If you are interested in a fast-paced career in business or finance, you may want to know more about what a stockbroker does. Brokers are sales agents who trade securities for their clients, earning a commission on each trade. They also provide services for their clients, such as trading advice and tips on opening and closing prices.
A Typical Day for a Stockbroker
A day in the life of a stockbroker is quite long and begins several hours before trading opens for the day. A broker gets to work early to read financial news and begin researching trades. The day typically starts at around 6:30 or 7:00 with market research and responses to client emails. When the stock exchange opens at 9:30, the broker begins buying and selling stocks for clients.
On the New York Stock Exchange trading floor, brokers trade only client stocks and don’t buy or sell shares of stocks for themselves, according to Business Insider. In New York, the trading floor is extremely fast-paced, and near the times of the opening and closing bells, the atmosphere is chaotic. By about 10:00, the trading floor calms down, and most trades between 10:00 am and 3:30pm are made by algorithms and software. However, most of these programs are controlled by stockbrokers who input information into them, such as opening prices and numbers of shares.
Working for a Brokerage Firm
Most brokers in the United States don’t work on the NYSE trading floor, but for brokerage firms such as Merrill Lynch and Morgan Stanley. In general, jobs with these firms are easier to get than a position on the NYSE trading floor, although the top firms are increasingly selective when it comes to hiring brokers. The educational requirements to be a stockbroker are more modest than in other areas of finance, and many positions don’t require a college degree. The job is essentially a sales job, and a brokerage firm provides on-the-job training for newly hired brokers. Professional licensing is required by the U.S. government, and stockbrokers must pass the Series 63 and Series 7 exams before they can legally make trades, according to Investopedia.
When a broker is first hired by a firm, the company gives the worker a sales quota that determines whether the employee can remain at the firm. A large portion of brokers fail to make the quota, and they are forced to look for work at another firm or in another profession. To meet the sales quota, brokers have to do a lot of cold calling and client meetings. It’s a successful model for most people who enter this line of work, but not for everybody.
Succeeding as a Stockbroker
Since brokers are paid almost completely through commissions, their salaries depend on how well they perform in their jobs and how persuasive they are with clients. People who are good at selling tend to be more successful stockbrokers than people who are, for example, better at financial analysis or accounting. In finance, people who are better with numbers than with people tend to work for funds and investment firms as analysts.
Finding success as a stockbroker requires a certain skill set. Stockbrokers need strong decision-making skills to make split-second choices that affect huge amounts of cash. Stockbrokers must possess analytical skills to monitor the stock market and examine the performance of financial products. Math skills help stockbrokers use investment formulas that boost clients’ return rates. Stockbrokers need ambition, determination, and outgoing initiative to compete in the fast-paced trading world. Sales skills are essential to persuade clients into buying or selling their stock shares. Communication skills help stockbrokers negotiate better prices and assert pressure for ROI. Listening skills are important to hear a client’s wants and earn people’s trust. Stockbrokers are also detail-oriented to execute trades and acquisitions properly.
Salary and Job Outlook for Stockbrokers
The Bureau of Labor Statistics calculates a mean annual wage of $98,770 for stockbrokers. The 415,890 securities sales agents, including stockbrokers, have an average hourly wage of $47.49. The bottom 10 percent of stockbrokers have a $34,360 median salary. The top 10 percent of stockbrokers enjoy a median income of $156,030. Most stockbrokers fall into the $42,650 to $123,320 range. Stockbrokers at brokerage firms bring home mean $133,020 earnings. Unsurprisingly, New York is the top-paying state with a $161,580 average stockbroker salary. The life of a stockbroker includes excellent pay, full benefits, and big commission-based bonuses. A stockbroker’s salary is peanuts compared to the multimillions earned by Wall Street CEOs though.
Are jobs for stockbrokers in high demand? The U.S. Department of Labor says no. The employment of stockbrokers is only expected to rise four percent from 2018 to 2028. There will be about 18,500 openings nationwide for stockbrokers this decade. Average job growth will keep the professional life of a stockbroker competitive. Brokerage firms are increasingly becoming automated or digital to reduce demand for stockbrokers. Industry regulation has shifted more jobs from investment banks and brokerages to hedge funds. Since finance is a popular major, aspiring stockbrokers also have to vie for jobs against many qualified applicants. Succeeding as a stockbroker requires standing out from the crowd. Stockbrokers with an MBA or M.S. in Finance and the Chartered Financial Analyst certification have the best hiring chances.
Related: What Does a Hedge Fund Manager Do?
Misconceptions About the Life of a Stock Broker
Stockbrokers are constantly being portrayed in blockbuster movies like The Wolf of Wall Street and Trading Places. Films have helped perpetuate some misconceptions about what stockbrokers do and how though. Let’s debunk some of these stockbroker myths. First, stockbrokers aren’t typically greedy, money-hungry jerks who make millions. Many stockbrokers don’t even hit the six-figure salary mark as shown above. Depending on their trade activities, some stockbrokers can lose money. Stockbrokers don’t generally live a lavish lifestyle with Lamborghinis like Jordan Belfort. As seen in The Pursuit of Happyness, stockbrokers don’t have an easy life either. Stock trading is a volatile, high-stress career. Stockbrokers ride the market rollercoaster and worry about every big-dollar trade. Emotional and physical health, especially a broker’s blood pressure, can suffer.
People often picture stockbrokers dressed in fancy suits and running around the stock market floor. In reality, most stockbrokers don’t physically work at the NYSE. Many dress casually and spend their days behind a computer in a cubicle. Stockbroker jobs are available across America, including in the Dakotas and Alaska. Stock trading offices can be abroad in cities like Tokyo and London. Online brokerages also allow some stockbrokers to telecommute from home. Graduating from an Ivy League school and heading straight to Wall Street isn’t the usual path. Stockbrokers put in the effort for internships and on-the-job training. Stockbrokers need to learn the right strategies to beat the market and profit. Trading stocks is way more complex than placing bets or rolling the dice in Las Vegas.
Stocks have been formally traded since the 1700s, and the job of a stockbroker has become very sophisticated since that time. If you’re tough-minded and good with people, you may be able to do what a stockbroker does.
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