How to Become a Stockbroker - Everything You Need to Know!

Author Edith Carli

Posted Mar 31, 2023

Reads 1.7K

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If you're looking for a fulfilling career field that involves the stock market and Wall Street, becoming a stockbroker might be the perfect fit for you! But how to become a stockbroker? It's not as simple as watching "Boiler Room" or "Wolf of Wall Street" and then jumping into the field. There's much more to it than simply shouting on the trading floor.

A stockbroker is a professional who buys and sells securities on behalf of clients. This job entails extensive knowledge of the stock market, as well as strong communication skills and an ability to build relationships with clients. While movies like "Wild Films" may portray brokers as ruthless and cut-throat, in reality, successful brokers are those who establish trust with their clients and provide valuable advice. So, if you're interested in pursuing this career path, there are certain steps you'll need to take to get there.

What Is a Stockbroker?

A stockbroker is a professional who acts as a middleman between buyers and sellers in the stock markets. They help individuals and large institutional investors buy and sell stocks, making trades happen. When an individual or institution wants to make a trade in the stock market, they go through their broker who executes the trade on their behalf.

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There are two types of stockbrokers: human brokers and discount firms. Human brokers, like those at Charles Schwab, offer advice and find clients, making trades and giving advice for a flat fee. Discount firms like Fidelity, TD Ameritrade, and E-Trade allow clients to make trades themselves online without assistance from a human broker. In either case, the job of the stockbroker is to execute orders at a specific price or order type.

The role of a stockbroker goes beyond just facilitating stock sales. They also offer investment advice to their clients and work with them to develop investment strategies that align with their financial goals. The profession requires dedication, strong communication skills, attention to detail and an ability to thrive in fast-paced environments. Becoming a successful stockbroker takes time but can be very rewarding both personally and financially for those who are dedicated to learning about the markets they serve.

Revolutionary Upgrades in the World of Brokerage

The brokerage industry has gone through significant changes in recent decades. Traditionally, stockbrokers worked on the trading room floor, shouting and gesturing to buy or sell stocks for their clients. However, technological advancements have made online trading possible, and this has led to a significant decrease in the number of brokers working on the trading room floor. Today, only 205 floor brokers work for 22 firms compared to NYSE's heyday when there were over 1,300 brokers representing 125 firms.

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These upgrades have also made it easier for individuals to become stockbrokers. The need to be physically present on the trading floor has decreased; instead, most brokerage activities are now conducted online. This means that aspiring stockbrokers can work from anywhere with an internet connection. In conclusion, revolutionary upgrades in technology have transformed the brokerage industry significantly and created new opportunities for those seeking to join this exciting field.

Who Uses Stockbrokers?

Individuals who want to invest their money but don't have the time or knowledge to do it themselves turn to stockbrokers. These brokers can be human brokers, like those at Charles Schwab, or online discount brokers that allow investors to make personalized decisions. Those who have large sums of money to invest often use stockbrokers for their expertise and guidance in the market.

Exploring the Essentials of Stockbroker Licensing

Becoming a stockbroker requires obtaining certain licenses. The absolutely required license is the General Securities Representative License, or Series 7 administered by FINRA. This license enables the holder to sell virtually any individual security and packaged products basically made up of preferred stocks, options, and bonds.

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In addition to the Series 7 license, those who intend to sell commodities futures, real estate, life insurance, and other financial products will also need additional licenses like Series 3 for those who aim to sell commodity futures contracts and Series 31 for those who want to sell managed futures in pooled groups. These are important licenses that cover a good portion of topics covered in the series 7 exam.

For financial representatives who prefer hourly fee structures or work with managed-money accounts, it's recommended to take the NASAA Series 63 (Uniform Securities Agent License) exam along with either Series 65 (Financial Planners) or Series 66 exams. The series 65 content focuses on investment strategies and ethical practices while the series 66 rolls both series 63 and series 65 together into one exam.

Unlock Your Potential with Online Discount Brokerages

In the world of stock trading, there are two ways to sell stocks - through a human broker or an online platform. While traditional human brokers have been around for generations, online discount brokerages have become increasingly popular in recent years. These firms offer a helpful service for people trading stocks, providing expert advice and making complicated trades happen at a fraction of the cost of a human broker.

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With online stock accounts discount firms, investors can trade stocks and invest money using an easy-to-understand online platform. For instance, an average investor can purchase 20 shares in a well-known company without ever leaving their home or office. In this age of technology, the need for a human broker isn't needed as much as it once was. Instead, investors can utilize the services provided by online discount brokerages to unlock their potential in the stock market.

Frequently Asked Questions

What exams do you need to pass to become a stockbroker?

To become a stockbroker, you need to pass the General Securities Representative Exam also known as the Series 7 Exam. You may also need to pass state-specific exams depending on your location and type of brokerage firm you work for.

How long does it take to become a stockbroker?

Becoming a stockbroker typically requires a bachelor's degree and passing licensing exams. The process can take anywhere from a few months to several years depending on education level, exam preparation, and job requirements.

Is a career as a stockbroker a good fit?

A career as a stockbroker can be a good fit for individuals who enjoy fast-paced and high-pressure environments, have strong communication skills, and are comfortable taking calculated risks. However, it is important to note that this career path also requires extensive knowledge of financial markets and regulations.

What licenses do I need to start a brokerage firm?

To start a brokerage firm, you will need to obtain the necessary licenses from regulatory bodies such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These licenses typically include a Series 7 license for general securities and a Series 63 license for state securities.

Does a stock broker need a master's degree?

No, a stock broker doesn't need a master's degree. However, they must have a bachelor's degree and pass the required licensing exams to become registered with the Financial Industry Regulatory Authority (FINRA).

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Edith Carli

Writer at CGAA

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Edith Carli is a passionate and knowledgeable article author with over 10 years of experience. She has a degree in English Literature from the University of California, Berkeley and her work has been featured in reputable publications such as The Huffington Post and Slate. Her focus areas include education, technology, food culture, travel, and lifestyle with an emphasis on how to get the most out of modern life.

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