the sharing of information between companies, stock brokers and analysts.
National Organization of Investment Professionals
The NOIP is tasked with improving the regulatory setting so that all investment professionals may benefit.
The STA is a trade organization which advocates on behalf of security professionals. The STA provides educational and lobbying resources for its members.
US Securities and Exchange Commission
The SEC is the leading regulating agency for investments. The SEC also works to protect investors and the integrity of capital markets.
Business & Stock Broker Degrees Search Tool
There are a plethora of stock broker degrees and related educational programs that prepare individuals for a career as a stock broker. With so many choices, deciding which school and program to attend can be overwhelming. The following search tool is designed to narrow down a large list of schools and programs to something more manageable.
GET YOUR ONLINE DEGREES FOR STOCK BROKERS
If you don’t have the time to sit in a classroom, these stock broker programs are offered through online platforms. Remember that many stock broker programs might be hybrid – offering some online courses while others are required to be taken in person.
What does a Stock Broker do?
Stock brokers work closely with clients to identify their buying powers and risk tolerance levels and develop strategies that will enable each client meet financial goals.
Stock brokers are trained, licensed professionals who buy and sell orders for stocks and securities.
Stock brokers work for different types of clients including individuals (with lots of money to invest), companies, or institutions (e.g, a university like Harvard).
Stock brokers are typically responsible with selling securities and commodities, advising clients on suitable investments, helping clients manage their investment portfolios, executing trades or sales in the exchange market, monitoring the performance of stocks, and protecting the financial interests of clients.
Most stockbrokers are required to meet certain sales quotas to remain employed, and they are responsible for bringing in new clients and selling them stocks or other investment products.
What skills do you need to be a Stock Broker?
A good broker should pursue education to become knowledgeable about the market and personable enough to build and maintain relationships with clients.
Successful brokers must possess excellent communication skills, especially over the telephone.
A strong work ethic, good judgment, mathematical aptitude, the capability to withstand high pressure situations, and a genuine interest in finance are all necessary skills for a junior stock broker.
As soon as you pass the required exams for your state, you are officially a stock broker, and you represent the brokerage firms that sponsored you.
Stock brokers can benefit from taking elective classes in speech or technical writing, which can provide the fundamental communication skills stock brokers need to discuss or thoroughly explain investment strategies and risks so that clients understand and are comfortable with their investments.