Last Updated: January 18th, 2022 by
Hollywood movies and TV shows about Wall Street make stock exchanges look very exciting, and they certainly can be. That said, most regular people don’t have the time or energy to trade stocks themselves.
That’s where stockbrokers come into play. This exciting career in the finance industry will have you buying and selling stocks on behalf of your clients. Plus, you’ll provide advice and guidance, especially when the market shifts upwards or downwards.
This guide will show you how to become a stockbroker, from the process you’ll go through and where you can find work as one.
Visit our Career Guide for a list of all our job insights for an in depth look at the new career path you are considering.
Job Description
The first step to learning how to become a stockbroker is to understand what the job entails.
Stockbroking means buying and selling stocks on behalf of your clients. In doing so, you’ll typically earn a commission on each trade that’s based on a percentage or a flat fee.
Besides stocks, you’ll also help clients invest in other types of securities like bonds, futures, and many more. You’ll also monitor your clients’ portfolios (or collections of investments) and notify them if you think their investments are going up or down in value.
Stocks and other securities can be quite complex and challenging to understand. As a stockbroker, you’ll also provide clients with investment advice to help them make better decisions.
Ultimately, though, the decision is still theirs. So, you’ll carry out buy and sell orders whenever they request it.
What Does an Average Day for a Stockbroker Look Like?
Before diving deeper into learning how to become a stockbroker, it’s crucial to know what it’s like to work as one.
Here’s what an average day will look like for you if you pursue this career path:
Market Research
The stock market is heavily influenced by what goes on in the news. So, your day will start very early with market research, but first, you must check the news to look for any information that will affect the stock market negatively or positively, so you can advise your clients.
At the same time, you’ll also look for any business opportunities that you can offer to your clients.
Client Calls and Emails
Throughout the day, you’ll be responding to calls and emails with your clients. Most of those calls will involve asking you to buy or sell stocks on their behalf.
Clients will also call you to ask for guidance to help them understand what’s going on in the market that day. Depending on what’s going on in the news, they might be terrified or overly excited.
Your job is to help them understand the facts to make rational decisions. Whatever the case is, you’ll carry out orders based on their instructions.
Buying and Selling When the Market Opens
Stock markets generally open from 9.30 am to 4 pm, with slight differences in timing for specific financial instruments. These are your busiest hours, as they’ll be when you buy and sell stock according to your client’s instructions.
Monitoring Client Portfolios
As the stock market goes up and down throughout the day, you’ll also keep an eye on client portfolios. The term ‘portfolio’ simply means the collection or basket of stocks that a client owns.
Monitoring those portfolios helps you guide clients to minimize losses and maximize profits.
For example, if a particular stock is on a downward trend, you can advise clients to sell it before they lose any more money.
Cold Calling
Cold calling is a reality for all stockbrokers, both newbies, and veterans alike. Your brokerage firm will hand you marketing leads in the form of names and phone numbers of potential clients.
Your responsibility is to call and convince them to do business with your firm, primarily through you.
How to Become a Stockbroker: Process
The process for how to become a stockbroker is straightforward. So, you can expect other stockbrokers you work with to have gone through the same process.
Here are the different parts of the process you’ll go through:
1. Get a Bachelor’s Degree
The first step in how to become a stockbroker is by getting a formal education.
Getting a bachelor’s degree is a minimum educational requirement for working as a stockbroker. Degrees in fields like business, finance, economics, and accounting are especially relevant to this line of work.
Regardless of which degree you choose, you should sign up for courses that cover subjects like:
- Finance
- Business
- Accounting
- Economics
2. (Optional) Get an MBA
A postgraduate qualification is not compulsory to work as a stockbroker. However, if you’re wondering how to become a stockbroker, it will be incredibly valuable to you in the long term, especially if you plan on seeking top positions in a brokerage firm.
A Master’s in Business Administration (MBA) is the most sought-after postgraduate degree for this line of work. It will help you stand out among your peers and earn you higher-level positions, a better salary, and more significant signing bonuses.
There is no perfect time to get an MBA. Some stockbrokers pursue it relatively soon after graduation, while others first wait a few years to gain real-world work experience.
3. Gain Training and Experience
Whether you’re still in college or already in the job market, you can increase your chances of success by getting training and hands-on experience as you learn how to become a stockbroker.
Remember: the stockbroker role involves a lot of persuasion and sales. So, gaining early experience in selling things will help you develop skills you can use later in your career.
Besides that, you can also gain hands-on experience by buying and selling stocks using your own money. Doing that will expose you to the stock market early and help you understand the ins and outs before you graduate and join the industry.
Trading with your own money also has an added benefit. It allows you to establish a track record for successful trading to show potential employers. That track record will also show that you’re willing to take calculated risks.
4. Register and Get Licensed
You must register with the Financial Industry Regulatory Authority (FINRA). They administer the Series 7 license that you must get to begin your career as a stockbroker.
Stockbrokers also help clients buy and sell other financial instruments (e.g., bonds, mutual funds, etc.).
So, here are a couple of other licenses you might have to get:
- Series 63, administered by the North American Securities Administrators Association (NASAA). This license is required alongside your Series 7 license to work as a stockbroker.
- Series 3, also administered by FINRA, to sell commodity futures contracts.
- And other licenses, depending on what services your brokerage firm provides to clients.
5. (Optional) Additional Training
Working as a stockbroker is incredibly competitive. So, you can always benefit from taking additional training courses that will support your work.
Those courses can include topics like:
- Sales and marketing training.
- Persuasion training.
- Additional training in statistics, economics, international business, and more.
Read More: Now that you know how to become a stockbroker, don’t forget to stop by our related guide on Bank of America Jobs and Careers. Discover everything you need to know to work in this field of finance and with one of the largest leaders in the banking industry.
Are You Suited for a Stockbroker Career? Skills, Credentials, Tools, and Technology
Learning how to become a stockbroker isn’t just about getting the right college degree. To go far in this line of work, you must also have the necessary skills and proficiencies.
Here are some of the ones you must have or be willing to develop to succeed as a stockbroker.
Personality and Skills
The US Bureau of Labor Statistics (BLS) highlights personal initiative, customer service, and being detail-oriented as crucial personality traits and skills for this role.
As a stockbroker, you must reach out and find clients yourself. That takes plenty of personal initiative, especially since you’ll often be rejected by uninterested customers.
For the clients who choose to work with you, your customer service skills will keep them happy. There are plenty of stockbrokers around, so you’ll stand out by providing your clients with better service.
Lastly, being detail-oriented is crucial as you work with complicated financial instruments like stocks, bonds, and others. Understanding those details makes it easier for you to help your clients understand them, as well.
Credentials and Proficiencies
The Occupational Information Network (O*NET) finds that you must be proficient in economics and accounting, sales and marketing, and mathematics.
Remember: you’re in the business of selling financial instruments, namely stocks. So, having a solid grasp of economics and accounting will help you understand how those instruments work for the benefit of your clients.
Plus, your role is to sell your services to existing and potential clients. So a successful salesperson must understand sales and marketing concepts to appeal to their clients, whether you’re trading stocks or anything else.
Lastly, buying and selling stocks involves a lot of calculations regarding prices, profits, losses, and more. Therefore, you must crunch those numbers effectively with a strong understanding of mathematics.
How Does a Stockbroker Find Work?
Most stockbrokers find work at a local brokerage firm. However, you can work as a stockbroker at financial institutions like banks and alongside fund managers.
Wherever you choose to work, the firm or institution will start you off with hands-on training, which will complete your journey of learning how to become a stockbroker.
You can also sharpen your skills and gain valuable experience by buying and selling stocks for yourself, using your own money.
What’s the Average Salary of a Stockbroker?
There are a few crucial things to understand about the money you’ll earn as a stockbroker. Firstly, you’ll earn a salary as you gain hands-on knowledge on how to become a stockbroker. Trainees typically do not earn commissions until they have their own clients.
Eventually, you’ll develop a client base that you serve as part of your brokerage firm. Then, your broker pay will mainly come from the commissions you earn to help clients.
Still, the US Bureau of Labor Statistics shares that stockbrokers earn an average of $96,540 a year. Those in the top 90th percentile earn $116,020 a year, while those in the bottom 10th percentile earn $36,910.
The BLS also lists these as the top 5 highest-paying states for stockbrokers:
- New York ($160,430 a year)
- Connecticut ($127,300 a year)
- District of Columbia ($113,480 a year)
- Massachusetts ($107,400 a year)
- Minnesota ($104,300 a year)
There are several ways that you can increase your earning potential in this role, like:
- Sales skills: Being a stockbroker is a sales position like any other. So, sharpen your sales skills continuously with additional training and self-learning.
- Master of Business Administration: A deeper understanding of the business world will help you provide better advice to your clients. That will indirectly earn you more in commissions.
- Stay up-to-date: News in the business world travels fast. When you can successfully stay ahead of what’s going on, you can provide your clients with timely advice, not just good advice.
Stockbroker Job Outlook
One thing that concerns people interested in learning how to become a stockbroker is the job outlook for the foreseeable future. Unfortunately, the US Bureau of Labor Statistics (BLS) estimates the field will grow by only 4% from 2020 to 2030.
The BLS considers that growth rate to be slower than average. That 4% means that there will indeed be growth. However, you can expect the industry to remain relatively competitive when you join it.
Top 3 Most Popular Job Paths
As you learn how to become a stockbroker, you’ll also have to decide what type of stockbroker you’d like to be.
Here are the 3 job paths that you can choose in this line of work:
Full-Service Stock Broker
When you work as a full-service stockbroker, you’ll do more than just buy and sell stocks on their behalf. You’ll also provide them with research, advice, tax guidance, and more.
Because of all the value-added services, you’ll provide, you’ll work with fewer clients and earn higher commissions. Think of this as the ‘quality over quantity’ job path.
Discount Stock Broker
As a discount stockbroker, you’ll pretty much only buy and sell stocks at your clients’ request. Discount brokers don’t provide advice or other value-added services and rely more on a salary rather than commission.
You can think of this as the ‘quantity over quality’ job path.
Online Stock Broker
These days, many brokerage firms have gone online, typically offering similar services to discount stock brokers. Many of these roles have become automated, but human stockbrokers still have parts to play.
Still interested in working with money but aren’t sure if learning how to become a stockbroker is right for you? We wrote an informative career guide on Banking Jobs and everything you need to know to pursue these careers.
Professional Associations
National Association of Stockbrokers (NAS)
Securities industry and Financial Markets Association (SIFMA)
Futures Industry Association (FIA)
Investment Company Institute (ICI)
Insured Retirement Institute (IRI)
Top Colleges and Universities
Massachusetts Institute Of Technology
Final Thoughts
By now, you should know how to become a stockbroker and whether this career is right for you. Consider the educational and hands-on experience you’ll need before deciding to go down this career path.