The prospect of becoming a successful stockbroker holds a lot of allure for many people, and two big factors determine who gets the best piece of the pie: career length (the longer time working, the larger the client base) and location (large cities are home to the biggest, highest-paying firms).
The median salary for a stockbroker — the average paid by firm excluding commissions — is $57,666 as of May 2020. A significant gap exists between the broker salaries, which ranged from around $40,000 up to $123,000.
If becoming an accomplished stockbroker sounds appealing, here's how to do it.
Toolbox to Excel
Prior to procuring the necessary licenses, you need these skills to succeed in this profession:
- Be a self-starter
- Know how to deal with rejection
- The determination to work long hours—nights and weekends included
- The patience to build up a business, which takes years
- Good sales, communication and time management skills
You’re ahead of the game if you can check these off, but if you really want to increase your advantage over the competition, then strongly consider these steps as part of your career legwork:
- Attain an MBA
- Accumulate certificates you might need down the road, which saves firms money and shows you’re motivated
- Earn excellent grades in college
- Procure an internship for experience
- Trade your own money — nothing matches real-world experience (See also: Stimulate Your Skills With Simulated Training)
- Join a business-related club or fraternity in college for networking opportunities
To build a client base, these tactics are imperative:
- Cold calling
- Contacting pre-qualified leads
- Tapping into relatives, friends, and referrals
- Networking in the community
You can also get creative and market via social media, blogging to show off your knowledge and tweeting to garner more attention, but keep it simple. The turnover rate for stockbrokers in their early years is extraordinarily high. Finding a mentor is highly recommended; you want to follow the path that those successful before you have taken. If you can make it through the early and difficult years, it will get easier.
Also, keep in mind that firms want to know the answers to two basic questions: Can you generate commissions, new leads, and accounts? If a firm sees potential in you, it will sponsor your FINRA exams. You can pay for the exams yourself, which shows determination. If you do, here are the costs:
Series 65: Uniform Combined Registered Advisor-State Laws $175
You have two years after passing an exam to register with FINRA. To complete registration with FINRA, you will need a background check (criminal and financial), a fingerprint card, and you need to register with the Securities Commission (unless you are conducting all of your business intrastate).
Which Broker Type Are You?
If you want prestige, then you’ll want to look into working for full-service brokers, such as Merrill Lynch or Morgan Stanley (MS). Payouts are around 41% and brokers will have had to earn $650,000 (e.g., Merrill Lynch), training will be extremely comprehensive, you will have to meet a high sales quota in order to retain your position, be faced with a lot of high-pressure situations and looked at as a number. This might sound discouraging, but if you pass the test, you eventually go from a number to a name and the potential for success is high. (For more, see The Top U.S. Regulated Stock Brokers.)
If that's not where you want to be, you can aim to work with an independent broker-dealer, such as LPL Financial. You'll see higher payouts — often 80% - 95%+ — but you’re responsible for your own expenses (they can be written off) and there's no office space provided.
If you don’t enjoy sales and/or giving investment advice, consider a discount broker like Charles Schwab Corp (SCHW), where you earn a flat salary. You'll get much more experience because your investment knowledge needs to be spread across the board as opposed to specializing in one area. There aren't any quotas to meet and you'll be situated in a friendlier, less competitive work environment.
The Bottom Line
If you want to become a successful stockbroker, the advice above will help. The job also requires a great deal of patience and thick skin. When doubt creeps in, remember that your willingness to persevere is what separates you from your competition.