How to Become a Stockbroker

LearnHowToBecome Team
Staff Writer
August 17, 2020

Like many professionals in the finance and business field, successful stockbrokers possess strong strategic thinking and communication skills. These professionals guide their clients on which stocks to buy and answer investment questions pertaining to risk and reward. They must also have sales skills since they sell stocks.

Some job listings and websites may refer to a stockbroker position under a different title. Securities, commodities, and financial services sales agents all complete the same job responsibilities as stockbrokers.

According to PayScale, stockbrokers earn more as they advance in their careers. For example, an entry-level stockbroker earns an average annual salary of $46,382, while a stockbroker with more than 20 years of experience earns $99,090.

Keep reading to learn more about a stockbroker's salary, how to select a stockbroker educational program, and what it takes to become a stockbroker.

FAQ

What is a stockbroker? Stockbrokers sell stocks to investors and earn a commission. They hold a license to execute trades within the stock market.
How does a stockbroker compare to a financial advisor? Financial advisors offer general advice to clients on how to invest their money to achieve a specific goal. Stockbrokers focus on making smooth stock transactions for their clients.
Are stockbrokers the only people who can buy and sell stocks? Clients and companies must rely on stockbrokers to buy and sell stocks. Some full-service stockbrokers may offer advice on which stocks to purchase, but they primarily facilitate stock transactions.
How long does it take to become a stockbroker? It takes at least four years to earn a bachelor's degree to become a stockbroker. Some stockbrokers may choose to earn their master's in business administration to enhance their credentials.
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What Does a Stock Broker Do?

The day-to-day activities of stockbrokers vary. These professionals primarily work in office settings, but some offer services and consultations at their clients' offices. Experienced stockbrokers may travel to foreign countries to advise clients overseas.

Stockbrokers commonly work overtime in stressful, fast-paced environments. Stock values change daily, and stockbrokers must stay current with these changes. These professionals work with companies and individuals. They sell stocks on behalf of companies to individuals with money to invest. Stockbrokers manage stock portfolios and try to help their clients earn profit from their investments. They must know how to analyze changes and alter selling and trading strategies to help clients and companies meet their goals.

Self-employed stockbrokers often complete additional job responsibilities. For example, they must know how to obtain new clients through advertisements and word-of-mouth marketing. They must also keep track of their company's financial information for tax purposes.

While earning a degree in stockbroking, students can select a concentration in a subject like security trading, financial analysis, financial management, or personal financial advising.

Security trading involves making high risk-and-reward decisions on buying and selling securities for an employer. Financial analyzing courses teach students how to study and interpret financial trends to offer advice to clients. A financial management concentration covers how to manage and set financial goals on behalf of an organization. Personal financial advising involves the same topics but for individuals.

Some stockbrokers may earn additional certifications to expand their services. For example, they may become registered fiduciaries. These professionals manage money for a business or individual. Fiduciaries assume more of a financial advising role and must legally place their clients' needs first.

Stock Broker Salaries & Job Growth

Stockbrokers earn most of their income through commissions. However, some stockbrokers who work for an investment firm may earn a small base salary. PayScale reports that stockbrokers earn an average yearly bonus of $5,833 and a yearly profit share of $5,129.

To progress up the compensation ladder, stockbrokers must learn sales techniques, build a large client base, and form trusting relationships with clients with large budgets. For this reason, experienced stockbrokers earn more than double that of entry-level professionals.

For example, stockbrokers with 5-9 years of experience earn an average yearly income of $69,500. Once stockbrokers have worked for 10-19 years, their average yearly income progresses to $90,000.

Location also impacts pay. For example, PayScale reports that stockbrokers in Los Angeles earn 146% more than the national average, while stockbrokers in St. Louis, Missouri, earn 26% less.

The Bureau of Labor Statistics (BLS) refers to stockbrokers as securities, commodities, and financial services sales agents. Review the chart below to learn about the salary and projected growth rate for these professionals. You can use this information to compare similar jobs. For example, financial planners earn a higher median pay of $129,890. The BLS projects jobs for these professionals to grow 16% between 2018 and 2028.

The median income of a stock broker is well above the national average. However, the actual income of a stock broker relies on many factors, including years in the business, the firm they are working for, their level of educational attainment, and geographical location. These salary differences, based on geography, are highlighted in the below map.

Career Lowest 10% Salary Median Annual Salary Highest 10% Salary Projected Growth Rate (2018-2028)
Securities, Commodities, and Financial Services Sales Agents Less than $35,320 $62,270 More than $204,130 4%

Source: BLS

State

Stock Broker Job Growth

Those interested in a stock broker career are in luck. The need for stock brokers is growing even faster than the national average. However, the growth rate isn’t uniform across the country. The following map will show where the new stock broker jobs are expected to be.

Steps to Becoming a Stock Broker

Step 1
Obtain a High School Diploma
All stockbrokers must earn a bachelor's degree to practice. But to earn admission to a bachelor's program, individuals need a high school diploma. Some colleges accept applicants with a GED.
Step 2
Get a Bachelor's Degree
Earning a bachelor's degree is one of the most crucial steps to becoming a stockbroker. Learners typically need four years to complete a bachelor's degree, but this number varies based on credit requirements and personal course loads. Some colleges offer accelerated programs for full-time students.
The FINRA exam series requires a bachelor's degree in a major relating to stockbroking. However, most colleges do not offer specific stockbroking degrees. For this reason, many aspiring stockbrokers pursue a finance or business major.
Business degrees teach students about day-to-day business operations. Understanding what it takes to run a business can help stockbrokers communicate with business owners. This versatile degree covers topics like marketing, ethics, human resources, and business law. Programs also cover finance subjects like accounting.
Students unsure of whether they want to pursue a career as a stockbroker, but who know they want to work in business, can benefit from this degree. A bachelor's in business teaches basics on topics like securities and stock trading, and some schools may offer a concentration in one of these subjects.
A bachelor's degree in finance provides a more concentrated curriculum. For this reason, a finance degree typically covers topics more closely related to stockbroking. Common finance courses teach students how to analyze the value of securities. Students also learn about financial accounting and finance banking.
A finance degree best suits students who possess confidence in pursuing a job as a stockbroker or a related position because it is not a comprehensive, multi-subject major. Finance majors can also earn jobs as financial advisers, accountants, auditors, and loan officers.
Before enrolling in a business or finance program, learners should review course descriptions to ensure that they align with their career goals. Admissions counselors can also help students select the right major.
Step 3
Complete an internship
Most business and finance degrees require an internship component. Some internships offer a salary, while others only count for school credit. An internship allows students to get hands-on experience in a business setting under supervision. These learning opportunities also allow students to build portfolios and enhance their resumes.
Step 4
Find a Sponsor to Take the Necessary Licensing Exams
To assist individuals and businesses with buying, selling, and trading stocks, stockbrokers must pass the FINRA exams. These exams require sponsorship from a FINRA-regulated financial firm. Individuals can apply for sponsorship by completing FINRA's Form U4.
Step 5
Take and pass the licensing exams
Stockbrokers must take multiple exams before beginning their practice. Almost all states require stockbrokers to pass the FINRA Series 7 and Series 63 exams. The Series 7 exam quizzes applicants on financial topics that relate to trading securities. Series 63 focuses on state rules and laws in addition to securities trading.

Licensing and Credentials for Stockbrokers

At a minimum, stockbrokers must pass the Series 7 and Series 63 exams. These exams require sponsorship through a FINRA member firm. Individuals must also pass the SIE before taking the Series 7 and Series 63 exams.

The Series 7 license allows the holder to sell securities, but not futures and commodities. This license is also known as the General Securities Representative Qualification Examination. Many individuals who work in the financial planning field take this exam before earning additional certifications.

This exam covers topics like taxation, retirement plans, investment risk, and equity. It also includes questions that relate to client interactions. The exam consists of 125 questions and posts a time limit of 225 minutes. To pass, students must answer at least 90 questions correctly.

The Series 63 exam, also known as the Uniform Securities State Law Examination, includes 60 questions and allows students 75 minutes to complete. The exam requires 43 correct questions for a passing score. Once aspiring stockbrokers pass the Series 63 exam, they can facilitate the purchases and sales of mutual funds, bonds, and stocks in a state.

The Series 65 license is an additional credential stockbrokers can pursue. Passing this exam allows them to become a licensed investment advisor. Rather than taking the Series 63 and 65 exams separately, individuals can take a combination of the two through the Series 66 exam.

Advanced stockbrokers can earn additional certifications. For example, certified financial planners and financial advisors can offer comprehensive financial planning advice to their clients. Additional certifications allow professionals to offer more client services.

Earning certification to become a chartered financial consultant requires nine college-level courses that cover topics like estate planning and income tax planning. After earning these credentials, consultants must complete 30 hours of continuing education every two years.

Similarly, becoming a chartered financial analyst requires education in statistics, probability theory, and economics. The Chartered Financial Analysts Institute administers the exams for this certification. Applicants must pass three levels of exams, and each one requires about 100 hours of learning and studying.

Graduate Business and Finance Programs

Aside from additional certifications and licenses, stockbrokers can enhance their qualifications by earning a graduate degree. Individuals can choose to pursue a graduate degree immediately after their bachelor's degree, but many choose to pursue a few years of professional experience beforehand.

On average, full-time learners need two years to complete a master's degree. Part-time learners take about four years.

A master of science in finance and a master of business administration (MBA) both prepare stockbrokers to succeed in their field. A master of science in finance offers a more focused curriculum than an MBA. This degree covers finance-related topics, like managerial accounting, investment analysis, and corporate finance.

Individuals who want a more comprehensive educational experience can pursue an MBA. This degree includes courses pertaining to finance, and it also covers topics like marketing, management, human resources, strategic planning, and operations.

Regardless of which option learners choose, a graduate degree prepares them to emerge as leaders within the finance or business field. Graduate courses teach students how to make big-picture decisions that influence an organization's success.

Learn more about the process of applying to a graduate program below.

Graduate Business & Finance Program: Admission Requirements

Completion of an application Payment of an application fee GMAT or GRE test scores Resume or curriculum vitae showing pertinent work in finance Personal statement Recommendation letters Official undergraduate transcript (and graduate, if applicable) Evidence of general knowledge in basic business and finance-related courses, such as quantitative methods, accounting and financial analysis.

Graduate Business and Finance Program Courses

Through graduate coursework, learners practice research and analytical skills. In fact, most graduate programs require participants to submit a thesis or portfolio that demonstrates these skills. Some courses may also require essays and traditional exams.

See below for three common courses in finance and business graduate programs. Keep in mind that programs may not offer all of these courses. Before enrolling, prospective students should consult with a school's admissions department and review course descriptions. Certain programs may align with specific career goals more than others.

Master of Science (MS) in Finance Courses

Financial Economics:

Learners discover how to overcome business challenges. Course topics relate directly to the stockbroking field, including capital budgeting, corporate investing, and security analysis. Upon completion, students know how to make financial decisions and manage investments on behalf of a company.

Econometric Research:

This class teaches students how to use economic data to evaluate theories. During their studies, learners discover how to use data and regression analysis to forecast stocks. An econometric course allows students to practice analyzing economic data so that they can successfully help clients when working as a stockbroker.

Financial Reporting and Analysis:

Students learn how to combine knowledge of accounting, economics, and business strategy to make wise financial decisions for a company. This class also teaches learners how to communicate this information to business stakeholders through reports. Students learn how to use previous company data to predict future financial performance.

Master of Business Administration (MBA) Courses

Managerial Accounting:

This class examines how cost data influences decision-making. Students learn about types of overhead costs and how this information relates to departmental revenue. By the end of this course, learners know how to successfully evaluate a business and point out ways to enhance operations while increasing revenue.

Finance:

This class provides a high-level overview of financial theories, corporate financial policies, and aspects that influence investment decisions. A finance course also reviews market efficiency, capital structure, and cash flow. This class serves as a review course for experienced stockbrokers and offers current information on industry advancements.

Business Law:

Stockbrokers can benefit from taking a business law course because it outlines the legalities of trade practices. Learners discover various laws that impact the business industry, the history of applicable laws, and how to uphold legal contracts. A business law class also teaches students about court processes and functions.

Accreditation for Business and Finance Degrees

When researching colleges and universities, prospective students should pay attention to accreditation. The U.S. Department of Education and the Council for Higher Education Accreditation oversee third-party accrediting agencies.

Accredited schools regularly receive quality assessments from one of these third-party organizations. Higher education institutions can earn regional or national accreditation.

Regionally accredited schools earn accreditation through an agency that only reviews schools in a particular region. Nationally accredited schools receive accreditation from an agency that oversees schools across America.

Typically, employers view degrees from regionally accredited schools as more prestigious than degrees from nationally accredited schools. Some scholarships reserve funds exclusively for students who attend regionally accredited schools.

Programs can also earn accreditation. The Accreditation Council for Business Schools and Programs serves as a top programmatic accrediting organization for business and finance programs.

Components Of Successful Stockbroker Careers: Skills, Credentials, Tools And Technology

High-earning stockbrokers know how to communicate with clients and help both businesses and individuals experience financial gain. Professionals need hard and soft skills to achieve success.

Soft skills are harder to quantify than hard skills. Stockbrokers need soft skills in organization, active listening, interpersonal communication, and strategic thinking. Most stockbrokers improve these skills through on-the-job experience.

Hard skills can be easily measured. Stockbrokers need hard skills in accounting, data forecasting, and financial reporting. Most individuals learn these skills through coursework. Stockbrokers must demonstrate their hard skills by passing a series of licensing exams.

Stockbrokers must also know how to use stock monitoring software and graphing software. Common stockbroker software programs include MProfit, HyperStock, and Firstrade. Self-employed stockbrokers must also know how to successfully market their business and build a client network since this job is mostly commission-based.

Skills

Stock brokers deal in securities and securities are measured and valued by numbers. Being able to understand what the numbers mean and how to manipulate the numbers through financial formulas is important.

Stock brokers must know their clients well, in addition to knowing what the market is doing. The smallest detail can make the difference between a great choice and an awful investment.

Stock brokers trade securities on behalf of their clients. Often the stock broker will need to convince their client on a particular investment decision or be available to answer investment questions.

Stock brokers need to be willing to take the initiative to find new clients. Without the ambition to grow their client base, stock brokers will quickly find themselves pushed out of the business by up-and-comers.

Stock brokers must be able to analyze securities, which is often a series of numerical values, and be able to glean useful information that they can pass on to clients or use to sell more securities.


Tools

Desktop computer with multi-monitor workstation Laptop computer Multi-line telephone Financial analysis software Spreadsheet software Smartphone

Credentials

Stock brokers have numerous credentials available to them. Many of the credentials come in the form of certifications and exams, which can expand a stock broker’s job responsibilities and allow them to interact more expansively with potential clients. Some of the exams and certification available include:

Exams

Certifications

Stockbroker Career and Degree Resources

To succeed in this field, stockbrokers must commit to lifelong learning and network with peers. Keep reading to learn about helpful resources for stockbrokers. These organizations host annual events, publish journals and newsletters, provide exclusive member benefits, and help professionals stay current on industry advancements.

National Association of Stock brokers

Consisting of various chapters all over the country, the NAS facilitates the sharing of information between companies, stockbrokers and analysts.

National Organization of Investment Professionals

The NOIP is tasked with improving the regulatory setting so that all investment professionals may benefit.

Security Traders Association

The STA is a trade organization which advocates on behalf of security professionals. The STA provides educational and lobbying resources for its members.

US Securities and Exchange Commission

The SEC is the leading regulating agency for investments. The SEC also works to protect investors and the integrity of capital markets.

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