Stock Brokers for Beginners

A stock broker is a financial professional who can help others invest their money. However, the profession has grown and changed and now a stock broker can have many different roles. To become a stock broker, you need a license, and to succeed, you need sales skills. Serious professionals may also consider obtaining additional education and certification.

Job Description

The term "stock broker" is becoming more colloquial these days as firms label their advisers by other names such as financial consultant, account executive and financial counselor. While the brokerage profession originated as a bridge between the stocks of the New York Stock Exchange, or Wall Street, and wealthy Americans, over time it has evolved into a more diversified investment practice with a consultative nature. Generally speaking, today's stock broker helps individual investors build a portfolio of stocks, bonds, mutual funds and a multitude of other appropriate investments.

Education and Licensing

To become a stock broker, you generally need a bachelor's degree from an accredited university. If you are just starting out, most firms offer a training program that will prepare you to take the industrywide licensing examination known as the "Series 7" exam. Upon passing, you have earned your general license to sell securities, such as stocks and bonds, and are granted the title of "registered representative." Some stock brokers take additional schooling to become Certified Financial Planners or CFPs. A CFP must pass a lengthy examination, meet high professional standards and adhere to a certain level of honesty and professionalism with clients.

Salesmanship

At the heart of a stock broker's job is the need to sell. Most stock brokers are not paid a salary but earn commission on any sales they make. As a result, beneath all the financial advice and recommendations is an ultimate need to sell an investment product. A broker who is not able to convince clients to make purchases will not last long in the business.

Investment Advisers

A registered investment adviser, or RIA, is a variation of a stock broker who is held to a higher standard. Specifically, an RIA has an obligation known as a fiduciary responsibility to always act in the best interest of his clients. While a good stock broker will do the same, legally a stock broker is not held to this fiduciary standard. Additionally, many RIAs charge clients fees rather than commissions, a practice that tends to align the interests of both adviser and client. Under a fee-based arrangement, the adviser only makes more money if the client does as well, whereas a stock broker can earn commissions even if the client does not make money.

References

• The Motley Fool: What Stockbrokers Actually Do
• FINRA: Registration and Examination Requirements
• FINRA: Content Outline for the General Securities Registered Representative Exam (Series 7)
• SecuritiesExam.com: How Do I Become A Stockbroker?
• Certified Financial Planner Board of Standards: Guide to CFP Certification
• The Free Dictionary: Broker Definition

Resources

• Smith & Howard Wealth Management: How Are Investment Advisers Different From Stockbrokers?