How to Become a Stock Broker or Trader - Career Path, Salary and Job Description

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What is a Stock Broker / Trader?

Are you interested in pursuing a career as a stock broker or trader? If you enjoy working with financial information and are good at product sales, being a stock broker or trader may be the perfect profession for you. Whether you are a student considering potential career prospects or a current financial professional in search of new opportunities, it is important to realize that becoming a stock broker or trader will take time and hard work. Because these professionals offer important financial services to both individuals and companies, however, job outlook is promising. The demand for stock brokers and traders will continue to grow with the economy, so the effort is often worth the outcome.

Stock brokers and traders provide a variety of financial services to individual clients, companies, or organizations. These sales agents often give advice concerning current or prospective investments, as well as assistance in portfolio management. They must be familiar with a wide range of products and are frequently responsible for processing buy and sell transactions for their clients. Stock brokers and traders may also analyze company finances and provide recommendations regarding public offerings, mergers, and acquisitions.

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Steps to Take to Become a Stock Broker

As with other professions, becoming a stock broker or trader requires acquiring the appropriate level of education before finding professional employment. For most, this means earning an undergraduate degree. However, many do choose to complete a graduate program to improve their marketability and increase advancement opportunities. Stock brokers and traders with a master’s degree often make more money than those without one. Individuals who plan to work in this field must also become licensed.

Step 1: Enroll in a Relevant Undergraduate Degree Program
Step 2: Complete an Internship with a Financial Firm
Step 3: Find Professional Employment and Join a Professional Organization
Step 4: Register as a Representative of Your Firm with FINRA
Step 5: Complete an Accredited Master of Business Administration Degree

Step 1: Enroll in a Relevant Undergraduate Degree Program

While a graduate-level degree is often helpful for job advancement, most entry-level stock broker and trader positions only require an undergraduate degree. This field does not require a specific major, so you can choose a degree option that suits your specific interests. It is recommended, however, that prospective stock broker and traders major in something finance or business related. Common undergraduate degrees include accounting, business, finance, and economics. The courses generally offered by these programs are preferred by employers, especially larger firms. Bachelor’s degrees usually consist of 120 credit hours of coursework that can be completed in four years by most full-time students. Online programs are also available, but may require five to eight years to graduate for students attending school part-time. Your specific curriculum will depend on the major you choose.

Step 2: Complete an Internship with a Financial Firm

Many undergraduate students interested in becoming stock brokers or traders choose to apply for an internship in the field before graduation. While most degree programs do not require internship completion, the experience and connections gained through these experiences can be invaluable. In fact, large brokerage firms and investment banks frequently hire summer interns and then offer full-time employment after graduation to those individuals who are most successful.

Stock broker and trader internships offer a variety of benefits, including:

Real-world training and work experience
Opportunities to apply academic theory and best practice
Experience working with a financial team
Access to potential professional mentors
Skills development
Networking

You will need to research your college or university’s specific internship application process. These vary per institution. Most schools have a career center and/or career counselor who can provide more information. You may also consider speaking with a finance or business professor who works in your major’s department.

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Step 3: Find Professional Employment and Join a Professional Organization

Unlike many other professions, stock brokers and traders must first find employment before they can become licensed. If you are not hired by the firm you interned with, you can begin searching for a job immediately after graduating from your undergraduate degree program.

Students and new professionals should both strongly consider joining a professional organization. These are available at the state, national, and international levels and are open to individuals at every career level. Membership benefits will vary significantly from organization to organization, but often include exclusive access to field resources, discounts, training, certification programs, and networking opportunities.

Some of the most prominent professional organizations, associations, and societies for stock brokers and traders include:

National Association of Stockbrokers (NAS)
Security Traders Association (STA)
National Organization of Investment Professionals (NOIP)
American Association of Individual Investors (AAII)
International Business Brokers Association (IBBA)

Step 4: Register as a Representative of Your Firm with FINRA

Every state requires that stock brokers and traders register as a representative of their firm with the Financial Industry Regulatory Authority (FINRA). In order to become fully licensed to buy and sell financial products, you must take and pass a series of examinations. In most cases, your financial firm will offer training to help you prepare for the Series 7 and Series 63 exams, which cover the trading of securities and relevant state rules and laws. After successfully completing the exams and becoming licensed, you will be required to attend computer-based continuing education courses on legal requirements, new financial products, and new financial services.

There are many other licenses available to stock brokers and traders as well. Most will give you the ability to sell different investment products and services. While many additional licenses are not required, earning these certifications can greatly enhance your professional standing. A good example of this is the Chartered Financial Analyst (CFA) certification, which is distributed by the CFA Institute.

Step 5: Complete an Accredited Master of Business Administration Degree

While not required, many stock brokers and traders ultimately choose to pursue a graduate degree. A master of business administration (MBA) is greatly preferred by employers and is often a requirement for high-level positions in the finance industry. An MBA frequently entitles professionals to more advancement opportunities, better compensation, and large signing bonuses when hired.

Finance MBA programs are designed to provide students with a deeper understanding of business, finance, and management topics. They generally consist of 30 credit hours of coursework and can be completed in two years by students who are enrolled fulltime. Some MBA programs allow students to graduate in as little as a single year.

Coursework typically covers the following:

Management Accounting
Taxation for Business and Investment Planning
Data Management and Analytics
Current Issues in Accounting
Predictive Analytics

Choosing an MBA program that is properly accredited should be a priority. Attending an unaccredited college or university may make it difficult to transfer credits, apply for higher education, and find suitable employment. Give preference to institutions accredited by the Association to Advance Collegiate Schools of Business (AACSB). Opting for a degree program that is accredited by a regional association may be sufficient if you plan to work locally.

What Does a Stock Broker / Trader Do?

The primary responsibility of a stock broker or trader is to connect buyers and sellers in financial markets. They often sell securities to individuals, provide advice to companies, and orchestrate trades. Daily tasks often depend on the size and scope of their firm, but stock brokers and traders often manage a wide variety of financial services for numerous clients.

While the specific job requirements vary, common responsibilities include:

Contacting prospective clients
Presenting information and explaining available services
Offering advice on the purchase and sale of securities
Buying and selling securities (stocks, bonds, etc.) and commodities (oil, gold, etc.)
Monitoring the performance of financial markets and individual securities
Analyzing company finances and providing recommendations for public offerings, mergers, and acquisitions
Evaluating cost and revenue agreements

Most stock brokers and traders work full time but, according to the Bureau of Labor and Statistics, one in three reported working over 40 hours a week in 2016. These professionals often work evening and weekends to accommodate their clients’ schedules. Working conditions are frequently fast-paced and stressful, with managers demanding a lot. Because electronic trading is continuing to replace traditional verbal auction-style trading, the majority of stock brokers and traders now work at a desk. It is also important to realize, however, that some jobs require extensive travel to other countries

Skills to Acquire

Not everyone is capable of becoming a stock broker or trader. This financial field is extremely demanding and professionals must be familiar with a wide range of products and clients. The work they do is often stressful, as they are often responsible for large amounts of money and must make important decisions quickly. Additionally, commissions and advancements are usually tied to sales. As a result, stock brokers and traders must develop and hone several important skills.

The most successful professionals possess the following traits:

Analytical skills necessary to judge the profitability of potential deals, securities, commodities, and financial service
Computer programming skills necessary to effectively analyze financial products
Customer-service skills necessary to persuade and make clients feel comfortable with financial recommendations
Decision-making skills necessary to make decisions quickly, often with large sums of money on the line
Attention to detail necessary to catch small changes in the specifics of public offerings, mergers, and acquisitions
Initiative necessary to create a client base and pitch security sales to individuals who many not be looking for financial services
Math skills necessary to utilize mathematical tools and investment formulas effectively

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Alternative Paths

The process for becoming a stock broker or trader is relatively standardized, so there are no real alternative paths within this profession. Because these professionals are not expected to earn a specific undergraduate degree, however, there is some opportunity for variation academically.

It is also important to realize that many financial firms provide intensive and specific training to the stock brokers and traders they employ. This on-the-job training often focuses on the products and services offered, as well as technical instruction in securities analysis and selling strategies. The training you receive and the certifications you are required to apply for will depend on the company you work for.

Stock Broker / Trader Career & Salary

According to the Bureau of Labor and Statistics, the median annual wage for most securities, commodities, and financial services sales agents in 2017 was $63,780. PayScale, on the other hand, reports an average salary of $56,117 for stock brokers and traders. Both of these figures are well above the median annual wage of $37,690 reported for all occupations. Entry-level stock brokers and traders can expect to make around $52,000 annually, while those with 20 or more years of experience can earn as much as $100,000 a year. Salary is also impacted by location; the top paying states for this occupation include New York, Connecticut, Massachusetts, South Dakota, and Kansas.

Where Might You Work?

In addition to managing individual investment accounts, stock brokers and traders often work for large corporate entities. Because almost every company and organization requires some level of financial investment advice, these professionals can find work in a variety of industries.

That said, the industries that hire stock brokers and traders most often are:

Securities, Commodity Contracts, and Financial Investments
Credit Intermediation
Non-depository Credit Intermediation
Company and Enterprise Management
Agencies and Brokerages
Insurance and Employee Benefits
Pipeline Transportation of Crude Oil
Computer Systems Design
Farm Product Raw Material Merchant Wholesalers
Professional and Commercial Equipment and Supplies Merchant Wholesalers

While most stock traders and brokers work in securities, commodity contracts, financial investments, and credit intermediation, the highest paying industry in the field is pipeline transportation of crude oil. Stock brokers and traders may also choose to work for themselves.

It is important to note that many stock brokers and traders work and live in New York City. This is, in large part, due to the fact that most major investment banks and the New York Stock Exchange (NYSE) are located there. In general, these professionals tend to find employment in more metropolitan areas.

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Potential Career Paths

There are many employment opportunities available to individuals interested in securities, commodities, and financial service sales. Becoming a stock broker or trader is not the only finance career option.

While these professionals can find work in a variety of industries, some of the most common professions include:

Investment Bankers
Investment Banking Sales Agents and Traders
Floor Brokers
Financial Services Sales Agents
Account Managers
Assistant Branch Manager

Investment Banker
Investment bankers are responsible for underwriting, or connecting businesses that need money to investors. Some of the most important services they provide are initial public offerings, mergers, and acquisitions. These professionals are responsible for estimating the worth of a company and ensuring that it meets the legal requirements to become publicly traded.

Investment Banking Sales Agent and Trader
Investment banking sales agents and traders are responsible for carrying out clients’ buy and sell orders for stocks, bonds, and commodities. They may also make trades on behalf of the firm they work for. These professionals often work for commercial banks, hedge funds, and private equity groups.

Floor Broker
Floor brokers work on the floor at a security or commodity exchange. Once a trade has been placed, these professionals are responsible for negotiating the price, making the sale, and forwarding the final price to the traders.

Financial Services Sales Agent
Financial services sales agents generally consult both individuals and businesses on various banking, securities, insurance, and related services. They also contact potential clients and explain the services offered, including managing loans, individual retirement accounts, estate planning, checking accounts, and credit cards.

Accounts Manager
Account managers are responsible for overseeing relationships with specific customers. They often have a clear understanding of the products and services offered and are able to make targeted pitches to new clients.

Assistant Branch Manager
Assistant branch managers at banks are often responsible for hiring, training, and supervising customer service representatives. These professionals are also in charge of the financial service manager. Additionally, they often monitor financial activities, perform audits, review reports, and manage cash levels.

Career Outlook

Overall, the outlook for stock brokers and traders working in the United States is decent. The Bureau of Labor and Statistics projects there will be a 6% increase in job availability for individuals in this field between 2016 and 2026. This is about as fast as the national average for other professions. The major reason for this growth is likely the continued demand for assistance with initial public offerings, mergers, and acquisitions. This will only improve as the economy grows. Additionally, more and more individuals are likely to require brokerage services as they approach retirement age.

There are a few major concerns regarding career outlook for stock brokers and traders, however. Employment growth is expected to slow as financial services continue to consolidate. Additionally, the development and use of automated trading systems has decreased the demand for stock brokers and traders. Large financial firms are placing a higher value on sales agents who specialize in a specific area of expertise and possess strong customer-service skills. Finally, the potential for a high salary tends to draw the attention of more applicants than there are openings in the field.

It is also worth noting that the level of employment varies per state. The locations with the highest rates of employment for accountants include, but are not limited to, New York, California, Texas, Florida, and Illinois.

Advancing From Here

Stock brokers and traders can advance to higher positions within a firm by taking on more accounts. This can lead to the eventual management of accounts for large institutions, as well as the authority to make investment decisions. Some professionals work toward branch office manager positions and supervise other brokers or advance to top management positions. In some cases, they may even become a partner at their firm.

Keep in mind that many investment banks have an “up or out” policy. They tend to promote or terminate entry-level stock brokers and traders after two to three years.

One of the best ways to advance as a stock broker or trader is to earn an MBA. This will not only make you stand out more from other job candidates, but it can lead to more promotion opportunities and higher pay.

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Frequently Asked Questions

What does a stock broker do?

A stock broker is in charge of providing financial services, buying and selling stocks and mutual funds, and making investments in the stock market on the behalf of the client.

What does it mean to sell securities?

A security is a tradable financial asset that a company offers. A company may want to sell securities when they need money for growth or investments.

How much do stock brokers make?

Stock brokers make around $65,000 per year.

What qualities should stock brokers have?

Stock brokers need to be patient, good with rejection, and good at communicating. A stock broker needs to be a self-started that is good at sales and time management.

What is the job outlook for stock brokers?

Stock broker jobs are expected to grow by 4% by 2030.

Becoming a Stock Broker Careers & Salary Outlook