How to Become a Stockbroker with a High Salary
A stockbroker is someone who helps investors and traders to buy the companies’ stocks. He makes a commission anytime he refers an investor, and so, sometimes they make a lot of money. Therefore, most people are curios to know how to become a stockbroker.
The amount of the money that is being transferred on the stock market every day, always makes so many people wonder how to become a stockbroker with the highest possible salary.
If finances interest you, stocks excite you and trading given you a unique high, perhaps then the career of a stockbroker could be quite an attractive career option for you. It requires steadfast commitment, undying passion, long hours and absolute perseverance.
The fact is stock markets do not yield overnight gains, and if you want to be successful, you need to have patience, in fact quite a lot of it. After all, it takes the time to grasp the market sentiment and the trends and the customer base that you can grow solely depends on this key factor.
While most of you can understand that being a stockbroker is not really that simple, the question is how to become a stockbroker?
Is there any set specific and a well-defined path that you must follow or can you just incidentally drift into this profession?
Well, Gordon Gekko might have almost convinced you that you need to be drop dead gorgeous and charismatic. The reality is that you get stockbrokers in all colors and creed. Perhaps what you absolutely need is a keen market sense and Gekko’s strong nose for a deal.
The Basic Skill Sets to Become a Stockbroker
If you come to think of it, there can’t be any specific skill set that really helps you become a stockbroker. You would realize that while how to become a stockbroker is a pretty direct question, there isn’t a straightforward answer to it.
History and general observation will convince you that different kind of skills helped different stockbrokers make their mark in the stock market. While some are diligent, others are plain lucky; there are some who gain experience through perseverance and a few who breeze through the storms of stock market rather amiably.
But the hard truth is that many brokers drop out in the first few years of the really log hours that you have to put in and the kind of stress you need to handle. Yes, one character trait that you decidedly need to make it big in the stock market is no doubt absolute dedication and patience.
So if you are keen to understand how to become a stockbroker, one of the first aspects that you must consider is if you are patient enough to sit through the tribulation of the stock market before you get to enjoy the gains you make.
While the list of must have personality traits is not so well spelt out, it is very clear that if you do not have the mettle to take rejection and losses in the same stride as gains and success, then stockbroking is really not for you.
So as you go through your day on the floor of the stock market, making phone calls, pitching ideas and tracking markets, it is very important to have a strong heart and ability to weather any kind of situation.
Some of the key abilities that are crucial in your pursuit of becoming a stockbroker include:
- Capacity to pitch and sell stocks
- Communicate effectively
- Explain complicated market basics to customers
Although now, there are some workshops and classes also help stockbrokers work on their communicative skills, most times it is what you possess naturally and what makes the cut. A glib talker and a smooth communicator will always have the upper hand in stock market dealings.
Well, that said, let us now chart out the course of your training for becoming a stockbroker? The first and foremost has to be the educational qualification, remember the chunk of your dealings are with numbers, excel sheets and quick calculation. A certain base in mathematics, accounts or any branch of finance would no doubt be very useful in this context.
Therefore while there are no specific majors or special degrees that you must complete to get the job of a stockbroker, you need to have above average competence and qualification in finance to justify your case. It is needless to mention that educational degrees always come in handy and if you have a masters degree in addition to your bachelor’s in finance, it only helps you get a better edge over the competition in the long run.
Further, it also showcases a candidate’s commitment to stand out and gain greater understanding in fields of finance and communication. If therefore you decided to finish your MBA before joining the stock market, the gain is all yours.
Also as a stockbroker, you need to be extremely alert and vigilant, especially if there are some trainings that are underway to help you get an edge. Stock exchanges and brokers conduct this type of training on a regular basis to help the participants grasp better selling techniques and also maintain the overall spirit of salesmanship. You can hone your management skills and understand the ins and outs of the trade.
This is one of those jobs where hands-on training matter a lot more than what you learn in classrooms. This is exactly why when you are starting off the choice of brokerage makes a lot of difference.
While some in their pursuit to become a stockbroker choose to go for smaller names which have higher prospects of more work, training, experience and a friendlier work atmosphere; there are many others who aim to start off with a big brokerage.
While they might have to deal with a lot of condescending viewpoints initially, in the long run, a big name could make a big difference to their overall competence. Even in terms of exposure, the access to big players comes quite naturally in the longer term.
How to Become a Licensed StockBroker?
While the extent of academic training does not make a huge difference, what surely does is the fact that as a stockbroker, you need to pass specific exams. These are crucial because, without these, a stockbroker is not a fully functional stockbroker. They do not have the license to sell stocks to clients. So the question now is if you want to be a licensed stockbroker, what are the key tests that you might take and which you have to pass?
These tests do not just strive to give them the competence to sell financial instruments but also helps them to garner a certain amount of credibility and self worth. Think about it, however much you might shine academically, it’s not borne out academically. What surely does is the set of licenses that you might carry as a stockbroker. They instantly lend an aura of credibility and true worth to whatever you might claim. Here is a quick look at all the exams and licenses you need to earn:
This is no doubt the first major exam that you must take to become a licensed stockbroker in the United States. It is a crucial exam that enables you to become a general securities registered representative in the United States. Essentially this exam is a very rigorous test spanning over six hours. This exam essentially covers all types of individual and packaged securities. Therefore this one covers pretty much everything like
- Mutual Funds
- Other variable annuities
Apart from the above listed ones, this exam also covers ethics as well as securities regulations. No doubt this one is also considered the mother of all securities exams, the hardest one to pass. It is essentially taken by beginners to become licensed stock brokers and begin selling securities.
This no doubt is the next most important one. It covers the overall state regulations and laws that a stockbroker must be well versed with to begin transacting business. Compared to the Series 7, this test is relatively of a shorter duration and considerably easier too.
This one comes next. There are many brokerage firms that need you to become a Registered Investment Advisers once you become a licensed stockbroker. This is essentially aimed to help you make better use of platforms targeted for professional money management. It is needless to mention that this is a type of add on license which can only help you fare better across multiple service platform.
In very simple terms this exam is a combination license exam that you might consider taking. It combines Series 63 and Series 65 exams and gives you the joint competence in one go. Thereby you do not just work as a licensed stockbroker but also can take up advisory roles.
Well this license exam is specifically for a select asset class. If you want to sell commodities futures as a licensed stockbroker, you need to sit for this exam and pass it as well. This license helps you to expand the ambit of your overall area of operation.
This license is related to the Series 3 exam. If you do get the license to sell commodities futures, this exam gives you the authority to sell managed funds dealing with futures.
Apart from the above mentioned exams, many brokerage firms encourage you to also get a life insurance license so that you are also able to sell life insurance and other variable annuities that are related to it.
As an aspiring candidate wanting to understand how to become a stockbroker, it is very important to pay attention to the fact these exams help you gain competence and brokerage firms you are associated with a sponsor you hoping you would pass. It is not wise to take these exams lightly and always better to undertake the required training and preparation necessary for gaining mastery.
How to Build a Client Base As a Licensed Stockbroker
The next important pit stop in your pursuit of becoming a stockbroker involves the essential element of ways to creating a client base. Because that will ultimately lead you to the key point of taking up any profession, the money you make from it. So a stockbroker salary is a direct derivation of the client base that you are able to gather as a licensed stockbroker.
Once you get the license and a job at any brokerage, it is time for you to get to work. You have t work with sure and steady fingers towards gaining more and more clients and making a name for yourself. While you are no doubt associated with a key brokerage but that will not always translate into clients for you automatically. The question then is how you can manage to get the clients. Well here is a step by step method for the best results.
Smile & Call
Remember your voice and your approach are your assets when you are making those initial contacts with the client. It is, therefore, a good idea to smile and speak because inevitably that makes your voice ore and approach friendlier. A cold call gets you nowhere.
Look For a pre-qualified List
Well to smile and dial does not mean you can randomly pick the phone book and start dialing any number. It becomes absolutely important that you look for lists from your firm or other marketing firms for prospective clients who might be interested.
Tap Your Own Sources
If you could extend the saying, “everything is fair in love and war” to business as well, perhaps it does not stand right so poignantly as it does in a stockbroker’s profession. Don’t be shy to get referrals from friends and family. Not only are they reliable but in many ways they can help you garner lasting gains. Even on credibility aspect, when you call a potential client through this kind of personal contacts, they are also more than ready to open up and let you manage their wealth more easily.
Chambers of Commerce
The local corporate organizations like the chambers of commerce, etc. can also be of great help in drumming up business when you are starting off as a licensed stockbroker.
Stockbroker Salary In United States
Well, this is the key element that every aspiring professional would be interested in understanding in their pursuit of how to become a stockbroker. Let us remember that not all of us are Gordon Gekko and none of you will start off earning millions from day one once you start working as a licensed stockbroker.
In fact, as per data from US Labor Department and websites like the payscale, indicate that the
1) Average median annual salary of a licensed stockbroker in the United States is close to $51,000.
2) The scope for overall cash earnings can range from $38,000 at the bottom of the range to $195,000 at the top of it
3) The stockbroker salary package also has a bonus component that runs close to $50,000, and if there is a profit sharing element as well, this can hover around $70,000 mark
4) The commissions that a stockbroker earns can vary greatly going up to well over $500,000 eventually for reasonably successful brokers.
Apart from the salary component, most licensed stock brokers also enjoy medical benefits and dental coverage. Therefore it goes without saying that the level of job satisfaction and contentment is pretty high among stock brokers and helps them achieve bigger gains driven by this passion.
But that said when you are considering the stockbroker salary you must take into the account the reality as well. You must understand that they do not always stand to gain. Sometimes, they also lose money, and there are innumerable licensed stock brokers who are struggling to make their mark in the world of financial jugglery.
Some are very successful, some meet with moderate success while there are many who are struggling hard to make ends meet. While my purpose is not to dissuade you from taking up this profession, the idea is to keep you in sync with the real situation.
In fact, a back of the hand, Wall Street data will show that stockbrokers tend to get wrong even as much as 50% of the time. As the saying goes, they get better with experience and often you might be faced with a situation where you are at the receiving end of a lot of criticism for your investment decision. At those times it is important to stay stoic to eventually reap the handsome benefits of a cushy salary and commission payout in the longer run.
Just that the eventual gains always make the gestation pain worth the entire effort. It is never easy to become a licensed stockbroker and at a time to sustain the business after that is even tougher.
So it becomes absolutely important to stay motivated and focused and let your passion for making money do all the talking. It would not be wrong to conclude that the journey of becoming a stockbroker is both time consuming as well as costly. Also read this: Is It Possible to Become a Stockbroker without a Degree?