Becoming a Stock Broker

Stock brokers buy and sell shares and stocks for their clients and earn a percentage of the profits. They may also offer financial advice to their customers when needed. In this article, you'll learn about the steps to become a stock broker, license requirements, federal and state qualifications, salaries of high- and low-commission stock brokers, and the future outlook for stock broker jobs.

Stock Broker Degrees & Education

A college degree is not required to become a stock broker, but most professionals working in the stock market have a Bachelor's Degree in economics, accounting, finance, or business management to prepare for this competitive field. Some brokerage firms hire students for internships during their last year in college, and the students who do the best are often offered jobs when they graduate.

Stock brokers must eventually be licensed. But before this point, aspirants have to work at a brokerage firm for at least four months and pass the Series 7 exam, offered by the Financial Industry Regulatory Authority (FINRA).

Several states require future stock brokers to take a second test called the Uniform Securities Agents State Law Examination (Series 63), which certifies candidates as securities agents. This exam tests an aspiring broker's knowledge of customer protection laws, the securities business, and principles reflected in the Uniform Securities Act. Most brokerage firms offer training to help future stock brokers pass these exams.

For the next two years, stock broker trainees continue taking classes that analyze securities, improve public speaking skills, and build sales techniques while working full time at a brokerage. Most firms have an intense training system, but those who thrive in this fast-paced environment eventually become stock brokers.

While working at a firm, some stock brokers go back to school to earn their Master's Degree in Business Administration (MBA). For those interested in executive positions, an MBA can lead the way to a higher salary, signing bonus, and higher-level position.

Stock Broker Job Description

A stock broker, also known as a securities sales agent, buys and sells stocks and shares for his or her clients -- whether individuals or corporations -- and receives a percentage of the profit.

Stock brokers gather information about investments that could benefit their customers and advise them on appropriate investments in the stock market. Once clients approve transactions, stock brokers place a transaction order to buy or sell stocks or shares with a floor broker at the stock exchange.

Stock brokers, especially those new to the field, spend hours each day building up a client base by cold calling people, contacting referrals from existing clients, and attending networking events.

The larger the client base, the better the income for a stock broker, so it is a job well suited to extraverted people. Some stock brokers even teach finance classes to meet potential clients.

Stock Broker Salary and Employment Information

According to a 2006 report by the U.S. Bureau of Labor Statistics (BLS), there were almost 320,000 stock brokers employed in the industry. As individual retirement accounts (IRAs) and 401Ks continue to replace traditional pension plans, and the retiring Baby Boomer Generation increases the number of market transactions, people will need more brokers for guidance. By 2016, the BLS predicts an increase in stock broker jobs by 25%. But even with this demand, competition is tough, and there are usually more applicants than jobs.

The deregulation of the financial industry has resulted in most major banks adding in-house brokerages that allow customers to move funds between bank accounts and investment accounts. This change has increased the number of stock brokers working in banks, which are now competing with investment firms.

In terms of salary, stock brokers earn a commission from transaction fees and a percentage of client profits, but most firms also provide brokers with a steady income by paying a minimum salary against this commission.

According to a BLS report in 2006, the median annual earnings of brokers were $68,500. The lowest 10% of earners made less than $31,170, but the highest 10% of earners brought home more than $145,600.

The BLS says the median annual earnings in the industries employing the largest numbers of stock brokers were as follows:

According to Salary.com, the median salary for a stock broker is $52,524. PayScale.com's stock broker salary information says the average pay for a stock broker, per years of experience, ranges between $37,189 and $101,130. SimplyHired.com lists a higher average pay for stock brokers of $88,000 per year.