How to Become a Licensed Stockbroker – Career Challenges & Rewards

Successful brokers often work in plush offices with staffs of professionals who handle office administration and compliance issues.

Career Overview Investment brokers are responsible for buying and selling stocks, mutual funds, and bonds on behalf of their clients. This is very important, because if you do business with an unregistered securities broker or a firm that later goes out of business, there may be no way for you to recover your money — even if an arbitrator or a court rules in your favor. 

Representatives that carry the Series 3 license tend to specialize in commodities and often do little or no other business of any type.

Testing and Background Checks 

Before you invest, make sure your brokers, investment advisers, and investment adviser representatives are licensed to sell securities. This brochure details how you can determine the validity of your broker's credentials, whether your broker has had any problems, and more.

This test is fairly short and considerably easier than the 7. This exam is a combination of the Series 63 and 65 exams. This is required to sell commodities futures contracts. This exam is necessary to sell managed futures funds. Full-Service Brokerage Firms A full-service firm is always a good place to start, even for those who may not genuinely wish to become full-service brokers.

The process that applicants typically undergo at these firms includes: Standard initial interviews and personality tests that screen candidates to ensure they are sufficiently extroverted to succeed at the job.

Those who fail to pass the Series 7 exam the first time are often terminated. Several weeks of sales and product training from different sources and vendors. Most major full-service firms have very high sales quotas that must be met within a short period of time, such as six months. Brokers are expected to prospect for clients through the following means: The Do-Not-Call lists have made this form of prospecting a risky proposition.

Many brokers and firms now limit their telephone solicitation to responding to postcard mailings or Internet responses by potential prospects.

Most firms expect their brokers to solicit their friends, families, and acquaintances for business. Business networking can be critical; those with affluent networks of people to tap into will have a much easier time getting started in this business. Most firms require both a minimum number of accounts and level of assets by the end of the trial period.

But these perks are hard-earned, usually taking several years. Those who apply with major full-service firms should also understand that these employers are chiefly interested in finding superstar million-dollar producers, and essentially set up the majority of their new employees to be the fall guys for the cream of the crop.

However, this should not necessarily deter prospective brokers from signing on at one of these agencies. They can still receive a minimal salary while studying for exams, and will receive free training classes and materials. This is because many firms that have no interest in hiring unlicensed personnel will now consider them for employment. These firms usually require some level of commission production, but nothing like the full-service firms. Cold prospecting of any kind is seldom required.

Most brokers who work at these firms get a permanent base salary plus benefits, and can still earn extra commissions as well. A typical day in the life of a discount broker consists of: Banks usually have lower payouts than other full-service firms and generally will only hire licensed personnel.

Bank brokers are usually provided with their own office inside the bank and can make a good living by convincing bank customers to buy fixed annuities and other conservative products.

The broker will often get a portion of the commission, in addition to the sale being credited to his or her production quotas. Most successful bank brokers have an efficient system of working with the bank personnel, as well as external channels of marketing they can turn to when bank employees are occupied with their own tasks. Independent Brokers Those who have established a book of business or have the means of doing so without needing the support of a full-service firm may want to look to an independent broker-dealer, such as Raymond James or LPL Financial.

This type of arrangement is ideal for someone who has built up a book of business elsewhere, such as at a bank or discount firm, and is now ready to manage this book independently. Because the payouts are so much higher, a lower amount of commission income is needed to maintain the same standard of living. CPAs, tax preparers, and accountants also have the inside track for retirement plan and corporate business, which can be substantial.

Obstacles and Challenges Being a broker is not an easy job. Those who start in this business can expect to encounter many obstacles on their way to success, including: Investment Advisers People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business.

As discussed in greater detail below, the rules governing the registration of certain investment advisers have changed. The Dodd-Frank Act amends certain provisions of the Investment Advisers Act of by delegating generally to the states responsibility over certain mid-sized investment advisers — i.

This means that state securities authorities will have primary regulatory authority over a substantial number of investment advisers that previously were subject to primary regulation by the SEC. Some investment advisers employ investment adviser representatives, the people who actually work with clients.

In most cases, these people must be licensed or registered with your state securities regulator to do business with you. So be sure to check them out with your state securities regulator. To find out about an investment adviser and whether it is properly registered, read its registration form, called "Form ADV. Part 1 contains information about the adviser's business and whether the adviser has had problems with regulators or clients.

Before you hire an investment adviser, always ask for and carefully read both parts of the Form ADV. An adviser must deliver the brochure supplement to the client before or at the time that the specific individual begins to provide investment advice to the client.

You can also obtain copies of Form ADV for individual advisers and firms from the investment adviser, your state securities regulator, or the SEC, depending on the size of the adviser. Because some investment advisers and their representatives are also brokers, you may want to check both BrokerCheck and Form ADV. Conclusion Once you've checked out the registration and record of your financial professional or firm, there's more to do. For example, if you plan to do business with a brokerage firm, you should find out whether the brokerage firm and its clearing firm are members of the Securities Investor Protection Corporation SIPC.

SIPC provides limited customer protection if a brokerage firm becomes insolvent — although it does not insure against losses attributable to a decline in the market value of your securities. If you've placed your cash or securities in the hands of a non-SIPC member, you may not be eligible for SIPC coverage if the firm goes out of business. Here are a few questions to get you started. What experience do you have, especially with people in my circumstances? Where did you go to school?

What is your recent employment history?


Find a Job 

Registered Investment Advisors do not need to associate themselves with a broker-dealer. The Bottom Line The majority of financial and investment companies that hire or train new advisors will have a mandatory licensing program included in .

Before you invest, make sure your brokers, investment advisers, and investment adviser representatives are licensed to sell securities. This brochure details how you can determine the validity of your broker's credentials, whether your broker has had any problems, and more. You don't have to earn a college to degree to become a licensed stockbroker, but you do have to take a series of exams before you can begin buying and selling securities. The Financial Industry Regulation Authority (FINRA) requires that all securities brokers pass the Series 7 exam in order to receive their license. 

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Financial Education

You can access extensive employment, disciplinary, and registration information about your stockbroker or investment adviser through your state securities regulator. To verify a license with either Broker Check or the Investment Adviser Public Disclosure, click here. To find contact information for your state securities regulator, click here. How Do I Become an Investment Broker? Investment brokers help their clients buy and sell stocks and other financial investments. Read on to find out more about how to become an investment broker. Schools offering Finance Investments How Can I Renew My Broker License?

The following is a list of securities examinations and the organizations that offer them (Brazilian Association of Investment and Capital Markets Professionals): technical sell-side research analysts] CNPI-P (Fundamental and Technical Securities Research) Costa Rica. Securities broker license; Operator and promotor in currency. Most firms also require their brokers to obtain a life insurance license in order to sell life insurance and variable annuities. Getting a Job as a Stockbroker Those who venture into the securities industry will begin by applying to brokerage firms and interviewing for jobs.

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