Are you someone who loves the hustle and bustle of business and enjoys the thrill of a challenge?
We knew you did! The perfect career may have just opened up to you, why not become a stock broker? It allows you to thrive in the fast-paced and dynamic working environment revolving around financial investments and the stock market. Dying to know more? Then read our comprehensive guide below!
What is a stockbroker?
What's a stockbroker? If you’re imaging Leonardo DiCaprio in The Wolf of Wall Street, it may not be as cinematic as you’re hoping, but it is still just as challenging and rewarding. Stockbrokers in the UK work within fast-paced financial environments where they buy and sell stocks for clients. They may work with other securities than stocks for their customers, who are either retail or institutional.
The term stockbroking refers to conducting sales through a stock exchange or over the counter in return for a commission. A stockbroker employee can work within two main areas, institutional and retail. Retail consists of services provided to investors, who typically have a lot of money and the stockbroker employee will work with them directly.
In comparison, institutional services work with financial institutions or fund managers who are knowledgeable and independent from the broker. They may use different stockbrokers in the UK across different markets. This area brings in higher revenue for the firm and in turn, higher profits and commission. The stockbroker career is ideal for someone who has excellent analytical, communication and negotiating skills.
An investment broker salary is varied, with experience, length of service and qualifications all contributing factors.
Stockbrokers can work in a range of ways including advisory, discretionary and executive. An advisory position focuses on advising on appropriate investments without making decisions. A stockbroker in this area will not be involved in the purchase and is common in institutional broking. Discretionary brokers will manage finances, make decisions on the clients’ behalf and perform the most commonly known act of buying and selling shares on the market. Then we have an executive broker, who engages with investment activities and only does so after a request from the client.
There are also three different types of brokers. The first being a full-service broker who provides a personal service to clients and passes on information not available to individuals without full service. They tend to receive a commission if the client invests in the stocks the firm specialises in and deliver personalist recommendations on investments. Next, we have a discount broker, where a list of recommended stocks is offered to clients without research information. Then there is an online broker who supports clients by carrying out research, news and a selection of stocks they can invest.
What does a stockbroker do?
It all sounds a bit complicated, right? Well, what do stockbrokers do daily? By looking at the stockbroker job description, we find that some of the key duties involve following the latest financial and tax legislation, financial news and understanding the movements within the market. They’ll carry out market research and analysis, write reports and regularly update their clients on their portfolio and new investment opportunities.
Stockbrokers will also proactively look for potential clients, sell their services and manage relationships through cold calling and networking. They may be required to give presentations at conferences and events as well. Stockbrokers should be honest and provide all information - including any risks involved - as you can mislead or exaggerate information.
How to become a stockbroker?
Now we understand what you’ll do if you become a stockbroker, the next step is to find out how to make a dream come true. There are no standalone stockbroker qualifications, but there are relevant undergraduate degrees that employers seek. Therefore, the stockbroker degree is instead a Bachelor’s in statistics, finance, mathematics, accountancy, business studies, engineering or economics. If you have a high grade or a first, then you’ll be at an advantage to other potential candidates.
However, studying qualifications to be a stockbroker doesn’t stop at the undergraduate level as having a higher degree, like a Master’s or an MBA (Master’s of Business Administration) can increase your chances of securing a senior position or progressing. However, you can enter stockbroker jobs at a junior level after completing an undergraduate degree.
If you’re imaging Leonardo DiCaprio in The Wolf of Wall Street, it may not be as cinematic as you’re hoping, but it is still just as challenging and rewarding.
There are also professional qualifications you can take to improve your job search; these include a chartered financial analyst (CFA), investment management certification (IMC), a chartered institute of management accounts (CIMA), an ACA or an ACCA. Most progressing to become a stockbroker study the first level of a CFA qualification. Qualifications aside, other things can help you, like previous sales experience, knowledge of a foreign language. For most employers, they ask candidates to complete an online application and if successful, request you to pass a further two or three interviews. Interviews may be in a question and answer format, and you may be required to give a presentation.
How to get stockbroker work experience?
Having experience in customer service or sales is an advantage to any application, and having stockbroking work experience is not necessary as most firms will offer training to recruits. But, if you’re interested in becoming a stockbroker and want to increase your chances, you could look at completing stockbroker internships or placements to set you apart from the crowd. These opportunities will allow you to understand the jargon, key terms and current trends in the market as well as helpful insight into what the career entails.
It's very competitive, but it’s essential to try to secure a relevant internship during your first or second year at university. You can find out about what internships are available through your university career centre or individual company websites. There may be a stockbroker graduate scheme available, but this is dependent on the bank or firm.
What skills do you need to be a stockbroker?
First of all, stockbrokers need to have excellent interpersonal, negotiating and communication skills. They’ll need to be able to perform under pressure and in a fast-paced and lively environment. Strong analytical, numeracy and research skills are essential as well as organisational, project and time management skills. They will need to be IT competent and be able to give presentations and talks at events and conferences. Stockbrokers need to be able to work independently and as part of a team. They’ll have excellent problem-solving abilities, assertiveness and have natural sales skills to secure those investments.
How much do stockbrokers earn?
It’s the big question now, how much do stockbrokers make? An investment broker salary is varied, with experience, length of service and qualifications all contributing factors. How much does a stockbroker earn when employed by big banks? The stockbroker wage for newly qualified brokers tends to be around £25,000. But, the financial broker salary will also increase depending on the commission, which at large banks can be between 15% and 20% for a graduate stockbroker.
How much does a stockbroker make in London? Regarding boutique investment companies, the stockbroker salary in London for juniors starts at £40,000, but includes 20% - or even up to 25% on top of the basic wage. After gaining a considerable amount of experience, the stockbroker wage can take home between £100,000 and £150,000. And the average stockbroker salary at this level would also be accompanied by a significant bonus.
Stockbrokers will also proactively look for potential clients, sell their services and manage relationships through cold calling and networking.
A stockbroker’s average salary varies between companies along with bonuses and percentage of commission. The more and higher sales you achieve the more money you’ll take home. Also, a stockbroker salary in London may be different from those in other areas in the UK. The sector offers bonuses for targets, health and travel insurance, gym membership, private medical insurance, travel expenses, tuition and exam fees and professional body membership fees. The range of benefits can also vary depending on the employer.
What are stockbroker prospects?
If you’re applying for stockbroking jobs, you probably want to know what comes after? We know how to be a stockbroker, what they earn and what a day in the position may look like, but what’s next? Successful stockbrokers build up a broad network of clients and can choose to set up a firm or to become a partner at the company where they work. A partner will work with a client base with a higher network, offering greater rewards and commission. Some stockbrokers may gear towards investment analysts if sales targets aren’t the main drive.