Running head: STOCKBROKING

Stockbroker

Rembrand Paul Pardo

Salt Lake Community College

BUS 1010-411

4/21/18

Penny Bivens
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Stockbroker

The career of a stock market trader is a very interesting and competitive one. Being a

stockbroker might not be the best option for everyone because although there is plenty of money

to be made as a Wall Street trader there is plenty of stress as well. Just like any profession it

requires preparation, dedication, practice, and hard work to be a successful investor advisor.

Job Description

In general terms a broker is an individual or party that negotiates transaction between a

consumer and a seller. There are different types of brokers: Insurance broker, real estate broker,

stock broker, high-end broker, and stock broker. The last one is the kind of brokerage that I am

interested in and that this paper is about, in this group there are three main types of brokerage

firms: Full-service, discount, and direct-access.

Insurance Broker

This type of broker works with different insurance companies, providing the best

available policies for his clients. The insurance broker is different from a typical agent; however,

they do have similarities with the service that they offer such as; providing structure policies,

settling customer’s claims and usually works on a commission basis. An insurance broker is

specialized in one specific type of insurance or deal, these are; health, life, home, auto and other

types of insurance (Maire, 2007). Some insurance brokers are required to undergo training and

must acquire formal licenses from the Security and Exchange Commission or other government

associations that deals with investments.

Real Estate Broker

A real estate broker is a person who helps the seller sells a property; he serves as an

intermediary between buyers and sellers.

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Although they have a big role between the seller and the buyer, a real estate broker does not have

the power or right to make important decisions on the client’s behalf. He must also acquire a

formal license before proceeding with any transactions; he is required to take a 90-hour course

and must pass an exam on a real estate law. This type of broker usually has salespersons known

as the real estate agents; their role is to assist the broker in the selling process (Maire, 2007).

High-End Broker

A high-end broker’s job is to study and plan the condition of the economy. These types of

brokers usually have a team of researchers. High-end brokers study the status of the market,

giving advises to their clients on when the best time to buy or sell a property is. Clients of a high-

end broker are usually people in the high society level.

Stock Broker

A stock broker or brokerage is licensed and regulated financial firm that facilitates

buying and selling transactions in various financial instruments for investor clients, institutions

and or for the firm. All financial market transactions have to be executed through a broker.

Basically, a broker is responsible for facilitating all stock trades you place. Most brokers allow

users to sign up through online applications. Brokers charge commissions for their services and

or they get a portion of the total profits when negotiation is finalized (“Day Trading,” 2018). The

type of broker will determine how expensive and how the commissions are structured.

Full-Service Brokers

These firms charge higher commissions or a percentage of assets. They offer the largest

assortment of diversified financial services and usually assign a licensed individual broker to

each client. These firms tend to have their own investment banking and research departments

that provide their own analyst recommendations, products and access to initial public offerings
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(IPOs) (“Stockbroker Career,” 2018). Clients have the option of calling their personal broker

directly to place trades or use various other platforms including online and mobile. Full-service

brokers have physical offices and locations. They also offer financial planning, asset

management and banking services. In addition to savings and checking accounts many full-

service brokers provide personal, business and home loans services. While most full-service

brokers provide online access and trading functions, they tend to charge higher commissions and

route orders directly to their own market makers or through order-fill agreements with other

firms. Full-service broker online platforms tend to have less day trading tools and indicators as

they cater more towards long-term investors.

Discount Brokers

Discount brokers have narrowed the gap with full-service brokers in terms of financial

products and services providing independent research, mutual fund access and basic banking

products. As the name states, discount brokers have smaller commissions for trades. Usually the

commissions will range about for $9.99 per trade, which may appeal to swing traders and less

active day traders, A day trader buys and subsequently sells financial instruments like stocks and

currencies within the same trading day (Wheat, 2005). The platforms tend to have more trading

and research tools than the full-service brokers since they cater to active investors and day

traders. Many of the larger discount brokers provide their own direct-access trading

platforms and physical office locations throughout the country.

Online Brokers

Online brokers also known as direct-access brokers cater to active day trading clients

with the smallest commissions often priced on a per-share basis, which is needed when scaling in

and out of positions. These firms provide direct-access platforms with charting and routing
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capabilities with access to electronic communication networks (ECN), market makers,

specialists, dark pools and multiple exchanges (“Different Types,” 2018). Speed and access are

the top benefits of direct-access brokers, often allowing for point-and-click executions and

programmable hot-keys. Complex stock and options orders can be placed on these platforms.

The heavy-duty platforms often carry a monthly fee composed of software fees and exchange

fees. The software fees can usually be waived or discounted based on the client’s monthly

trading volume. Active day traders are best advised to use reputable online/direct-access brokers

to ensure maximum control and flexibility as well as speedy order fills. To keep overhead low

and pass on the cheaper rates, online brokers usually don’t provide physical office locations for

customers (“Brokerage Account,” 2018).

General Career Path

Becoming a Stockbroker does not require any particular major, although something in the

business or financial industry is recommended. In the majority of cases, a bachelor’s degree is

required for entry-level securities, commodities, and financial services sales positions. In my

interview with Patrick Donohoe, he truly recommended to anyone who wants to work as a

stockbroker to pursue a degree in a four-year institution. Assuming someone wants to work for a

brokerage firm or investment bank, a bachelor’s degree will be required because competition in

this kind of career is big. In most cases stockbrokers need licenses and certifications. Most

investment firms require stock brokers to have a Series 7 and Series 63 (or 66) license. Some

employers hire non-licensed stock brokers if they obtain the licenses within several months of

employment. To obtain a Series 7 license, stock brokers must pass the General Securities

Registered Representative Examination, which is administered by the Financial Industry

Regulatory Authority (FINRA). Brokers must receive a passing score of 72% to obtain Series 7
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licensure. To obtain Series 63 or 66 licensure, stock brokers must pass the Uniform Securities

Agents State Law Examination, which addresses legal, bookkeeping and client services in

securities sales and exchange. Some employers may offer training programs that prepare stock

brokers to take the licensure exams. With both licenses, stock brokers demonstrate extensive

knowledge of securities sales and financial regulations to employers (“Stock Broker Training,”

2018).

(“Occupational Outlook Handbook,” 2018) Common stockbroker degrees include

accounting, business, finance and economics. Additionally, a master’s degree in business

administration (MBA) is very useful for advancement in this career path.

As mentioned earlier in this paper there are different types of stockbrokers and although

you’d need to steer your education and knowledge acquisitions depending on the kind of stock

trader you want to become there are certain skills and concepts that a stockbroker must have and

master. Common stockbroker degrees include accounting, business, finance and economics.

Furthermore, a master’s degree in business administration (MBA) is very useful for advancement

in this career path. Additionally, taking additional classes in statistics, mathematics and

quantitative analysis will also be very helpful to be a competitive investor advisor. Among the

numerical and mathematical knowledge, a broker needs interpersonal skills, strong analytical

skills, stress management skills, and flexible when situations don’t turn out the way they were

planned (“Stockbroker Career,” 2018).

General Education Experience

As mentioned before it is strongly recommended to have a high school diploma and a

bachelor’s degree in finance or business administration to become a stock broker. Additionally,

on-the-job training programs and or internships are the best options to obtain the general
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education experience for the job. These allow to gain practical experience and work towards

earning the needed professional licenses. With several years of experience, stockbrokers are

qualified for a variety of career opportunities. In training programs, stock traders study securities

and commodities sales, federal regulations on investments and how to manage financial

portfolios for their clients.

A great opportunity to continue gaining education experience in this industry is through

The National Association of Stockbroker (NAS). It is a large professional organization with

more than 20,000 members throughout the country. The organization provides conferences,

weekly meetings, networking opportunities and continuing education resources. Large

corporations and financial institutions often have representatives at NAS meetings, which give

members an in-depth look at trends in the industry. The NSA has chapters in 45 cities, so

professional development resources are easily accessible to most stock brokers (Maire, 2007).

Average Salary

According to the U.S. Bureau of Labor Statistics, the median annual salary in May 2017

was $63,780 or $30.66 per hour (“Occupational Outlook Handbook,” 2018). However, the actual

income of a stock broker relies on many factors, including years in the business, the firm they are

working for, their level of educational attainment, and geographical location. According to the

U.S. Bureau of Labor Statistics, stockbroking in Utah is above the national average, about

$73,090 or $35.14 per hour (“Occupational Outlook Handbook,” 2018).

Career Outlook

The career outlook for stockbrokers is positive, as economic growth is anticipated.

Deregulation of the industry is allowing many stockbrokers to expand their responsibilities.

Increased concern about financing pension plans, as well in advances in technology and new
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types of currency like the bitcoin are also causing many people to turn to stockbrokers for

advice, and the stock market continues to attract increasing numbers of individuals investors.

However, this is an industry of ups and downs, so the upswing cannot last forever (“Financial

Experts,” 2018).

Bio of Someone in the Profession

“I never thought that I’d work as a stockbroker, but I am glad that the bad situations I was

living brought me to this profession”. The career of a stockbroker is an exciting and rewarding

one, but it can be really stressful and hard as well. Although, there is some true about what you

see in the movies and TV shows this profession is mainly not what most people think about.

“Before I worked as a stock trader, every time I thought about this profession I’d imagine guys

constantly yelling buy, buy, sell, sell in room with monitors in the city of New York”.

Not every stockbroker makes millions. If you watch the news, you've heard of the big

bonuses some traders make. The truth is that the average stock broker doesn't make anything

near the millions most people imagine - some actually lose money. Stock brokers make an

average of $63,780 a year, and floor representatives $43,800 annually, far from the millions you

might imagine, although the ones working on Wall Street typically do make more. Additionally,

they don’t always beat the market. Sometimes it's easy to tell if a market is going up or down;

but very often, it's not. Traders and brokers get it wrong most of the time; around 39% of the

time. “If past turbulences in the stock market has taught us anything, it's that even the pros are

scratching their heads sometimes. The elements controlling stock values are complex;

many mutual funds with highly experienced managers have been beat by the market.” The truth

is that trading is not a science. As much as we would all like to predict where the market is

going, sometimes even the experts are wrong.

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Even though the market is hard to predict stockbrokers are not just guessing. It's easy to

think that it's all just guesswork on trading world – just like in Las Vegas, with brokers and

traders making random bets on the direction of the market. The truth is that it takes a great deal

of experience and knowledge, of economics both domestic and international, to be able to

navigate the financial markets. Not everything is as exciting as it’s pictured in movies. Many

traders and brokers are just regular office workers, working from an office cubicle, spending lots

of time on the phone. These financial professionals often wear casual clothes and many stock

traders work from home, far from any trading floor. Furthermore, financial advisors are not all in

New York. “The hub of the financial industry may seem to be on Wall Street, but the truth is that

stock trading is done from around the country - even around the world.” Traders and brokers can

work from any location, not just from Wall Street.

This profession can be interesting and fascinating. Stock brokers get to meet different

types of people with different types of backgrounds. Most people can contract the services of a

brokerage firm, but usually people with meanings are the ones willing to risk some money. Lots

of actors, singers, and such invest in the market. Stock brokers get the opportunity to work along

with them, and in some cases, they travel to meet them personally. These experiences along with

working with numbers and people is what makes this profession a very special one (Donohoe,

2018).

Pros and Cons

As mentioned in this paper this career is not for everyone due to its pros and cons. On

one hand the benefits of this career can be big. The more you are in this profession the more you

understand how market works and the better your predictions and advises are, thus you get more

work. Expertise in stockbroking can lead you to opportunities to make lots of money. This can
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provide you with a lifestyle that is not only available to every professional. Business travels and

constantly meeting new people are some of the other pros that this profession brings.

On the other hand, we can find very persuasive cons in this profession. The same way a

stockbroker can make people win lots of money they can make them lose millions as well. You

have to be good with numbers and be able to have good problem-solving skills. Havin stress is

guaranteed in this profession, being able to know how to deal with it is a must. Additionally,

having good interpersonal skills is required and enjoying working with people is necessary,

therefore if you don’t like the idea of dealing with people this is not a good profession for you.

My “fit” with this Career

I have always loved numbers and working with people. The world business has always

attracted me, and I hope that one day I’ll be able to make good money with something I enjoy

doing.

Growing up I always knew that my future profession had to have numbers because I was

never good with history, letters or languages. I only understood in kind of languages, that is the

numerical languages. Since a very young age my father started to teach me math, and early in my

life I could see that our world works with numbers and that mathematics make sense. This is

very important in the stockbroking career. Investor advisors are constantly working with

numbers which I consider it is very interesting and entertaining.

Most of the professions require to work with other people and this was never a concern to

me. I like working on my own and be able to make my decisions, but I also like to interact with

other people. In high school and even in collage I enjoy meeting new people, learning about

them and working along them. Just like in school a classroom is filled with students with

different ideas, opinions, backgrounds and desires, the same way stockbrokers work with many
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clients from different parts and different backgrounds something that I really look in my future

profession.

Adversity is something that I’ve always had to deal with in my life. It has never been

easy, but I strongly believe that bad experiences, failure and stress have given me the opportunity

to develop attributes and skills that otherwise I would have never gained. Working in the trading

market can be very stressful and disappointing when things don’t turn out the way you had

planned, it is a profession that requires motivation and strength. That is why I believe that even

though it could be hard I would be able to manage the stress and the disappointment the career

sometimes brings.

Conclusion

The career of Stockbroking is a very challenging one as well as a very rewarding one if you

have what the profession requires.

A specific degree is not necessary, but education is a must in this career. The bigger your

knowledge and training is the bigger the chances to succeed as a stock broker. This paper helped

me know about the things I need to do to become a stockbroker and realize the things I need to

be prepared for and path to be able to succeed.

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