A stockbroker is someone who buys and sells stocks and other various securities on behalf of another person. Other terms for stockbrokers are brokers, investment specialists, and investment brokers. A stockbroker may also be considered an investment adviser because not only do these people handle the logistics of securities transactions, they often advise their clients on which ones to purchase and sell. The term Registered Representative is given to people who pass the Financial Industry Regulatory Authority (FINRA) qualification examination, and who are employed at a registered brokerage firm. There are a few requirements one has to meet in order to become a stockbroker in the U.S.
Although a college degree is not mandatory to become a stockbroker, most successful brokers have college degrees in finance, accounting, business administration, or economics. Many senior brokers also possess a Master of Science Degree. The better a person is with math and understanding the economy, the better the chances are of the person being successful in buying and selling stocks. Having a degree also will make you more likely to be selected for an internship or a job at a brokerage. If you want to become a stockbroker, it is advisable to take the time to first get a Bachelor’s Degree before taking any of the exams.
If you are not one of the few selected in college or after graduation to intern at a brokerage firm, you will need to get hired and attend rigorous entry level training at a stock brokerage firm. You can also attend broker training seminars to learn more about this field, and to stay informed on the current economic trends. You should have a strong resume, possess excellent interpersonal and communication skills, have a strong background in math, and be have a decisive personality in order to get a job as a stockbroker and to be successful in the trade.
Next, you need to obtain a legal license, and you can get this by passing a series of exams. The General Securities Registered Representative Examination (Series 7 Exam) is the most important one to pass, and is required in order to be recognized in the industry. Some states also mandate that you take and pass additional exams, such as the Uniform Investment Advisor Laws Exam (Series 65 Exam), and/or the Uniform Securities Agents State Law Examination (Series 63 Exam). Even if your state does not require these two exams, they will help you get a better job at a reputable brokerage firm.
The reason people need stockbrokers is that transactions for stock exchanges have to occur between two people who are members of the exchange. Therefore, only brokers can carry out the transactions, not a layperson. Stockbrokers provide the services of advisory dealing (the broker makes recommendations on which shares to purchase and sell, but the investor has the ultimate decision), execution-only (the investor will make all of the decisions and tell the broker what to purchase or sell), and discretionary dealing (the broker will make all decisions and take actions on behalf of the client). These services are based on the client’s wishes for how much decision-making to leave to the broker.
If you enjoy working with numbers, and like being in a competitive environment, you could succeed as a stockbroker. By taking courses in High School and college in business, math, and finance; joining investment clubs and attending seminars; passing the required exams; and getting hired at a stock brokerage firm, you will be on your way to a great career as a broker.
