What Do Stockbrokers Do and What Does Their Day Look Like?
A stockbroker is an individual who trades stocks and other securities for another individual or multiple individuals. They are typically associated with a brokerage firm or dealer. Another common term for a stockbroker is an investment advisor depending on the exams that they pass.
Stockbrokers are required to be licensed in the United States. In order to become a licensed stockbroker in the United States you must take and pass the Series 7 Exam and then either the Series 63 or Series 66 Exams. The first exam focuses on the general knowledge of a securities representative and has 260 questions (only 250 of the questions count towards the final score).
The Series 63 Exam is the Uniform Securities Agent State Law Exam. This exam is state specific and tests potential securities agents on state laws regarding investing. This exam has a total of 65 questions, of which, only 60 are graded. Uniformed Combined State Law is the title of the Series 66 Exam and is developed not only to test potential securities agents but investment advisors too. The exam contains a total of 110 questions but only 100 of them are graded.
There are three different services that a stockbroker provides. The first is discretionary, this means that on the behalf of their client the stockbroker handles all investment transactions. Advisory services are provided to clients who just want advice on what to invest in and how to invest. Lastly execution only services are for when a client knows what they want to buy but the stockbroker is the one who makes all of the purchases and sales.
As the market is constantly changing the day to day work of a stockbroker can change greatly. Every day it is important that stockbrokers stay on top of the market so that any changes that happen you can account for. At the same time though stockbrokers have to try to search out new clients because only so many of the clients come to the brokerage looking for a broker.
A stockbroker has to be able to remain calm when talking with their customers. Customers may not understand technical terms and how things work right off the bat. Part of a broker’s job is to answer their client’s questions about investing and their portfolios. Because stock have the potential to crash you also have to be able to talk to a client when their portfolio crashes. When this happens clients can be upset, angry, and/or depressed and they need to be handled carefully.
What are stockbrokers paid?
Well that is somewhat of a difficult question to answer because stockbrokers are typically not paid hourly. They are paid based on how much business they conduct although they may have a baseline salary and earn commission on top of this. Typically a broker makes 1% of the assets that they manage but they do not get to keep the entire amount. The company that they work for will typically take 60-70% of that 1%. So for example to make $30,000 in the first year a stock broker must manage around $10,000,000. Managing that kind of money right of the bat can be difficult because brokers are expected to bring the majority of that in themselves. Most stockbrokers also charge a fee for interacting with clients. Whenever someone calls to ask advice from the broker they are more than likely going to experience at least a small fee.
A stock broker starts their day around seven in the morning. The first few hours of the day are spent researching the stock market. Then when the stock market opens at 9:30 AM they check the positions of the portfolios they are managing and spend time contacting their existing clients. This time will be used to advise the clients on how their money should be handled based on that days positions. Often time’s clients will have conditions for buy and selling.
Working hours for a stock broker
Because the market is still open until 4 PM brokers usually take a quick lunch around noon then return to work to keep track of the stocks and continue talking with clients. After lunch would typically be the time which the broker would conduct any face to face meetings with clients or potential clients.
The closing of the stock market does not signal the end of the work day for a stockbroker, especially a new. It just signals the switching of tasks. Instead of working with their existing clients this is when they will start marketing themselves to new clients. They will spend at least a couple of hours on the phone and computer contact both people and businesses. This is also the period of the day when stockbrokers will do any other networking that they need to do as they don’t have to focus on the stock market until the next morning.
After the market closes some stockbrokers will even teach classes and seminars to prospective clients or people who want to learn more about how to handle their money. Since a lot of people don’t work on Saturday and the market isn’t open on the weekends it isn’t uncommon for a stockbroker to work for a while on a Saturday to connect with people that he couldn’t’ get in touch with during the work week. This can range anywhere from a couple of hours’ worth of work to six hours’ worth of work depending on how badly the broker and brokerage needs new clientele. Working on the weekends is more common of someone who is just starting out in the stock brokering world.
Being a stockbroker is a demanding job, you work 9+ hour days and you are responsible for other people’s money so you have to be at the top of your game. It can also be a really rewarding job though because not only does it have the potential to pay well you have the potential to make other people happy by making their money. If you are interested in breaking into the stock brokering world it would probably be best to have a little bit of money saved up for that first year so you don’t have rely on making that first $10,000,000 for your clients.