Salary at a Stock & Bonds Brokerage
Many people never go into the career they choose initially. Some find a niche in a job along the way that fits them perfectly. This is how many stockbrokers end up in their jobs. Working at a stock and bonds brokerage often offers opportunities for every type of disposition. Brokers need to be outgoing personalities who understand the market and people. The type of organization, amount of business and the individual's position at the brokerage determine how much he will make.
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Dealer Concession
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Every piece of business at a brokerage generates a specific amount of income. This income is the dealer concession. Everyone gets a bit of that income. The higher the percentage to the broker, the more money the broker makes.
Scale
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The percentage of the dealer concession varies by the type of stock and bond brokerage firm and by sales. Often, the higher the dealer concession, the bigger percentage you receive. If you made $10,000 in dealer concession, you might only receive $1,000 or 10 percent. However, if you made $100,000, your potential could be 45 percent, $45,000, or more.
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Bonuses
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For those with extremely high sales, there's normally an annual bonus and a quarterly bonus. This is also a percentage of the dealer concession.
12B-1 Fees
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If you sell mutual funds, you receive compensation to your dealer concession at the time of purchase but also 12B-1 fees after the client holds the funds for a year. While the percentage is small, it adds to your dealer concession; if you have several million dollars of client assets in funds, it contributes significantly to your dealer concession. Often this is enough to qualify you for higher percentages and bigger bonuses.
Management Fees
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Some brokers sell a managed portfolio that has several funds with minimal up-front charges and no charges for sales, but the client pays between 1/2 percent to 2 percent each year. Income from management fees goes to the dealer concession.
Independent vs Financial Institution
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When you work for a brokerage affiliated with a financial institution, you have benefits and some huge negatives. The benefits include easier prospecting and sales. Since you're part of the bank or credit union setting, automatically you have credibility. You also have a large client base. However, your sales must be higher to receive the same amount of income as a broker who sells less for a traditional stock and bond brokerage. That's because you get a smaller percentage of the dealer concession. Often you'll only receive 10 to 30 percent. Brokerage-house brokers make a higher percentage and independents keep the most but have to pay all their own expenses.
Effects
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The job of stockbroker has excellent pay for motivated individuals. Normally the income is a six-digit figure or close for those who work hard. Initially, it is lower until the broker builds his business. If you move to a management position, you receive a small percentage of the dealer concession from the people you manage. The higher your position, the smaller the percentage you receive, but the bigger the pool from which to draw.
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