How to Become a Stockbroker
Warren Buffet once said, “Risk comes from not knowing what you’re doing.” For many individuals and businesses, the lines between bear and bull markets can get blurred, resulting in losses. When you learn how to become a stockbroker, you help clients make wise investments and build lucrative financial portfolios—and earn yourself a pretty penny at the same time.
As a stockbroker, you can enjoy job security and good pay. The Bureau of Labor Statistics projects a 10% increase in new stockbroker jobs over the next 10 years. Below, we discuss how to become a stockbroker and what you’ll need to get started.
What Is a Stockbroker?
A stockbroker is a financial agent who facilitates purchases and sales of stocks, bonds, and other fungible securities and commodities. Most stockbrokers work for banks or brokerage firms, while others are self-employed.
There are generally three types of stockbrokers:
- Full-service brokers: Full-service brokers offer a wide range of services to clients. That includes portfolio construction and analysis, financial advice, estate planning, and access to foreign markets and IPO shares.
- Discount brokers: Discount brokers execute the sales and purchases of fungible securities with little or no commission. However, they don’t offer many of the same services as full-service brokers.
- Online Brokers: Online brokers offer the same services as full-service and discount brokers but do so over the internet rather than in person.
What Does a Stockbroker Do?
Stockbrokers buy and sell fungible securities for individuals and businesses. They also provide financial advice for companies looking for investors and help them conduct trades.
The day-to-day responsibilities of stockbrokers include:
- Reaching potential clients through cold-calling and other sales methods.
- Presenting financial information to prospective clients.
- Offering advice on selling, purchasing, and trading securities.
- Monitoring financial markets.
- Analyzing businesses’ finances and advising companies on mergers, acquisitions, and public offerings.
How to Become a Stockbroker
Stockbrokers typically need a bachelor’s degree in finance, business, accounting, economics, or a related field. Most employers prefer candidates who have completed an internship at a brokerage firm or investment bank. While a master’s degree in business administration (MBA) isn’t necessary for an entry-level position, most advanced jobs in the securities industry require them.
Certification isn’t typically required for stockbroker jobs, but it can boost your knowledge, competency, and value to employers. Stockbrokers can pursue the Chartered Financial Analyst (CFA) certification from the CFA Institute.
The CFA program provides investment professionals with in-depth knowledge and skills in investment analysis, which is valuable for stockbrokers who wish to advance their careers. To be eligible for certification, you must pass a three-part exam that covers investment tools, asset valuation, portfolio management, and wealth planning.
Along with a rock-solid knowledge of investing and the ins and outs of the stock market, you’ll also need certain soft skills to succeed as a stockbroker. The skills typically needed for a stockbroker job include:
- Strong analytical skills.
- Close attention to detail.
- Customer-service skills.
- Excellent decision-making skills.
- Initiative to seek out and contact clients.
- Exceptional math skills.
There are more essential requirements to getting a stockbroker job, which we will walk you through step by step. Read on to learn how to become a stockbroker and meet the licensure requirements.
Step 1: Pass the Securities Industry Essentials (SIE) Exam
All stockbrokers must register with the Financial Industry Regulatory Authority (FINRA) and obtain a license before they can begin buying, selling, and trading securities. To be eligible for licensure, you must pass a series of examinations, starting with the Securities Industry Essentials (SIE) exam.
This exam assesses your basic securities industry knowledge and can be taken by students or professionals ages 18 or older. Taking the SIE before graduating college is a great way to familiarize yourself with the securities industry and get a head start on your stockbroker career. Passing the SIE exam doesn’t qualify you for FINRA registration, but it is a prerequisite to the Series 7 exam. To begin, simply create a FINRA account and schedule your exam.
The SIE exam covers your knowledge of four essential topics:
- capital markets.
- products and their risks.
- trading, customer accounts and prohibited activities.
- regulatory frameworks.
Step 2: Find a Sponsor
Before you can take the General Securities Representation exam (Series 7), you must find a sponsor from an organization registered with FINRA or a self-regulatory organization (SRO). A sponsor will submit your information to FINRA’s Central Registration Depository, invest in your training for the Series 7 exam, and pay the testing fees.
To find a sponsor, you must fill out and submit the 39-page Unform Application for Securities Industry Registration or Transfer (form U4). Once you’ve submitted the form U4, a sponsoring firm will electronically file it with FINRA.
The sponsoring firm will then conduct a background check and ensure that all information on the form U4 is complete and accurate. You will then be asked for a fingerprint card, which you can obtain from your local police station or sheriff’s office.
If you can’t find a sponsor after submitting the form U4, you’re not out of options. Some brokers or brokerage firms will sponsor and hire you if they’re confident that you’ll pass the Series 7 exam.
Step 3: Complete and Pass the Series 7 Exam
Once you’ve found a sponsor, you must take and pass the Series 7 exam, which assesses the ability of entry-level representatives to perform the most essential securities industry functions. That includes selling corporate, municipal, and investment company securities. Other subjects in the Series 7 exam are variable annuities, and direct participation programs and options.
Once you’ve passed the Series 7 exam, you’ll be eligible for the General Securities Representation registration issued by FINRA. This exam contains 125 items that cover these four key job functions:
- Seeks business for the broker-dealer from current and potential customers.
- Opens accounts after obtaining and evaluating customers’ financial profiles and investment objectives.
- Provides customers with information about investments, makes recommendations, transfers assets, and maintains appropriate records.
- Obtains and verifies customers’ purchase and sales instructions and agreements; processes, completes, and confirms transactions
Step 4: Complete the Series 63 Exam
Next, you must pass the North American Securities Administrator Association (NASAA) Uniform Securities Agent State Law Examination (Series 63), which is administered by FINRA. This exam is designed to gauge your knowledge and understanding of state laws and regulations regarding securities trading.
The Series 63 exam contains 65 multiple-choice questions, 60 of which count toward the final score. To pass this exam, you must correctly answer 43 questions within 75 minutes.
The exam covers regulations pertaining to investment advisors, investment advisor representatives, broker-deals and agents, and securities and issuers. It also covers remedies and administrative provisions, customer and prospect communication, and ethical practices and obligations.
Step 5: Obtain a Fingerprint Card and State Registration
Once you’ve completed the Series 63 exam, you must obtain a fingerprint card from your local police station or sheriff’s office and register with your state’s board of registration. Fingerprint cards can be submitted electronically or by mail to FINRA.
Step 6: Complete Continuing Education to Maintain Your FINRA License
Congratulations! Now you know how to become a stockbroker. But remember that even once you’ve obtained all the required credentials, you’ll need to maintain your license and FINRA registration.
FINRA requires you to complete the Regulatory Element continuing education program two years from the date you were issued your license. You must then complete the program every three years to keep your license.
The Regulatory Element program covers compliance, regulatory, ethical, and sales practice standards.
How Much Does a Stockbroker Make?
Now comes the big question: How much do stockbrokers make? According to Monster’s pay data, the median stockbroker base salary is $75,721 per year. However, stockbrokers can earn a yearly base salary between $47,418 and $108,549 based on your experience level, certification, and location.
However, commissions are also a key part of a stockbroker’s overall compensation package—the standard is around 1 to 2% of clients’ managed assets. The more clients a stockbroker takes on, the more money they will make. Many stockbrokers receive additional incentives such as bonuses and stock options as well.
Find the base pay range for stockbrokers in your area on Monster’s Salary Calculator. This tool also provides a list of potential next career steps that can boost your pay, professional experience, and skills.
How to Find Stockbroker Jobs
Now that you get the gist of how to become a stockbroker, are you ready to apply to jobs at brokerages and banks? First, take some time to create your resume. Start by referring to Monster’s finance resume examples. These examples can help you write, format, and refine a stockbroker resume that demonstrates your key skills and professional achievements. Then, create a cover letter by using these tips for financial professionals.
Once you’ve obtained the required credentials and created your resume and cover letter, you’re ready to apply for stockbroker jobs on Monster.
Want to move where the best jobs are? Search in these five U.S. metropolitan areas where stockbrokers are in the highest demand:
Grab the (Career) Bull by the Horns by Joining Monster
Knowing how to become a stockbroker is only the first step in your journey to a rewarding financial career. Invest in your career’s success by signing up with Monster. We’ll meet you halfway by getting your resume in front of job recruiters in the securities industry. Plus, we offer free job notifications to keep you updated on new stockbroker positions in your area.