Even if you are not a finance industry professional, you have likely heard of Stockbrokers. But what do brokers actually do? At their core, Stockbrokers are financial professionals who handle transactions on behalf of their clients.
What does a Stockbroker do?
For both individuals and corporate clients, financial brokers facilitate investment dealings for their clients. In popular culture, the term “Stockbroker” may be used as shorthand to describe a variety of career paths, including Stock Traders, Investment Brokers, Commodities Brokers, or Bond Brokers. A Broker can also act like a Financial Advisor advising clients on their investment portfolio and investment options to reach a financial goal. A client’s financial situation and what they’re trying to achieve will impact their best investment option. For example, a long-term investor looking for assistance with retirement planning will likely want to make different trades than an active investor looking for a quick return.
Types of brokerage firms
It is possible to operate independently as a Stockbroker, but most Brokers work for investment banks or brokerage firms, sometimes called “brokerage companies” or just “brokerages”. These organizations pool their expertise in buying and selling for the benefit of clients on both sides of the financial transaction, matching sellers of securities with interested buyers of financial products like stocks, ETFs (exchange-traded funds), and mutual funds.
Typical Stockbroker salary
Traditionally, brokerages have operated on a commission-based model, with fees collected from the client following a successful transaction. In recent years, the removal of transaction fees by several popular online trading platforms has introduced new profit models which have been embraced, such as exchanges paying brokerages based on the volume of transactions they bring in.
Stockbroker salaries will vary based on the institution, clientele, and level of broker experience.
How to become a Stockbroker
A bachelor’s degree is required for most entry-level Stockbroker positions. A degree in finance, business administration, or an economics-related major that provides candidates with a thorough understanding of equity markets will lay the foundation for becoming a successful Stockbroker. Previous experience with trading via a college internship is often a desired qualification but not always a requirement.
Entry-level trader or brokerage trainee positions often list the following skills as beneficial for supporting a successful transition into the stockbroker career path:
- Strong analytical skills.
- Ability to work on a team.
- Interpersonal skills to build relationships with clients.
- Ability to work in a fast-paced environment.
- Entrepreneurial mindset with enthusiasm for driving profit.
