What qualifications do you need to be a stockbroker?
The life of a stockbroker is glamorised in movies like “Wall Street” and “The Pursuit of Happyness.” Based on the impression of these movies, many might think that a career on Wall Street is an instant path to living the high life full of nice cars and expensive dinners full of caviar and high-end champagne.
However, becoming a stockbroker is a lengthy, arduous process.
To be considered for employment by a financial institution requires at least a bachelor’s degree. Ideally, the candidate has majored in a business-related field like finance, economics or accounting. A quantitative discipline like math or statistics is also acceptable. The Bureau of Labor Statistics states that people who have their MBA are sought after because of their prior work experience and advanced education. The BLS states that possession of an MBA may result in larger salaries, signing bonuses and higher positions within the company.
While in school, students are advised to seek an internship with a company that hires stock brokers. These interns are exposed to the buying and selling of stocks and are sometimes hired by the institution upon graduation.
Becoming a stockbroker requires licensure by the Financial Industry Regulatory Authority (FINRA). This license is granted upon passing the Series 7 General Securities Representatives examination. The FINRA website states the 6-hour test consists of 250 multiple choice questions broken into two parts. The exam consists of subjects like derivative products, margin accounts, debt instruments, packaged securities and investment objectives. Many firms offer candidate preparation courses and study materials.
Additional certification may be necessary depending on the state or the type of products bought and sold. For example, insurance brokers must pass an additional exam pertaining to the sale of insurance. Brokers must also continue their schooling throughout their career to maintain their license. This continued education comes in the form of ethics classes and updating brokers on new laws and regulations in the industry.
Brokers must have a good credit score and no criminal background to gain employment.
The work environment of a stock broker is hectic, especially if she is working on the floor of Wall Street or FOREX. A critical job skill is the ability to maintain a calm demeanour in a stressful environment. Because the stock market is always open in different parts of the world, brokers must also be willing to work long hours. Brokers must use quantitative skills like statistics to read the direction of the market and capitalise on market fluctuations. Brokers should have strong knowledge of the financial markets gained through education or work experience.
In some cases, brokers work directly with investors. Therefore, strong communication skills and a personable demeanour are required. He must also be willing to follow directions issued by clients and his superiors. Other times, he must be willing to take calculated, educated risks.
Despite the long hours and stressful work environment, many are drawn to this position because of the high salary. The BLS reports that as of May, 2008, the median salary of a financial broker is £61,724. This figure may be higher through bonuses and commissions frequently offered for high performance.