Stock brokers buy and sell stocks and other securities on behalf of clients; those clients might be individuals or institutions. Stock brokers receive a commission which is compensation for making the transaction for the client. Due to the complicated nature of investments and other factors, stock brokers must pass exams in order to become licensed to legally buy and sell securities.
Ironically, despite the heavy regulation of the industry stock brokers work in, there are no required degrees someone must obtain to become a stock broker. As long as the proper licenses are obtained, a stock broker can have only a high school diploma. However, most stock brokers choose to earn a degree in order to compete in a very competitive market. Here’s what students can expect from the career and the degree pursuit.
Stock brokers, through their legal mandate (license) and understanding of investments and capital markets, buy and sell stocks for their clients. Here’s more about what their day-to-day work entails.
In order to help their clients buy and sell the right stocks at the right time, stock brokers must be able to analyze the particular investment and tailor it to the client’s needs. The better advice a stock broker can give the client, the more money the client will make and subsequently, the more trades they will make. Since stock brokers are primarily paid through commissions, the more trades, the better. Because this job requires close monitoring of the stock markets and the management of client money, it can be high-stress.
Stock brokers must regularly find new clients and research the markets so that they may give up-to-date investment advice. They must have a deep understanding of securities and commodities, depending on their specialization. They must also be able to analyze company financial reports and provide recommendations to clients. Some stock brokers may not work with clients, but directly on a trading floor, buying and selling stocks pursuant to an order placed by a trader. Other stock broker may focus more on giving investment advice and helping clients find the best way to achieve their investment and financial goals.
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.
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.
Working as a stock broker might require only a high school diploma to start, but students can’t stop there if they want to advance. Here are the best steps to take to get there.
Even though no formal education requirements are needed to become a stock broker, it’s unrealistic to make a career as a stock broker without a college education. And in order to get a college education, such as a bachelor’s degree, a high school diploma will be necessary.
The Bureau of Labor Statistics (BLS) reports that in most cases, a bachelor’s degree is required for entry-level securities, commodities, and financial services sales positions. Assuming someone wants to work for a brokerage firm or investment bank, a bachelor’s degree will be required. There is no particular major needed, although something in the business or financial field is recommended. Common stock broker degrees include accounting, business, finance and economics. Taking additional classes in statistics, mathematics and quantitative analysis will also be helpful.
Many brokerage firms and investment banks will hire summer interns to work at their offices. Depending on the firm, these internships can serve as extended job interviews where successful summer interns will have a significant advantage when applying to these firms for post-graduate employment. This is a solid way to receive the intensive training that some of the bigger companies require.
In order to sit for the necessary exams to become a licensed stock broker, an individual must be sponsored by a FINRA (Financial Industry Regulatory Authority) registered firm or other regulatory authority. Generally, this means getting hired by a brokerage firm or investment bank before getting licensed. Brokers registered with FINRA must complete continuing education classes to keep licensing current.
Practically all states require stock brokers to take and pass the Series 7 and Series 63 exams. The Series 7 exam covers financial topics relating to the trading of many different types of securities and Series 63 also covers the trading of securities, but focuses on state rules and laws. Depending on the firm, additional licensing exams may be needed. Some stock brokers may choose to pursue certification that, while not required, may enhance professional standing and earnings.
Though there is no particular major that students should focus on to reach the dream of being a stock broker, some are more advantageous than others. Here are a few options.
A bachelor’s degree in business is one of the universal degrees for launching a stock broker career. A business degree will cover a wide range of business related courses; not only will graduates gain familiarity with securities and trading stocks, they will learn other aspects of a company, such as marketing, operations and ethics. Higher level courses a business major can expect to take include:
A finance degree is another great choice for individuals interested in working as a stock broker. Although slightly less comprehensive than a business degree, a finance degree will go more in-depth into subjects likely to be encountered by a stock broker, such as investments, risk management and financial analysis.
Even though a bachelor’s degree is the de facto degree requirement for a stock broker career, a master’s degree in business and finance are very popular and highly recommended. In order to be admitted into a master’s program, applicants will have to meet certain requirements. Please note that the following list is not exhaustive and each school will have its own unique application requirements.
Aspiring stock brokers seeking a master’s degree might be well-served with these two standouts:
Time to complete: 2-3 years
Each school is different, but a typical master’s degree in finance consists of about 35 to 40 credits, with classes taken year-round. Students will not only learn about more detailed and specialized business and finance related topics, but will take management courses as well.
The MS in finance provides an opportunity for students to concentrate in a particular area of finance, such as capital markets and investment. Unlike some other business graduate programs, a MS in Finance is more tailored to finance-related subjects and less on leadership.
Individuals who want additional instruction on specialized areas of finance or want to improve their level of knowledge in a specific area so that they may continue to grow in that specialty.
Students will learn about different computer technologies that can assist in the process of financial analysis.
This course covers advanced and complex valuation models and financial decision analysis.
Financial instruments from other countries are explained in this class.
This course will focus on derivatives as a means of deducing investment risk.
Students will gain an overview of different types of fixed income investments and how they work.
Time to complete: At least 2 years
The typical MBA program will last about two years, but sometimes less. The curriculum consists of a broad range of business, finance and leadership related coursework to prepare students for management and leadership roles.
An MBA program teaches students not only additional business and financial concepts, but how to think strategically to improve the financial status of a business as well as how to take on a leadership role within a business.
Individuals who ultimately desire upper level management positions are perfect for an MBA degree. The MBA also provides an excellent opportunity for students to establish long-term and valuable connections with fellow classmates and faculty.
Students will examine business operations and recurring operations. Common issues and strategies will be reviewed.
Students are taught accounting methods and processes that can be used for major business decisions.
This class covers the overall process of how business decisions work to improve the value of the company or organization.
The basics of consumer demand and business supply models are presented in this course.
In this course, students will learn how to use statistical methods to measure business performance.
Stock brokers can easily switch careers or engage in job duties that overlap with other financial professionals. Potential professional areas for stock brokers can include (with salary info from the Bureau of Labor Statistics):
Securities traders buy and sell securities on behalf of their employer in order to make money for that employer. Traders often make high risk, high reward trades that can be worth millions of dollars.
A personal financial advisor gives financial and investment advice to their clients. Their job can entail listening to the client to understand their investment and financial goals, then recommend financial instruments and investment strategies to best achieve those goals.
Financial analysts analyze and study financial trends and data in order to give investment advice to others, usually organizations. Financial analysts typically work in one of two areas: giving advice to entities that are looking to buy investments and entities that are looking to sell investments.
Financial managers do exactly what their title states: they manager financial matters. More specifically, they manage the financial goals of an organization. Financial managers usually work in-house for a company and find ways to improve the company’s financial position.
Investment bankers act as intermediaries for business and investors. Businesses need to raise capital and often do so by selling securities. Investors are looking to buy securities in order to make a profit. Investment bankers give advice to businesses to help raise the most money, and then help those businesses raise the capital they need.
In order to be a successful stock broker, a particular set of skills, tools and credentials are needed. Some of these are essential while others are helpful for professional advancement and promotions.
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.
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:
Source: Bureau of Labor Statistics
Those who chose to become a stock broker might find that there are other appealing financial careers available. Some of these promising careers include working as a financial analyst, a personal financial advisor, insurance sales agent, financial manager, or real estate brokers. These are the average salaries you might expect from related occupations:
The NADT is a professional association that works to improve the professional standing and education of day traders.
Consisting of various chapters all over the country, the NAS facilitates the sharing of information between companies, stock brokers and analysts.
The NOIP is tasked with improving the regulatory setting so that all investment professionals may benefit.
The STA is a trade organization which advocates on behalf of security professionals. The STA provides educational and lobbying resources for its members.
The SEC is the leading regulating agency for investments. The SEC also works to protect investors and the integrity of capital markets.
There are a plethora of stock broker degrees and related educational programs that prepare individuals for a career as a stock broker. With so many choices, deciding which school and program to attend can be overwhelming. The following search tool is designed to narrow down a large list of schools and programs to something more manageable.
If you don’t have the time to sit in a classroom, these stock broker programs are offered through online platforms. Keep in mind that many stock broker programs might be hybrid – offering some online courses while others are required to be taken in person.