Stock Brokers and Organizational Structure

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If you want to become a stockbroker, you have several different options for how and where to work. Some companies pay for your training, so once you secure a position with them, they pay for your licensing. Other companies require that you secure a Series 7 NASD license and an insurance license before they'll hire you. Each type of company structure has a different makeup and is perfect for a specific type of personality.

Brokerage House

  • When you work at a brokerage house, you work under a sales manager or team leader. There's normally a two-tiered layer of management--your direct supervisor or sales manager and his boss, who oversees several managers. These managers have a district manager who covers a large area, and there's sometimes a regional manager who oversees them and reports to the head of the company. Your job in a brick-and-mortar brokerage firm is to deal directly with clients and build a large client base with high amounts of assets.

Financial Institutions

  • Stockbrokers for banks and other financial institutions have a double set of managers and rules to follow. They work under the bank's auspices and ruling body, and also the brokerage firm and SEC rules. The structure is similar to that of the brokerage house, but the brokerage considers the bank its biggest and only client. Your job is to make the branches money through sales of financial products. The commission level is lower than at a traditional brokerage firm, but you have access to the bank's client base. While the bank's management doesn't have direct control over you, their input is highly important and can make or break a broker.

Wealth Management

  • Normally, stockbrokers who provide wealth-management services work either under the auspices of a bank or large firm. Unlike traditional brokers who simply recommend products but must follow the client's requests, these individuals often make the decisions for the clients and execute the trades. Depending on where the wealth manager works, the structure is customarily varied. If they work for the wealth-management or trust department of a bank, they answer directly to supervisors for that department, and ultimately to the upper management of the bank.

Independent

  • If you don't like a lot of management and want the highest possible commissions, open your own stock-brokerage house. You can use the services of several broker dealers simply by applying to have them hold your license and use their services. If you fit their requirements, most of the time, the only thing they ask is a minimum amount of production, competency and adherence to the law. You'll receive the highest compensation at these places, but you must pay all your own expenses.

Financial Planner

  • Financial planners charge for the service of helping clients lay out a plan for their future and accomplish it. Some accept a fee and don't do any of the trades recommended; others don't charge for the plan, but earn their money on the trades; and the third type makes recommendations for a fee and are also paid when they trade. There are two types of financial planners: those who work for a firm (often opened by a single person or partners) and those who work for themselves. The organizational structure normally entails one supervisor or is similar to an independent.

Online

  • Stockbrokers work for online companies. They often have little contact with people, except for those who work in the customer service area, and then the contact is simply by phone. These types of companies are often very large, and there are several layers of management in the hierarchy.

Stockbrokers as Principals

  • This type of broker doesn't deal with the public, but purchases stocks for a company's benefit. He purchases stock for resale to clients, in hopes that the price increases when the clients buy it. These brokers make multimillion-dollar decisions for their companies. As with any large company, there's normally a supervisor who answers to another. Another name for such a broker is a stock trader.

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