How to Become a Stockbroker

How to Become a Stockbroker
How to Become a Stockbroker

If you know what the featured image in this article symbolizes, chances are, you are familiar with the stock market. It is a dynamic marketplace where people buy and sell stocks in the hope of making money. Trades are especially heavy during a bull market, where optimism prevails and prices of stocks keep going up. A bear market on the other hand, is the exact opposite: the sentiment is pessimistic and prices of stocks keep going down. In this article, we will discuss how to become a stockbroker.

What Is a Stockbroker?

Stockbrokers are licensed professionals who buy and sell stocks for retail (individuals), or institutional (business entities) clients. They have a deep understanding of investments and capital markets. First, stockbrokers communicate with their clients to determine what their financial goals are. Then, they give recommendations what stocks are good to buy that will likely provide a gain in the future. Lastly, they buy or sell stocks on the client’s behalf and handle the transaction.

To help clients make money in the stock market, a stockbroker must be able to analyze the financial reports of companies listed in the stock exchange and provide timely advice. Failure to do so can mean potential losses on the part of the client. Aside from the financial performance of companies, the stock market is affected by such factors as the country’s overall economy, monetary policy, as well as geo-political risks.

The better advice a stockbroker can provide, the more money a client can make. Satisfied clients will mean more trades, and this will subsequently lead to more commissions. Simply put, the more clients and trades, the better. Being a stockbroker can be a fun job, but it can also be stressful, as the job involves other people’s money.

How to Become a Stockbroker

How to Become a Stockbroker

1. Take mandatory exams – There are 2 basic tests you must pass before you can become a stockbroker:

• The Series 7 – The Series 7 or General Securities Registered Representative Examination is given by FINRA or the Financial Industry Regulatory Authority. It usually lasts 6 hours and is probably the most difficult test an aspiring stockbroker will take. If you pass this test, then you will become a “registered representative” or stockbroker. You will have the authority to sell all types of securities and investments, except real estate, commodities futures, and life insurance. At present, the Series 7 test costs $290.

• The Series 63 – This test is about conducting business and the different laws that govern transactions. It is much easier than the Series 7 and only takes about 75 minutes to finish. Currently, the Series 63 test costs $96.

2. Complete the paperwork – After you pass the required exams, you need to complete your registration with FINRA/NFA. You must also register with the Securities Commission of each state that you wish to work in. Here is a rundown of things you must accomplish:

• Pass a background check
• Get a fingerprint card
• Complete paperwork at the state and federal levels

3. Meet quotas – Now that you are a licensed stockbroker, you have to meet the expectations of the firm you are working for. Depending on the company, your employers will probably give you six months to one year to prove to them that you have what it takes to become successful stockbroker, i.e., to get and maintain a large enough number of clients.

4. Take continuing education courses – To keep your license, you need to take continuing education classes and attend seminars. Usually, the brokerage firm you’ll be working for will facilitate this for you.

What Course Should You Take Up in College If You Want to Become a Stockbroker?

Although there’s no specific course that students should take to be a stockbroker, some are more advantageous than others. For example, a bachelor’s degree in Business Administration is one of the most popular courses for stockbroker hopefuls. This is because this course covers topics that are relevant to companies in particular, and the stock market in general.

Among the things you will learn are how companies raise capital, why they issue shares of stock, and how they pay dividends to shareholders. You will also learn other aspects involved in running a business. Other college courses you can take if you want to become a stockbroker include Accounting, Finance, or Economics.

How Much Is the Salary of a Stockbroker?

According to the Bureau of Labor Statistics, the median pay for stockbrokers in the US is $63,780 per year (based on 2017 data). But the actual income of a stockbroker is influenced by many factors such as years of experience, what firm they’re working for, and the commission they get from trades.

Conclusion

If you want to be a famous stockbroker on Wall Street, start reading books, find a good mentor, and follow the latest developments on the stock market. After reading this article and knowing how to become a stockbroker, now is a good time as any to take your interest in stocks to a higher level and make a career out of it.