Swim With The Sharks As A Stockbroker

By Glenn Curtis AAA

Becoming a stockbroker isn't easy, and the process can be quite intense and stressful at times. Still, many individuals coming out of school want to join the ranks. But how can they go about doing that? Is there a defined path that one should follow? This article addresses those questions and provides greater insight into this alluring career.

Desire And Skills
Being a stockbroker sounds like glamorous work; we have Hollywood movies like Wall Street to thank for that. But the fact is that many first-year brokers end up dropping out of the business because the job usually requires long hours, can be very stressful and requires a large amount of dedication. If you are considering entering the profession, you should first do some soul searching and try to determine whether you have the desire and patience to do what it takes to be successful. (Read Financial Careers According To Hollywood to see how financial professionals are portrayed on the silver screen.)

While no particular personality traits are required to become a broker, generally speaking, successful Registered Representatives have an inner drive to succeed. They also make the most of their day, and they can take rejection. These are important qualities to have, given that most of a broker's day is likely to be spent on the phone, pitching stock ideas to prospective or existing clients.

Other key skills that can come in handy are:

  • an ability to sell
  • an ability to effectively communicate
  • an ability to explain to others concepts that are sometimes hard to grasp

Although classes and seminars are offered to improve communications ability and salesmanship, that takes time and money. Therefore, it's usually best if you already posses these skills before entering the field. (If you're still trying to figure out where you'd fit best in the financial world, check out Finding Your Place In The Financial Industry and Is A Career In Financial Planning In Your Future?)

Education
A college education is generally a must these days, as the competition to get into certain firms and training programs can be quite intense.

There are no specific types of majors or degrees that will guarantee you a job, but individuals who majored in finance probably will have a leg up on the competition. In addition, a master's degree helps the candidate stand out from the crowd, as it implies that the candidate has learned additional skills in communication and finance that can be helpful on the job. (Read Should You Head Back To Business School? to find out how an MBA might help you on the path to a great career.)

A Firm Fit
Be on the lookout for companies that have reputable and structured training programs. These companies can be extremely helpful in teaching certain sales techniques, time management skills and the ins and outs of the industry. (For tips on getting accepted into the training program you want, read Get Into A Broker Training Program.)

To find this information, conduct a search on the internet and, more specifically, on the websites of individual firms. Good old-fashioned help-wanted ads in major newspapers such as the Wall Street Journal or New York Times might also detail information on training programs.

And, even beyond that, consider firms that match your personality and preferences. For example, as a would-be broker, consider whether you want to work for a large, internationally known firm or a smaller firm. (To learn how to find a firm that's a great fit, read Trying On Potential Employers.)

Sometimes brokers who start off at larger firms feel like small fish in a very large pond. And small regional broker-dealers might provide a higher commission rate and a warmer and friendlier cultural atmosphere. However, the downside to a smaller firm is that landing customers or ensuring confidence in your firm might harder because of its lesser-known name.

Series 7 and 63 Exams
Even if you are hired by a firm and you have the desire, there is no guarantee you will become a fully functioning stockbroker - to do that, you must first pass specific exams:

  • The Series 7 exam is traditionally taken by beginning brokers. It is a general securities license that enables an individual to sell securities such as stocks.
  • The Series 63 exam focuses on state laws and regulations.

Would-be brokers should understand that these exams are not easy, and the brokerage firm sponsoring you for the exam expects you to pass it. (Need help passing the exams? Our Series 7 and Series 63 exam guides have the information you need.)

Building Clientele
Just because you pass the exams and officially become a stockbroker doesn't mean that you can sit back and relax. On the contrary, this means that your work is just beginning. You now must focus on building a book of business.

There are many ways to seek clients. Some of them include:

  • A phone book and an order to "smile and dial", which means to make cold calls in order to open accounts. (For tips on making the sale, read Cold Call Without Getting The Cold Shoulder and Alternatives To The Cold Call.)
  • A list of pre-qualified prospects, from which to start contacting to drum up business. These may be given to you by your firm or bought from marketing firms.
  • Tapping relatives or friends to obtain referrals.
  • Organization memberships, such as the local chamber of commerce in order to network and meet prospective clients. (Read Targeting Ideal Customers to learn why the wealthiest clients might not always be the most lucrative.)

Bottom Line
This entire process can be a very time-consuming and costly adventure. As a would-be broker, consider the effort that must be put forth and whether you have the patience and mindset to take on something like this. Keep in mind the time and effort it takes to attain such a position. If you are lucky or motivated enough to possess the necessary aptitude, take heart - although it isn't for everyone, being a stockbroker can be a very rewarding job.

Can't decide between becoming a broker or a trader? Read Preparing For A Career As A Broker Or Trader to sort out the differences and choose the one that's right for you.

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