How Much Training Does a Stockbroker Need?
Before a novice stockbroker can handle your investments, he must be trained. Most stockbrokers are college graduates, although that is not a requirement. To begin his training, he must be hired by a brokerage firm and become a part of its broker training program that involves over four months of intense education culminating with receiving a license after passing two rigorous examinations. He will be considered a "trainee" for about two years while going through the company's training course before he is considered by the firm as one of its brokers.
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Significance
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Entrusting decisions involving your assets to a stockbroker is an important consideration. For that reason, brokers go through years of training to improve their skills in dealing with your money. In return, they become professional money-managers and are a part of a very lucrative profession.
Identification
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A stockbroker must be publicly licensed before he can handle your investments. After four months of training at a brokerage firm, the trainee will sit for the General Securities Registered Representative Examination, or Series 7 exam, that is administered by the National Association of Securities Dealers. It qualifies the trainee to give advice on various types of securities. In most cases, the trainee will take the Uniform Securities Agent State Law Examination, or so-called Series 63 exam, to prove his knowledge of state laws governing securities.
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Benefits
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Because of the level of expertise required of all stockbrokers in the U.S., you should have confidence in the advice one gives you regarding the investment of your funds. But your broker doesn't stop learning after he goes through training and takes the required examinations. To be a good steward of your wealth, he must continuously improve his ability to serve his customers by staying current with matters affecting their holdings.
Features
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Product knowledge that a stockbroker receives from the firm does not guarantee success. For that reason, brokerage firms like to hire people that have good interpersonal skills and have worked successfully in some other profession. For that reason, someone rarely enters the profession right out of college. Instead, she will have developed a wider view of the world before assuming the responsibility of managing your money.
Misconceptions
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Many people have been lured by lower commissions offered by Internet-based brokerage companies that provide little or no advice from a broker. Instead of receiving the many benefits that a broker can offer because of his training and experience, they have chosen to rely on their own research and instincts; and in many cases, they have lost more money than they would have paid for a broker's advice through somewhat higher commissions.
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