Stock Broker Salary and Career Information
Congratulations on choosing stockbroking as your future career option. It’s a highly rewarding and lucrative career, one that promises both wealth and prestige. If you’ve visited this website to know the stock broker salary numbers, you’ve arrived at the right place.
Along with the information on stock brokers salary, this website serves as a comprehensive resource for those students who are pursuing a career in stockbroking.
However, if you just want to know how much does a stock broker make, click here.
We’ve tried our best to make this website a friendly place for everyone interested in stockbroking. Below, you will find everything you need to know about stockbrokers.
What is a Stock Broker?
A stock broker is an individual usually associated with a stock brokerage firm. Their general job role is the buying and selling of stock options on behalf of a client via a stock exchange, or through over the counter finance.
This service costs a commission fee which enables stock brokerage firms to accrue profit.
Stock brokers often, also give financial advice to institutional, commercial, or private clients that they work with in order to counsel their clients on where best to spend their money with a view of gaining the highest financial return.
More information from Wikipedia.
What Does a Stock Broker Do?
Stock brokers are essentially a middle man between a buyer and a seller of stock options and shares. The concept is that these people with greater knowledge of the wider market can facilitate the best deals without individuals having to locate one another privately.
Clients use this middle man as a way to draw out their expertise in order to invest a certain sum of money with the intention of creating a larger sum of money through this original investment.
Stockbrokers are the brains that hold the knowledge of which areas are financially viable for increasing revenue. This knowledge incites investments which help to generate competition and activity within the stock market. They are the “enablers” that allow the stock market to run smoothly.
For more information about the stockbroker job description, click here.
What Type of Stock Brokers Are There?
There are two main types of stock brokers: full-service brokers and discount brokers. Full-service stock brokers are more expensive to hire and often earn a far larger salary.
This is because they not only facilitate and undertake stock deals between clients and sellers, but they also provide financial advice and stock advice in order to steer buyers in the right direction to assist them with closing the most worthwhile deals.
Discount brokers, however, merely carry out the actual deal between buyers and sellers. They do not provide financial advice, whatsoever, and allow their clients to buy whichever stocks they deem to be worthwhile, without the financial assistance of an expert.
It is vital that both types of stock brokers are present in the stock market. They are, first and foremost, a vital tool for ensuring that transactions take place quickly, effectively, and correctly. However, discount brokers are as important as full-service brokers.
With the general population having the option of making their own decisions, it allows the market to grow organically as the balance of good decisions and bad decisions among the unadvised traders enable the winning and losing within the market and keep the vying competition.
What is the Range of Stock Broker Salary?
Salaries are tracked by the US Bureau of Labor Statistics and figures show that in 2010, the average salary for a stock broker was $70,190 per annum. However, despite this average salary number, this is not representative of the range of stock broker salary available to those within the field.
With over 312,000 people currently employed as stock brokers within the USA, it can be expected that salaries vary considerably depending on employer, location, expertise, and achievement.
In terms of basic salaries, according to the US Bureau of Labor Statistic Study in 2013, the lowest earning 10% of stock brokers gain an annual salary of around $31,330.
The highest earning 10% of stock brokers, however, earn a mean average of $166,400 per year. It is clear that there is a considerable difference across the range of salaries earned by stock brokers.
It is important to note that stock brokers are most often paid a minimum salary by the employing company that they work for. Despite this minimum salary, most stock brokers earn considerable capital from bonuses and commission on account of success due to transactions completed by their own hand.
Commission is taken for each transaction carried out by a stock broker. If successful, stock brokers gain not only this commission, but also a percentage of the achieved profit from the deal undertaken. They can also earn bonuses for exceptional work awarded to them by their employer.
Salaries paid to stock brokers are unusual compared to the rest of the labor market. Within stock brokering, trainees will earn a relatively high basic salary compared to other careers of around $20,000-$30,000 per annum. However, as a stock broker builds their client base and achieves higher commission rates, this salary decreases.
This is because ongoing commission supersedes this salary, giving the stockbroker consistently high payment. Effectively, the more clients a stock broker has and the more successful they are at keeping those clients, the higher salary they will earn.
It is vital to also recognize that stock broker salary vary depending on location. For example, a 2011 study by the US Bureau of Labor Statistics showed that Connecticut was the highest earning state for stock brokers, with the average stock broker salary standing at $159,950 per annum. New York was the second highest earning state with an average annual stock broker salary of $135,700.
However, states such as Kentucky, earn fairly low wages for the same job. Kentucky, is in fact, the lowest earning state according to the same study, with stock brokers earning an annual salary of around $59,060; this shows that stock broking in Kentucky is a considerably less lucrative career than in other states.
What Educational Requirements Do Stock Brokers Need?
There are several educational steps to becoming a fully licensed and employed stock broker which means educational planning is vital.
Firstly, a stock broker must hold a relevant Bachelor’s degree from a recognized establishment. The better the university, the more employable an individual is to a stock brokerage firm. Relevant degrees are usually financial based with companies looking for Bachelor’s degrees in finance, accounting, business, or economics.
Many potential stock brokers hold MBA as this is not only more attractive to employers, but also increases bonuses, initial salary, compensation, and leads to faster job advancement within the field.
After completing a Bachelor’s degree, those looking to become stock brokers must be employed by a stock brokerage firm for four to six months before taking the General Securities Registered Representative Examination, also known as the Series 7 examination, in order to gain the necessary license to enable a stock broker to conduct transactions.
Many people look to be hired as an intern for this period, especially with the large number of internships available in this industry field.
In order to pass the examination, entrants must achieve a score of 70% or higher to receive the required license. This license registers the candidate with the Financial Industry Regulation Authority (FINRA), sponsored by the hiring brokerage. Without this license, individuals are prohibited from selling stock and cannot technically be called a stockbroker, even if they manage to hold a Series 6 examination certification.
Furthermore, some states require stock brokers to pass the Uniform Securities Agents State Law Examination and the Uniform Advisor Law Examination. Equally, after four years of working and three examinations, stock brokers can achieve the Chartered Financial Analyst Certification. This qualification allows stock brokers to gain access to higher salaries, greater benefits, and further advancement within the career.
Lastly, it is essential that stock brokers carry on their education throughout their employment period. This facilitates the ability to stay up to date with current trends within the market coupled with the techniques to recognize and act upon those trends to generate higher revenue from investment. As with the above qualifications, continued education and class hours gives stock brokers access to career advancement and high salaries.
Feel free to read our post about how to become a stockbroker for more detailed information.
What Are The Prospects Like for Stock Brokers?
As a stock broker trainee, you will often start at the very bottom, learning to understand the industry and the techniques used to not only trade stocks but to gain clients, and to keep them. Once fully trained and licensed, stock brokers tend to move forward quickly in gaining clients and subsequently commission.
In terms of career prospects, stock brokers often stay in the same position for their career but gaining more clients which increases salary and prestige.
The difficult task of accruing clients means that stock brokers are often not inclined to try to move out of the position they are in, especially with the potential of such a high salary.
However, a handful of stock brokers move from private clients to work with industry clients and institutions. These positions generally deal with higher financial figures which lead to larger returns on investment and bigger compensated salaries and bonuses.
The industry itself holds great career prospects for those looking to move into stock broking. Despite the recent setback due to consolidation on account of the financial crisis, the field of stock trading is once again moving forward. According to the US Bureau of Labor Statistic, the field itself is set to grown 14% between 2010 and 2020, creating more jobs for those with the intention of becoming stock brokers.
The reason for this increase is generally due to pensions. Traditional pension plans are quickly being replaced due to the lack of faith in older financial systems and an increasingly elder population. This has led and continues to lead more people to investigating alternative options that may appear to be more secure such as Individual Retirement Accounts and 401Ks. Those looking to take this route require a stock broker.
Despite the potential of a 14% growth and job creation, the field is extremely competitive and entry is not easy. Although more career positions are being created, there are still far more applicants than there are vacancies, creating fierce rivalry for the much-wanted job.
Who Typically Employs Stock Brokers?
There are a variety of different firms that employ stock brokers including Market Makers, asset management firm, private client stock brokerages, and investment banks. The different types of firms lead to varying competition for entry and positions.
Market Makers are a huge employer of stock brokers. The role of Market Maker companies is to buy stock and attempt to sell it at a higher price than the buying price. Basically, if someone was looking to sell 1000 stocks for IBM, Market Makers would buy these and sell them to someone looking to buy those stocks for a higher price.
This means that those 1000 stocks can be divided by, say 5 buyers looking to buy an exact number of stocks. Effectively, Market Makers make the stock markets useable. Market Makers are designated to certain stock markets, such as either the New York Stock Exchange or the American Stock Exchange. Ameritrade are a good example of a Market Maker and stock brokers are used to make these deal.
Asset Management firms often work with clients in order to help them achieve the greatest return on their assets. This includes investing those assets in order to try and increase their worth. These firms use stock brokers to make the decisions on investing these assets, along with maintaining the accounts of the clients who are having their assets managed.
It is the role of the stock broker in these companies to try to make correct decisions which will be financially viable to clients by increasing their assets and subsequently their worth or the worth of the client company.
Private client stock brokerages are perhaps the easiest companies to understand. They simply work with private clients in helping them to invest their money on the stock market with the view of returning revenue higher than the invested amount. These companies use both full-service stock brokers, to provide advice to clients looking to invest their money wisely, as well as using discount brokers in order to undertake the physical transactions without providing the advice.
Lastly, investment banks also employ stock brokers, and this is probably one of the most competitive fields to enter. Investment bankers are essentially stock brokers; however, not all stock brokers are investment bankers. Investment banking often gains a very high salary and basically focuses on helping companies, institutions, governmental departments, and rich individuals to manage their wealth and investments in order to return bigger revenue.
Often this involves selling stocks and shares in order to afford for a company to proceed and to finance their business activity. Often investment bankers earn the highest salary of all stock brokers. However, this is very much dependent on which company they work for and which clients they have.