How to Become a Stock Broker in the United States

2024 Author: Samantha Chapman | [email protected]. Last modified: 2023-12-17 09:13

Did you just finish watching Wall Street? Well, being a stock broker, or stock broker, doesn't involve all that glitz and glamor, but it's a pretty cool profession. A broker is a financial advisor who offers his services to clients (businesses or individuals) to make appropriate investments based on their abilities and goals. To carry out this profession, one must work in a brokerage agency; buying and selling stock on the stock exchange is restricted to stock exchange members. A stockbroker is also known as a securities sales agent or commodity broker. Here's everything you need to know to become one!

Steps

Part 1 of 4: Getting started

Step 1. Go to a good university

In the past, anyone with a certain flair for numbers and lots of friends could have become a successful stockbroker. But this is no longer the case! If you want to be competitive, you will need to get a degree. Economics, finance, math, accounting, or business management are all good fields to take your undergraduate degree. The better the university you enroll at, the more prospects you will have once you graduate!

In particular, if you enroll in the specialist, keep your grades high. The better the grades, the more likely you are to get into the best training there is. Not to mention, you will know what you will be doing once you start exercising in the industry

Step 2. Look for internships

Some brokerage agencies hire interns during their final year of college. Join your university's Investment Club or start your own if it doesn't already exist! Getting an internship could greatly facilitate your path to becoming a mega millionaire.

This is your best bet if you are not planning on pursuing a master's degree in business administration or an MBA and want to start working as quickly as possible. But know that relaxing is a totally feasible option. A lot of people take a couple of years off, go back to the books for a master's degree, and come into play a little later. Also, people are more willing to entrust their money to a 28-year-old than a 22-year-old, so feel free to continue eating precooked foods and using paper cups for a little longer

Step 3. Consider taking an MBA (Masters in Business Administration)

Of course, having it is not necessary per se, but, if you want to ascend to the crème de la crème, this title will put you at the top of the pile of possible people to hire, in which you will find yourself when you look for a job. More and more students are choosing this path, so these certificates are almost becoming the norm. This step could help you advance your career, get more incentives to join a company, and receive higher pay.

Again, feel free to take a few sabbaticals between graduation and master's. Helpful work experience (even if it were an unskilled job at a bank or business) will increase your options 10x. Showing that you already fully understand your current or future job will convince companies to take you seriously

Step 4. Get the right training

Read. Observe. Expose yourself. Learn. This is an area where you can really improve yourself at your own pace. So read books! Watch Finance-Focused Programs! Follow different actions to check which ones go up and which ones go down. While Gianni feeds the ferrets and Andrea plays football, you'll make sure you finish your studies by applying for a six-figure income, and that's just the beginning.

• Try William Bernstein's The Fours Pillars of Investing: Lessons for Building a Winning Portfolio, or Mark Hebner's Index Funds: The 12-Step Program for Active Investors. Even reading the financial section of the Wall Street Journal or the NY Times won't hurt you!
• You probably know some people who are at least as a hobby to invest. Ask them what they know! The only reason you need a degree now is that this is the current academic trend. In the past, even those who had only an active interest in the industry could work. So, gather as many resources as possible as soon as you have the opportunity and as often as you can.

Step 5. Open your investment portfolio

When you get old enough, start taking care of some of your money (if you are under 18, you will need to do so on behalf of your parent). Team up with a member of your family who does the same and see how you can start building your skills brick by brick. If you don't trust your money yourself, why would anyone else trust you with theirs?

Part 2 of 4: Planning your Future

Step 1. Consider your alternatives

There are three paths you could follow for your career:

• Be a full-service broker. This would mean doing a job at a company like Merrill Lynch or Morgan Stanley. In order to be successful in this field, you need to be very sales oriented. The company will provide you with a space, train you and give you a salary to start with until the trial period passes.
• Being a discount broker. Charles Schwab or Fidelity represent two examples of brokers in this area. If you are more service oriented, this is the job for you. Generally, you will always receive a salary, so you will earn less on commission, but mainly by assisting those who come to you, buying and selling, but without giving advice.

• Being a bank broker. It is clear from the name what you will do: you will work in a bank. The bank's customers come to you to buy fixed annuities and to make other, often more conservative, choices.

  • Discount brokers usually need to know a little bit of everything (profit reinvestment, stock options, margin accounting, derivatives, bond ladder, etc.), while full-service brokers typically specialize in one area, such as IRA reinvestments or employee stock options.
  • Full service brokers are responsible for finding their customers. However, they are also offered a workspace and a salary to get started. If you are a discount broker, you pay your overhead costs and earn less on commissions. It is a question of compromising.

  

  Step 2. Do a search among the different companies

  If you have narrowed your options and decided what kind of broker you want to be, you will still need to determine which companies you want to apply to. Just like a pair of pants (one you'll wear for decades), the company has to be the right one for you. The main thing to consider? The dimensions.

  • A large business can often provide you with a competitive training package, making you feel more stable and relieving your startup costs. Either way, you may feel like you're a little fish swimming in a big sea.
  • A small business may give you the attention you want and a more pleasant idea (as well as offer you a higher commission rate), but it may not be able to offer you the clientele or training of a larger property.

  

  Step 3. Train at a company

  You will need to undergo a few months of job training before you can get your license and be a well-trained broker, but you can still work. It all depends on where you are hired. Some may call training an "internship", others will consider it just a pre-training, some will offer you more money than others. Whatever kind of process the company follows, it is a necessary pre-examination step.

  Part 3 of 4: Becoming Fully Qualified

  

  Step 1. Take your required exams

  There are two basic tests you need to take:

  • The Series 7. Formerly known as the General Securities Registered Representative Examination, this test is handled by the Financial Industry Regulatory Authority (FINRA) and is the hardest one you will take (lasts six hours). After passing it, you will become a "registered representative" or "stockbroker". You have the authority to sell all securities and investments, except in real estate, life insurance and commodity futures. It currently costs $ 290.
  • The Series 63. This exam is more about business management and the various laws governing transactions. It is much shorter (75 minutes) and much simpler. It costs 96 dollars.

  

  Step 2. Consider taking other exams to specialize

  They are not strictly necessary, but they will make sure that nothing is off-limits to you. Those exceptions mentioned in the passage on the Series 7 exam? They will no longer count once you pass these tests.

  • The Series 65. Your business may require you to become a Registered Investment Adviser. You have to take 65 for the company to use professional management platforms.
  • The Series 66. It's just a combination of 63 and 65.
  • The Series 3. This test is required to sell contracts such as commodity futures.
  • The Series 31. To sell managed futures funds, you will need to take this test. It is usually obtained in place of 3.

  

  Step 3. If you live in the UK, you should know that the examination process is completely different

  Series tests do not exist. Overseas, you could obtain a CFA Society UK Level 4 Certificate in Investment Management, a CISI Level 4 Diploma in Investment Advice, a CISI Level 7 Master in Wealth Management, a Fellow or Associate status of the Institute and Faculty of Actuaries or a Manchester Metropolitan University BA (Hons) in Financial Services, Planning and Management.

  

  Step 4. Organize the stacks of documents

  After passing the exams, you will need to complete your registration with the FINRA / NFA and register with the Securities Commission of each state in which you intend to work. Here are the basic documents:

  • Pass a criminal background check (any crime that goes beyond a minor traffic offense could get you disqualified)
  • Get a fingerprint card.
  • Complete paperwork at both the state and federal levels.

  

  Step 5. Fulfill requests made of you and successfully pass your first year

  But the hardest part isn't over yet. Now that you are a legitimate broker, you will need to meet expectations. Based on your company, you will likely be given six months to a year on a basic salary to give yourself time for you to build your clientele. This will be the hardest part. In fact, many take several years to feel really comfortable. It's stressful, but the game is worth the candle.

  Most people who retire do so at this point in their careers. They don't earn what they expected, they are not good salespeople, they can't bear the fact that they will have to work long hours, they get fired because they don't earn enough for the business, etc. If you can get over this, they won't let you leave

  

  Step 6. Continue to take training courses

  In order to maintain your license, you will need to attend seminars and sign up for ongoing training courses. Your employer will facilitate this process for you. Never stop learning! The market changes constantly.

  Part 4 of 4: Part 4: Succeed in Your Career

  

  Step 1. Build your customer base

  Again, there are three traditional methods of doing this:

  • Cold calls or going door to door. You will literally have to grab the phone book (surprisingly, it still exists) and start making phone calls with a smile on your face. You might even get a list of names from the county registry office to knock on every door. Sure, dogs could follow you.
  • A list of possible clients. You can buy one from a marketing company or your employer might deliver it to you. Considerably better than being accused of trespassing.
  • Create your network. Reach out to your friends, friends of friends, distant uncles of friends of friends, join industry clubs and various organizations to offer your service to their members, etc.

  

  Step 2. Overcome the learning curve

  This will already be clear to you, but remember that the stock market is not based on calculations like 2 + 2 = 4. There are billions of factors that come up all at once and that you need to learn to keep in mind. You will advise people and take risks with their hard earned money. There are many things you will have to get used to. And to say many things is, of course, a real understatement.

  • The amount of money you will pocket will increase year after year. The easier your job becomes, the more money you will make, surprising, isn't it? The hardest part is actually getting on the right track.
  • Initially, you will only work, all the time. Whenever you can get clients, you will be working. This means nights, weekends and holidays. But, once a solid customer base has formed, you will find yourself working six hours a day and taking time off whenever you need it. However, it may take years to get to this point

  

  Step 3. Get used to constant sales pressure

  You will meet potential customers from day one. If you don't convince people to capitulate to your charm as a salesperson, your work will be numbered. Until you have a group of people who will allow you to invest their money, the pressure will be on you 24/7. It can be quite exhausting for some.

  Again, if you are not a super seller, you may be following the path of the discount broker or bank broker. Sales aren't for everyone. You could also start out at a bank or as a discount broker, build your network, and then move on to become a full-service broker

  

  Step 4. Become persuasive

  Your whole job is to make people trust you to trust you with their hard earned money. The responsibility is big! Not to mention, you'll probably be a complete stranger to them. How are you going to convince them to even let you into their homes?

  This is where the mentor figure comes in and will come in handy. There are psychological tricks that characterize this industry that all professionals use to make people hang more or less literally on their lips instead of slamming the door in their faces. Needless to say, you will develop a nice chutzpah

  

  Step 5. Communicate effectively

  Let's put it as it is: you will know a lot of obscure terms and concepts for the average man. That's why you have a job. However, instead of throwing out all those acronyms and definitions that are incomprehensible to most, you will have to put yourself on their level. Can you bring everything you know to people unfamiliar with the industry and make your knowledge accessible to everyone? Hopefully so!

  

  Step 6. Work for an independent broker

  Raymond James or LPL Financial are two examples of independent brokers. They offer virtually every project and their employees see payouts of between 80-95% (being a full-service broker could earn you around 40% early in your career, slowly but surely ascending).

  You need an established customer base to do this. A very, very large customer base. For this reason, CPAs and accountants often gain an edge in this department. It is undoubtedly something to aspire to. After being active in the game for some time, this becomes a certain possibility

  Advice

  • Brokers can also pursue certifications as a Chartered Financial Analyst (CFA) after working for four years and passing three exams.
  • Both FINRA and NASAA require scores of 70%, except for Series 7, 63 and 65 exams, which have pass rates of 72%; the Series 66 has an admission score of 75%.

  Warnings

  • Stockbrokers and commercial agents often work more than 40 hours a week, including evenings and weekends.
  • A stockbroker career is very competitive and stressful, but it is very rewarding.
  • Many brokerage firms prefer to hire brokers who have proven to be successful in other financial fields.