What Are the Education Requirements for Becoming a Stock Broker?
Learn about the job description of a stockbroker and what education you'll need to become one.
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If you are interested in the fast-paced world of financial investing and following the stock markets closely, a career as a stockbroker may be the profession for you.
After getting a college education, you'll also need to pass licensing exams. Keep reading to learn more about becoming a stock broker.
Related job titles are securities, commodities, and financial services sales agents, investment consultants, finance managers, and financial analysts.
What Does a Stock Broker Do?
A stock broker or stockbroker, also known as a broker or a securities sales agent, is a financial professional who assists clients with managing their investments. In particular, stock brokers buy, sell, and trade securities on the stock market for clients, who may be individuals or corporations.
More than just a number cruncher needing strong mathematical skills, a stock broker also needs strong interpersonal communication skills to be able to work with clients to help them develop financial goals and investment strategies to reach those goals. Salesmanship is an important attribute.
Most important to success in this profession are strong critical thinking and analytical skills since successful investors frequently need to take decisive actions based upon their analyses of financial market shifts from moment to moment.
Managing client portfolios and scouting for new clients are usually also important parts of the job. By all accounts, it is a stressful and often-intense profession that can be rewarding if you have the personality and temperament to handle its ups and downs.
What Is the Work Environment of a Stock Broker?
Many different types of licensed and regulated brokerage service environments exist.
You may associate with a:
- full-service brokerage firm
- discount brokerage firm
- direct-access or day trading brokerage firm
- app-based brokerage firm
Your pay or commission structure will vary, depending upon the type of brokerage firm you work with.
Full-service brokerages offer diverse financial services to clients, and working for one will bring you the highest commissions or percentages of each client's assets.
Full-service brokerages usually have physical locations and offices where they meet with clients face-to-face. In recent years, however, the rise of online brokerages has challenged the traditional brokerage system.
Most online brokers are with discount brokerage firms. Today, the majority of orders to buy and sell stocks occur online in an automated process.
However, more affluent institutions and individuals still use the personalized portfolio management services of full-service brokers.
What Types of Degrees Should I Earn to Become a Stock Broker?
Ideally, a prospective stock broker will earn a bachelor's degree in business or a finance-related discipline such as accounting, economics, finance, business administration, marketing, management, or a similar degree.
An undergraduate degree will qualify you for an entry-level trainee position, which will give you experience in the financial world and help you determine the areas in which you are most interested. Trainee hours are also required for licensure exams (see below).
In today's competitive environment, candidates are strongly recommended to earn a Master of Business Administration (MBA) or a master's degree in economics, finance, or accounting to ensure qualifications for career advancement.
While searching for those master's programs, be sure to look for degree programs that offer specialties and concentration in areas such as investment, hedge funds, trading and exchanges, and mergers and acquisitions.
Graduate certificates are also available that can add value to your career portfolio if you are already working in the business world.
Some of America's most prestigious business schools offer certificate programs that may entail only enrolling in four courses:
- Harvard University Business School: Certificate in Finance and Accounting (online)
- Johns Hopkins University: Graduate Certificate in Investments (online)
- Cornell University: Certificate in Financial Management or in Investment Strategies (online)
- San Diego State University: Advanced Certificate in Investment
Continuing education through seminars and training conferences is also recommended for stock brokers. These courses will keep you up-to-date on the frequent changes in the landscape of the financial industry.
What Licensing Is Required for Stock Brokers?
The investment profession is regulated by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
A prospective stock broker needs to become licensed as a registered representative (RR) in order to work for a brokerage company and represent clients who are trading in securities.
As a registered representative, you may obtain employment as a broker, financial advisor, or portfolio manager.
The FINRA administers the Series 7 and Series 63 exams, which license registered representatives and give them authority to buy and sell securities such as stocks, mutual funds, and bonds on behalf of their clients.
To qualify for the Series 7, you must have been working at a registered firm for at least four months. The exam, which takes about four hours to complete, has 125 multiple-choice questions and requires a score of 72% or above to pass.
Series 7 candidates must also pass the Securities Industry Essentials (SIE) Exam.
The Series 63–Uniform Securities Agent State Law Exam, which focuses specifically on state laws and regulations, is a requirement in most states.
Other licenses require the Series 65 and Series 66 exams, which may expand a stock broker's scope and set of allowable activities.
Become a Stock Broker Today
Becoming a stock broker takes hard work and dedication and yields a high reward. To enter the competitive finance world, you'll need to earn a degree and be sure to continue your education.