A stockbroker, or a financial advisor, is an important figure for those who are interested in making investments in stock. Investors need to understand what these finance professionals do- and they also need to be able to rely on their services- if they want to maximize the profits of their stock investments.
Financial advisors specializing in the stock trade typically work with a broker-dealer or a brokerage firm, according to Investopedia. They make work with either retail clients or institutional clients, and they might facilitate the purchase and sale of stocks and/or other types of securities. In the United States, this type of professional needs to hold some kind of licensure. Stockbrokers needs to pass exams to become licensed. They must pass exams known as the Series 7 exam, and they must also pass either the Series 63 or Series 66 exams to work as brokers in the stock trade.
Education of a Stockbroker
Although a thorough understand of financial markets is important, a financial advisor in the stock trade does not necessarily have to have a college diploma. However, in general it is necessary that a broker trading in stock have at least a bachelor’s degree, and a graduate level degree in finance or some similar area is highly useful. In basically every country, some type of licensure is needed for professional stockbrokers.
In the United States, brokers trading in stock are registered with the Financial Industry Regulatory Authority (FINRA) after taking the Series 7 exam. There are a variety of different more specific exams and licensure distinctions regulated by the FINRA.
Function of a Stockbroker
Stockbrokers are necessary because a non-registered, unqualified person can not legally buy and sell stock. Only brokers specifically trained in the stock trade are able to do this, and so investors need to go through a broker when investing in the stock market.
Job Tasks
Stockbrokers make trades in stock for both individual investors and for private companies. Brokers will carry out orders on certain stocks either over the phone or on the computer. They will send the order to the securities exchange floor so that their client can either purchase or sell a stock. When a client expresses an interest in a stock with a broker, the broker will tell the client how much the stock will cost and take the client’s payment. Then, the broker will oversee the transfer of the stock title and handle any procedures related to clearing and settling the transaction.
Other tasks of a financial advisor in the stock trade include conducting research on which stocks are the most profitable and when is the most profitable time to buy or sell. Brokers not only facilitate transaction on stocks, but they also typically provide clients with advice on buying and selling. If a client’s investment does well, it benefits the broker, because the broker makes a commission on transactions. Therefore, it’s in the broker’s best interests for any transaction he or she facilitates to be profitable.
Related Resource: Investment Banker
A stockbroker needs to be thoroughly versed in the workings and procedures that take place on exchanges like the NYSE, and they also need to be reliable sources of information on how money is made through stock investing.
