Brokerage Supervisor

What Is a Brokerage Supervisor?

Brokerage supervisors are financial professionals who oversee one or more brokers. They are employed by businesses that rely on various types of brokers, such as stock brokerage companies, mortgage brokers, or real estate agencies.

How Brokerage Supervisors Work

Brokerage supervisors are typically paid a straight salary, meaning they do not receive commissions. However, they may receive a bonus based on the performance of the team they manage. By contrast, most brokers receive a significant percentage of their compensation from commissions. In fact, it is not uncommon for brokers' compensation to be 100% commission-based.

The core responsibility of a brokerage supervisor is to ensure the team produces results while maintaining full compliance with all legal and regulatory standards. At times, the pressure to generate sales can lead brokers to cut corners and may even encourage legally dubious activities. It is the responsibility of brokerage supervisors to monitor these dynamics and ensure that their teams are held accountable to the best practices of their industry.

Qualified brokerage supervisors generally possess a strong understanding of their industry as well as its regulatory environment. Often, brokerage supervisors will have firsthand experience as a commissioned broker. This experience can be invaluable in allowing the brokerage supervisor to anticipate and respond to the incentives faced by commissioned brokers, which can sometimes encourage non-compliant behaviors.

The role of brokerage supervisors in ensuring compliance is especially important, because those supervisors can be found responsible for the conduct of their team. Supervisors who fail to properly manage their brokers, such as by failing to conduct formal audits of transactions or clearly articulating compliance procedures, may be subject to enforcement actions by state or federal regulatory agencies. These actions may include fines levied against the brokerage supervisor. In some cases, negligent brokerage supervisors can even be barred from holding a supervisory position in their industry.

In addition to ensuring compliance among team members, supervisors are responsible for ongoing training of the brokers they supervise. These responsibilities may also include determining sales bonuses, assuming a predetermined bonus formula is not already in place.

Real World Example of a Brokerage Supervisor

Darlene is a brokerage supervisor working at XYZ Financial, where she supervises a team of six stock brokers.

As supervisor, Darlene is responsible for maintaining XYZ's compliance policies and ensuring they are understood and followed by her team. Because of her previous experience working as a stock broker, Darlene can anticipate when her team members may be tempted to compromise their professional standards. In these situations, she is responsible for intervening to avoid or correct the missteps and ensure they are not repeated.

Although Darlene is paid a salary rather than commission, she is nonetheless eligible for sales-based performance bonuses if her team performs especially well in the eyes of senior management.