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Advertiser partners include American Express, U. Bank, and Barclaycard, among others. And while many brokers still do this today, the role of stockbrokers has evolved and expanded considerably over the past few decades.
Those who decide to explore this career path will face many challenges, but can also reap substantial monetary rewards. There are a number of steps involved in becoming a successful broker, and a plethora of career paths one can take. Your path may begin with your college education. Students who wish to explore becoming stockbrokers should consider majoring in financial planning as undergraduates, and possibly continue their studies in graduate school.
This provides the majority of technical knowledge needed to start a career in the financial planning industry, and will help qualify a student to sit for the CFP board exam or earn other credentials, such as the CLU or ChFC. Students who want to become stockbrokers might also consider majoring in business, finance, economics, or accounting to gain an understanding of what drives the economy and the forces that influence and determine the price of securities.
Those who major in accounting and become CPAs may gain a leg up over their peers. Conceptually, becoming a stockbroker is fairly simple although not easy. For some prospects, this is the hardest part of the process.
Each license is obtained by passing the corresponding exam. 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:. 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:. 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. Working at a bank can be an excellent alternative for those who do not have much of a network. 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.
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. 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:. Those who can get past the initial obstacles and make it over the hump can enjoy very rewarding careers. Some of the perks that come with being a broker are:.
Stockbrokers face many challenges in their jobs, such as compliance, sales quotas, bear markets, and bureaucracy. But the rewards can be well worth the frustration and effort.
There are many paths to success in this business, and those who fail with one company should not hesitate to try again in a different setting.
Mark Cussen, CFP, CMFC has 17 years of experience in the financial industry and has worked as a stock broker, financial planner, income tax preparer, insurance agent and loan officer.
He is now a full-time financial author when he is not on rotation doing financial planning for the military. He has written numerous articles for several financial websites such as Investopedia and Bankaholic, and is one of the featured authors for the Money and Personal Finance section of eHow.
In his spare time, Mark enjoys surfing the net, cooking, movies and tv, church activities and playing ultimate frisbee with friends.
He is also an avid KU basketball fan and model train enthusiast, and is now taking classes to learn how to trade stocks and derivatives effectively. Financial Education Students who wish to explore becoming stockbrokers should consider majoring in financial planning as undergraduates, and possibly continue their studies in graduate school.
Testing and Background Checks Conceptually, becoming a stockbroker is fairly simple although not easy. This exam is required to become a general securities registered representative. This is considered to be, by far, the hardest of all the securities exams.
The 63 covers state blue-sky laws and must be taken next in order to transact business. 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. 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.
A typical day in the life of a discount broker consists of: 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. 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: Long Hours of Prospecting.
Therefore, many brokers must rely upon business from friends and family in order to get started. New brokers can also expect to spend many nights and weekends pounding the pavement and marketing themselves. Although the initial quotas that brokers face are usually the hardest to reach, most firms continually reset these quotas and expect their brokers to make them on an ongoing basis. Those who recommend individual securities must also learn how to research their offerings effectively.
Brokers will inevitably have to deal with unhappy clients who may or may not be reasonable in what they expect from their investments.
Most brokers who start out can expect to earn next to nothing for the first year or two of production, although they may be given a base salary or draw against commission.
Life, health, and disability premiums — as well as the cost of errors and omissions insurance — are standard expenses for most brokers. These expenses are in addition to marketing and advertising costs and overhead, such as rent and utilities. CE is required to maintain licenses on an annual basis, and many firms also strongly encourage their brokers to earn professional designations, such as the CFP, in order to improve their marketability. Rewards and Benefits Those who can get past the initial obstacles and make it over the hump can enjoy very rewarding careers.
Some of the perks that come with being a broker are: Established reps often make six-figure incomes, especially as they build their books of business and their payouts increase. Also, many products that brokers sell, such as mutual funds and annuities, pay residual incomes that build up over time to provide a substantial cushion of commissions.
Successful brokers often work in plush offices with staffs of professionals who handle office administration and compliance issues. Most established reps either share a sales assistant with someone, or have one of their own. The length of the typical workday tends to shrink for brokers as their tenure in the business increases. Final Word Stockbrokers face many challenges in their jobs, such as compliance, sales quotas, bear markets, and bureaucracy. Have you explored becoming a stockbroker? What have been your biggest challenges?
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