There is a common misconception among people that stock brokers make a lot of money, which is far from the truth. Stockbrokers earn a good amount of compensation compared to other professions; however, it takes time, hard work, and perseverance. Like other professions, stockbrokers must also gain significant experience and maintain a strong client base in order to generate extraordinary income. A career in finance is always important, and stock brokerage is no exception. To become a stockbroker, you need to plan ahead. Work toward a solid degree, followed by training so you can apply for the licensing exam and qualify to trade stocks.
What is a stockbroker?
A stockbroker is a professional who helps facilitate the transaction of shares and stocks between the buyer and the seller. They act as intermediaries who deal with both parties and help close the deal. You can think of stock brokers as a means of helping you sell or buy stocks through the stock market or over-the-counter finance. Stockbrokers are better acquainted with all the technicalities as well as the legal formalities required when dealing with stock transactions. In return, you must pay the brokers a small commission. Stockbrokers basically work for a brokerage firm.
Educational Requirements for Stockbrokers
Educational planning is vital. You must have obtained at least a bachelor’s degree in Economics, Accounting, Mathematics, Finance or Business. Of course, an MBA is preferable but not required. MBA ensures that you can get a better starting salary.
Training requirements for stockbrokers
Without proper training, you cannot be a fully-fledged stockbroker. You’ll start as a stockbroker trainee at one of the brokerage firms and work there for at least four to six weeks before you can apply for a Series 7 exam. If you don’t know what a Series 7 exam is, it’s a Series 7 exam. which, upon approval, provides you with the required license to practice as a stockbroker. Legally, he cannot trade shares until he obtains this license.
A Series 7 license can only be obtained if you can get more than 70% marks on the exam, so you need to prepare thoroughly. Upon passing the exam, you will also be automatically registered with the Financial Industry Regulated Authority (FINRA).
How much can you expect to earn?
As an apprentice stockbroker, you will be paid a base salary that could range from $20,000 to $30,000 a year. For a full-fledged stockbroker, this would be higher and he/she is also entitled to a commission on top of the basic salary. According to the US Bureau of Labor Statistics, the median salary for stockbrokers was $70,190 per year in 2010.
Location also plays a very important role in determining the stockbroker’s salary. If you are in the states of New York or Connecticut, expect higher wages compared to someone in Kentucky. This is largely due to the fact that most financial activities are concentrated around New York and Connecticut. A stockbroker in Connecticut earned about $159,950 per year in 2011.
Career Outlook for Stockbrokers
Stockbrokers play a very important role in the financial industry by helping in the smooth flow of the financial mechanism. As a broker, you will always be looking for new clients and maintaining a proper relationship with the existing client base. The more clients you have, the better salary you will earn.
Although the financial crash of 2008 had a negative impact on the profession, it is moving forward slowly and surely. It has been estimated that by 2020 there will be a 14% increase in the number of stockbrokers entering the profession. All in all, stock brokerage has a great career prospect. For someone looking to enter the financial field, pursuing a career as a stockbroker may be your best decision.