Stock brokers work within the financial industry in a wide variety of positions, with different levels of customer interaction and authority. Many have a graduate degree in business finance, making them especially qualified to serve as analysts and assist individuals and companies with investment decisions in the stock market. Similar positions include employment as a financial advisor or investment advisor. They may work directly with individual investors, making recommendations and assisting on behalf of their clients. They may also work within financial institutions or corporations and help manage their investment portfolios.
Job Description and Outlook
Stock brokers may work directly with individual clients or they may work within a financial institution or corporation in the financial division. They will often research and make recommendations on prospective stocks to buy or sell for their client. They may also offer advice and recommendations regarding the buying and selling of bonds or other investment devices, such as commodities and mutual funds.
They differ from stock traders in terms of their job functions. They usually buy and sell stocks on behalf of their clients and give advice regarding their investment activities. Traders, on the other hand, buy and sell on behalf of investment firms. These stocks are usually managed in investment portfolios, such as mutual or hedge funds. Brokers frequently work directly with investment client and buy or sell based on client decisions. Traders buy and sell them based on instructions from portfolio managers for the investment fund.
Brokers also analyze financial reports and documents from potential investment securities. They sometimes make recommendations regarding mergers, acquisitions and public offerings if they work for financial organizations or corporations. They also review revenue reports and cost agreements and report their findings to supervisors, often making investment recommendations based on their findings.
They may also assist companies searching for investors. Their assistance may take the form of finding individual investors, corporate investors or venture capital investors. Stockbrokers also assist companies with initial public offering preparation, including consulting with investment brokerage firms and bankers, public relations managers and stock exchange managers.
There are currently around 307,020 securities, commodities and financial service sales agents working in the United States. According to the Bureau of Labor Statistics (BLS), the job market is expected to grow by approximately 15 percent between 2010 and 2020 – approximately 1.5% per year. This is approximately the same as the overall average job growth rate in the United States. The Bureau expects that positions that help companies with initial public offerings (IPOs) and global economic growth will be especially strong. Additionally, they suggest that employment growth for commodities trading will be substantially strong.
It is expected that competition among job applicants for high paying positions in financial services and sales will be especially strong. Applicants who have a graduate degree in finance and have earned one or more job certifications are in a better position to find employment.
Education and Training Requirements
An undergraduate degree is required for almost all entry level positions in the financial services industry. A degree in finance such as business administration, economics or finance is especially useful. Employers expect job applicants to have at least taken courses or have experience in these areas of study if they do not have a degree in one of the fields.
For higher paid positions, most employers require an Master’s degree in business administration (MBA) or business finance. An MBA is required for positions that require a person to be involved in activities that are regulated by the Securities and Exchange Commission (SEC). An MBA is also required for the majority of middle and upper management positions in companies in the financial sector.
Many financial organizations hire undergraduate students for summer internship positions. Candidates who are successful and make a positive impression are often offered employment shortly before or after graduation.
Training is provided by many financial services firms in their specific products and services. Training is also frequently offered on selling strategies when working with clients in financial service firms that work directly with investment clients. Entry level brokers are encouraged to seek additional training in securities analysis and broader aspects of the financial and banking industry. As new products and services are offered, agents must continue to attend training seminars and conferences to gain a full and in-depth understanding of the products they are selling.
Stock brokers and investment bankers are also required to become licensed and registered with the Financial Industry Regulatory Authority (FINRA). Obtaining a license requires studying for and passing several exams, including the commonly known Series 7 Exam. The Series 7 Exam tests candidates on SEC rules. It also tests examinees’ knowledge about foundational investment concepts.
Additional licenses and registrations may be required, depending on the type of investment products being sold by the broker or agent. For example, life insurance annuity financial investment tools require licensing as an insurance agent. Continuing education is required to maintain most licenses, including FINRA licensing. Many firms offer assistance to candidates to help them pass these licensing examinations.
In addition to Series 7 Exams, many states require stock brokers and traders to pass an additional exam, called the Series 63 Exam. This exam tests candidates on a broad range of aspects of the stock market. It is also substantially shorter than the Series 7 Exam and considered much easier to pass.
Salary Facts and Statistics
According to the 2011 Bureau of Labor Statistics Report, the median salary is approximately $72,000. Top salaries in this field are well over $100,000, with individuals with many years of experience typically earning significantly higher incomes than those just entering the field. This causes the average reported salary to be $98,810. In the United Kingdom, stock broker salaries typically range from £20,000 to £50,000, depending on their work environment and the type of financial firm they work for. Experienced traders in the United Kingdom frequently earn salaries in excess of £100,000 annually, with the potential to earn £1,000,000 and higher when combined with bonus payments.
For many, a large part of their income is based on commissions from sales and trades. Additionally, many investment firms and organizations offer quarterly and annual bonuses based on individual job performance and firm profitability.
The majority of financial advisor, stock trader and broker positions are within brokerage firms and work directly with clients and make recommendations. A smaller number of positions are with financial management organizations and enterprises. Securities and investment exchanges are another source of employment for many individuals who work as brokers and traders. Finally,they may also find employment in corporations and companies as financial managers who manage corporate investment portfolios.
According to the Bureau of Labor Statistics, the majority of employment opportunities for financial managers and advisors are located in large cities in the United States, such as Chicago, Miami, Dallas and San Francisco. Also, large metropolitan areas of the Western and Northeastern United States, including Los Angeles, New York, Boston and Philadelphia have the largest numbers of employment opportunities.