To most of us, the mere mention of the words “stock broker,” sends mental pictures of people in business suits shouting at each other and signalling obscure gestures, while talking to multiple people over the telephone. Some may picture Will Smith playing the role of Chris Gardner in the movie The Pursuit Of Happyness, while some of the more “senior” readers might picture Charlie Sheen playing the role of Bud Fox in the 1987 movie Wall Street. This article aims to shed some light on the realities of being a stock broker.
What is a stock broker?
A stock broker is an investment professional who facilitates the buying and selling of shares of publicly listed companies in behalf of his or her clients. Although this is their main function, brokers can also give advice, guidance, or even stock tips to their clients. Some brokers also create special arrangements with their clients, wherein they manage the client’s stock portfolio in return for a small percentage of the profits. In a nutshell, you need a stock broker to be able to buy or sell shares that are traded in stock exchanges like the NYSE or NASDAQ.
How do you become a stockbroker?
In the US, all stock brokers need to obtain a license from the Financial Industry Regulatory Authority (FINRA). This is done by passing the FINRA General Securities Representative Exam, or more widely known as the Series 7 exam, while being employed by a registered broker-dealer firm. According to the Princeton Review, “Those with prior work experience have the greatest opportunities for becoming a stock broker. Few people become brokers straight out of college. Most employers seek applicants who have already succeeded in other fields, such as insurance sales. If you know your interests lie in the market, study economics, finances, computers, and business management in college. Many employers view ambition as the most important quality a candidate can possess.”
Stock Broker Salaries
According to salary.com, a website that tracks the salaries of various professions across various industries, the median salary for a typical stock broker in the US is $56,450. Keep in mind that that is an approximation, according to some sites, stock brokers earn salaries of $150,000 while some may even earn as less as $30,000. On top of that, stock brokers also earn commissions on the trading volume that they generate within their firms, plus other commissions on profits that result from their management of clients’ portfolios.
Online Stock Brokers
With the arrival of the internet, the stock brokerage business has undergone a lot of changes. One such change is the birth of online trading. Back in the old days, if an investor wanted to buy shares of stock, he or she needed to call a broker by phone and give out his or her orders. Nowadays, people just log into their brokerage accounts online and buy or sell shares with a few clicks of a mouse. That’s all there is to it, you actually don’t need to talk to a stock broker anymore to be able to execute trades.
This turn of events has benefited investors in terms of convenience, speed, and costs. Brokerage commissions now run from as low $4.95 to $14.95 per trade. Furthermore, brokerage research reports are now more accessible because they are readily available to their customers on their websites. With all these developments, you may now be wondering what stock brokers do nowadays. Well, most stockbrokers today service more “traditional” clients. These are the clients that are baffled by new technology and would rather talk to a real person on the phone rather than push buttons on a computer. These customers, in effect, pay for stock broker salaries because they don’t mind paying for higher commissions in exchange for the (perhaps perceived) added service.
Luckily for us, WealthLift readers, we have the WealthLift Brokerage Finder – a tool that helps us select the best stock brokerage for our needs. Just input the required data pertaining to your investing style and the brokerages that fit your style will be displayed. Plus, the brokers add another $100 to your account if you pass the investor’s quiz. Pretty sweet, right?