Trading stocks for a living is a high-risk career that can have great rewards. You can go from boom to bust and back to boom quickly. It's not for the faint of heart or for the person who wants a traditional career. But if you love action, a fast-paced workplace, and the potential to make a lot of money, then becoming a stockbroker might be for you.
It's never too early or too late to become a stockbroker. People in their late 50s and early 60s make the switch. Warren Buffet was 11 years old when he bought three shares of preferred stock.
Regardless of your age, becoming a stockbroker means seeing business opportunities before other people do. Yes, you need to have a background in business and economics. You also need above average math skills, though spreadsheet software now does much of that work for you. But without a keen insight into how and why a company can make money and be successful, your success as a stockbroker will be limited to simply making trades for people.
Another quality you need is to be convincing. You won't be able to make a trade without client approval, so you'll need to sell them on the benefits of a trade.
The first step in becoming a stockbroker is getting an education. Today, a stockbroker needs at least a bachelor's degree, if not an MBA. Companies have become more and more complex in their structure, and a stockbroker must have a solid understanding of how a modern company operates.
Your education will include coursework in finance, economics, accounting and other business related topics.
To supplement your studies, join an investment club. While you can learn a lot trading by yourself, joining a group that works together will prepare you for working in a brokerage house. It will also expose you to how people interact when trading stocks and give you insights and experience that will be valuable when you work with customers.
In addition to a formal education, you'll also need to pass the General Securities Registered Representative Exam, also called the Series 7 exam. The National Association of Securities Dealers administers the test. In many states, you'll also need to pass the Series 63 (Uniform Securities Agents State Law Exam and the Series 65 (Uniform Investment Advisor Law Exam).
Becoming a stockbroker always means facing competition, but it's especially pronounced early on. Many firms hire a large number of new stockbrokers, knowing that a certain percentage of them won’t continue on in the business.
Starting out, stockbrokers make between $30,000 and $50,000 a year. At a traditional brokerage firm, you'll be paid according to a commission schedule established by the firm. Since it’s a commission job, stockbrokers can make next to nothing or they can make hundreds of thousands of dollars a year. If you work for a discount brokerage, you'll likely earn less than $50,000 a year.
How much you earn is also a function of where you live. The larger the concentration of customer wealth, the higher your commissions and compensation.