A career as a stockbroker or stock trader can be fulfilling and rewarding
If you hold a degree in finance and take an unusual interest in NASDAQ, FTSE 100, Sensex, and Nikkei 225, then you should set your sights on becoming a stockbroker. Stockbrokers and traders earn their bread and butter by transacting in company stocks chiefly on behalf of their clients. Registered stockbrokers have the license to buy and/or sell stocks as representative of their clientele.
Licensed stock traders and brokers have a sound understanding of the stock markets that comes in perfectly handy, enabling them to advise clients on trading. Since the stock markets tend to be extremely capricious and unpredictable, stock brokers have to keep themselves constantly updated. The main objective of stock traders is to place as many as trades as possible as they receive a commission on a successful trade. Stock brokers earn their livelihood chiefly from commissions and fees on trades.
Distinguishing between a stockbroker and stock trader
Assuming that you’re aiming to be a stockbroker, it is significant to understand the distinction between a trader and stockbroker. Having a clear idea about the differences or variations in job profiles of a stockbroker and trader will enable you to decide which career would be apt for you. Though both types of professionals trade in securities, brokers also function as sales agents either independently or on behalf of a brokerage.
Brokers maintain a directory or list of individual and institutional clients and place trades on their behalf while traders work in a bank, stock exchange, or investment firm. Traders manage securities for the investment firm or bank they work for. Brokers are directly in touch with their customers and place trades as per the latter’s wishes.
Many stockbrokers manage portfolios of their clients, offering valuable advice on matters pertaining to insurance, retirement program, and wealth management.
Traders generally work under portfolio managers and assist the latter in supervising and managing specific accounts, helping develop a sound investment strategy for some clients. These professionals handle different financial markets including commodities, derivatives, bonds, forex, and stocks. Both stockbrokers and traders need to have the FINRA (Financial Industry Regulatory Authority) license for operating as a sales agent.
And for obtaining the FINRA license, traders and stockbrokers have to appear for the ‘Securities Trader Qualification Examination’ and ‘General Securities Registered Representative Examination’ respectively.
Career prospects as a stockbroker
If you’re aspiring to become a stockbroker, you’d be pleased to learn that most brokers’ get salaries way beyond the national median income. Nevertheless, several factors will determine your earnings as a broker, including your location, educational qualifications, expertise level, and professional experience. On the other hand, if you’re employed by a brokerage or securities firm of national repute, you can expect a lucrative pay package.
Contrary to popular belief, there is a heavy demand for stockbrokers throughout the US. As a matter of fact, the level of demand for stock market brokers and sales agents is much higher than other analogous or related professions in the financial sector.
Steps to follow in order to become a stockbroker
You’d at least need to have a high school certificate or diploma to launch your career as a broker. However, possessing an undergraduate or postgraduate degree will enable you to climb the career ladder at a faster rate. Abide by the following steps to make it as a stockbroker:-
A high school certificate is a must
Though you do not need to be a graduate or postgraduate in order to work as a broker, having higher academic qualifications offers you a competitive edge. Majority of the reputed firms give preference to those postgraduate and graduate candidates when it comes to hiring fresh recruits. So, you should set your sights on receiving a college or university degree.
And in order to apply for a graduate degree, you’d need to have a high school certificate.
Obtaining a bachelor’s degree will give a fillip to your career
You’d at least need to be a graduate to be considered for an entry-level sales position in a registered commodities, securities or brokerage. This stipulation has been prescribed by BLS (Bureau of Labor Statistics). While applying for a graduate study program, you may not have to opt for a major.
Nevertheless, completing a major, particularly in the financial or business stream gives you additional advantage. A degree in economics, finance, business or accounting is especially suitable for this profession.
Apply for an internship in a well-known brokerage or investment firm
After completing your graduation, you could apply for an internship position in a firm. Having experience as a intern or trainee will work to your advantage, letting you land a position in a big company.
Working for a firm will pave the way for receiving a FINRA license
Make sure that the brokerage firm you want to work for or do an internship in is FINRA registered. You’ll need to be involved with a brokerage listed on FINRA so as to qualify for the FINRA test.
Make sure you sit for the FINRA exam and clear the same
Each and every US state conducts the FINRA exams. If you want to get the FINRA license for trading as a broker, you’ll have to clear the Series 63 and Series 7 tests.