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What Is a Stockbroker?

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. 
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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 giving advice to 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.

Three of the major types of brokerages are:
Description Benefits Drawbacks

Direct Access Brokerage

Direct access attempt to offer the fastest transactions to active traders

Technology-driven solutions; emphasis on  quick execution; efficient access for investors who already do their own research

Quick trading execution may cost the investor more

Discount Brokerage

Discount brokers attempt to offer the cheapest transaction

Zero trading commission fees; flat brokerage fees; enhanced access for everyday investors 

The investor may be required to execute their own trades via an online platform

Full Service Brokerage

A full service stockbroker offers holistic, start-to-finish transaction support

Tailored investment advice; education on trading strategies, and potentially financial planning; little work for the investor to put in

Full service brokers are at the most expensive end of the brokerage spectrum

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. and new profit models 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 

Stockbroker Career Path and Job Outlook 

Because of advancements in automated financial services and investing technology, including e-trading, robo advising, and micro-investing mobile platforms that have made self-directed transactions possible for investors, some may wonder if stockbrokers still exist or if this is a dying career path. While online trading platforms have reduced the demand for a human broker to give beginner investors access to the stock market, there are still scenarios in which a broker provides necessary services. For example, large orders carried on behalf of an institutional investor and/or high net worth individual investor may call upon a broker’s expertise. Some investors may also prefer to make transactions through a trading representative for privacy purposes.

Other Possible Career Tracks

Other financial services roles focused on institutional investing include:

How Can the CFA® Program Help Me?

Because CFA charterholders have mastered a curriculum that provides comprehensive investment expertise, many employers list the CFA designation as a preferred credential for investment roles. The CFA charter prepares professionals to adapt to the continually changing demands of the investment industry.

Explore whether CFA Program is the right choice for your next career steps

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