How to Become a Stockbroker: A Comprehensive Career Guide

Thanks to Gordon Gekko and Wall Street, two generations of young men and women have grown up wanting to be stockbrokers. As personal advisors and brokers to some of the wealthiest people in the world, stockbrokers must combine seemingly contradictory qualities to become successful. Top brokers are part salesmen, part financial wizards, part marketers, and part managers. The challenges – and rewards – of this job attract thousands of people each year, making it one of the most lucrative career options around.

If you’re unsure of what being a stockbroker actually involves, try this introductory course on stocks, futures, options and forex.

Read on to find out how you can be a part of the exciting world of finance by becoming a stockbroker

Understand the Job

What do you see when you hear the word ‘stockbroker’?

If you see Gordon Gekko in an expensive tailored suit lounging around in a Manhattan penthouse apartment, you probably have the completely wrong idea.

Instead, if you see young men packed like sardines into hot, small offices where the volume rarely goes below 100db and your workday starts at 9 and ends at 9 the next day, then you’re right on track.

As far as professions go, stockbrokers can football players look lazy. The significant financial rewards attracts extremely talented and motivated people to try their hand at playing stockbroker. The result? Intense competition with endless working hours, challenging targets and constant stress, especially in the early years. This is a winner-take-all, alpha-driven world that doesn’t tolerate, let alone encourage laziness.

Most stockbrokers have to go through a ‘rookie’ learning phase where they are expected to devote every waking hour to the job. This means saying goodbye to family, friends, sleep and even regular meals.

But if you do manage to stick around past the rookie phase, the rewards and opportunities are endless. While the initial salaries are very lucrative (average salaries in New York start at $132,000/year), stockbrokers have the opportunity to move into asset management and investment banking where the sky is literally the limit to what you can make per year. A talented, hardworking stock broker for a major firm can easily expect to more upwards of $100,000 per year along with bonuses (which usually run into six figures).

Responsibilities

As a stockbroker, your primary responsibility is to make money for your clients. Breaking it down, the fundamental responsibilities of a stockbroker are:

• Buying Stocks: The stockbroker must buy stocks on behalf of the client. Depending on the arrangement he has with the client, the stockbroker may buy any stock as he sees fit without client intervention (called a discretionary account), advise client on what stock to buy (advisory account), or buy specific stocks indicated by the client (execution account).

• Selling Stocks: Buying stocks is just half the deal. To actually make money, the stockbroker has to also sell the stock at the right time. As with buying, the freedom with which you can sell stocks will depend on the kind of account you have with the client.

• Researching Stocks: In the movie Wall Street, Bud Foxx wakes up in the middle of the night to research stocks on his computer. This isn’t atypical; researching stocks is the bread and butter of a stockbroker’s life. Market research will give you the valuable insight you need to buy/sell stocks at the right time and make money for your clients.

• Getting Clients: The last responsibility of a stockbroker is to get clients for the brokerage firm. Networking, cold-calling, writing articles/blogs, running websites, etc. are some of the many tools a stockbroker has to attract clients.

Required Skills

As a stockbroker, you will need to master a wide domain of skills, such as:

• Strong analytical skills. As a stockbroker, you will be expected to analyze hundreds of stocks on a daily basis. This beginner’s guide to technical analysis of stock charts should help you get started.

• A numerical bent of mind. While you don’t need to be a quant wizard, you will do a fair but of number crunching on an everyday basis. You’ll find the going a lot easier if you have an aptitude for numbers.

• Strong interpersonal skills. As a stockbroker, your most important assets are your clients. Strong interpersonal skills will go a long way in keeping them happy.

• In-depth knowledge of financial markets. You, the stockbroker, will be Sherpa your clients need to navigate the messy world of banking and finance. An in-depth knowledge of how international finance works is a must.

• An ability to sell. At the end of the day, makings sales is what earns a stockbroker his bread and butter. If you can’t pick up the phone, dial a random number and make an impassioned pitch, you’ll find the going hard in this business.

The best stockbrokers combine the charm, wit, and communication skills of top salespersons with a savant-like hold on financial topics. These skills are often contradictory, but in no way impossible to develop, either through practice, or through formal education.

Education Requirements

On paper, you don’t need any educational qualifications to be a stockbroker.  After all, a stockbroker simply buys and sells stocks – something even a high-school dropout can do.

However, the ground reality is that there are far more would-be stockbrokers than there are jobs at brokerage firms. With such tough competition, a bachelor’s degree is a must, preferably in finance related subjects such as business, economics or accounting. To really gain an edge over your peers, you might even want to get a master’s degree, usually a MBA.

There is a definite bias towards premier college graduates in top brokerage firms. Going to an Ivy league school will definitely boost your prospects of landing a job, though is by no means necessary. A MBA from a top-tier program will also give your application the edge needed to stand out from the crowd.

To recap, you’ll need:

• At least a bachelor’s degree. Business/finance/economics majors preferred.

• A MBA or related master’s degree to boost your chances of landing a job.

Warren Buffet doesn’t have a fancy MBA degree or an Ivy-league education. Learn how he got his start in this free course on value investing.

Exams and Certifications

In the United States, every individual must pass the Series 7 or General Securities Representative Exam to become a stockbroker. In addition, you will also need to clear the Series 63 or Series 66 exams, depending on the state where you want to ply your trade.

Let’s take a look at these exams in a little more detail:

• Series 7: The Series 7 exam is conducted by the Financial Industry Regulatory Authority (FINRA). It’s a six-hour test with a total 250 questions that cover basic investments such as stocks, bonds, options, etc. Each candidate must answer at least 72% questions (i.e. 180) to clear the exam.

• Series 63: This exam was originally developed by the NASAA (North American Securities Administrators Association). It is meant to qualify candidates to work as stockbrokers within a particular state. Passing this exam – which consists of 65 questions – is a must for practicing as a stockbroker in most states.

• Series 66: Series 66 is an alternative to the Series 63 exam. Clearing this exam enables you to practice both as a stockbroker and an investment adviser representative. It is also conducted by the FINRA and includes 100 questions that must be answered within 150 minutes.

Getting In

There are two basic ways to become a stockbroker:

• Join a big brokerage firm.

• Start out on your own.

Understandably, option B is a lot harder than option A. The network, knowledge, training and prestige a brokerage firm offers is beyond value to an aspiring stockbroker. Starting out on your own, on the other hand, means building a client list and reputation from scratch – a process that can take years of trial and error. This is why we recommend getting a job with a brokerage firm to start off your journey.

Most of the top brokerage firms are based out of Wall Street, so a relocation to New York would be in order. Open job listings at most top firms are rare. You will have to build a network or get referrals to get your foot in the door in most cases. The best way to get in, however, is to start out as an intern (just like Will Smith in Pursuit of Happyness). Don’t expect to be paid much (if paid at all), but you’ll gain valuable experience and possibly impress your employers enough to land yourself a full-time job.

So there you have it: everything you wanted to know about working as a stockbroker. To further your education, try out this course on advanced tactics for mastering the stock market.

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