Angela Palacios her journey into personal finance when her high school career test said her No. 1 career match was as a stockbroker. She took this feedback and started down an educational path of economics, business, communications and finance, all the subjects a stockbroker would need to excel.
Today, Palacios has worked her way up to a partner and director of investments at Center for Financial Planning in Southfield, Michigan, but it all began with that high school career proficiency exam and an interest in becoming a stockbroker.
While the role of stockbrokers is changing as investors become increasingly autonomous, the position can still be found at some brokerages. That said, what may begin as a job as a stockbroker often morphs into a career as a financial advisor or planner.
What Does a Stockbroker Do?
When Palacios got her career test results, a stockbroker was a more common role. Traditionally, a stockbroker was the person placing trades on an investor’s behalf. A stockbroker may also act as a salesperson, trying to drum up interest in a certain investment.
With the advent of internet trading, the need for a human middleman has diminished. Today, the term stockbroker is sometimes used interchangeably with financial advisor, although the former is more likely to focus on the execution of investment strategies, while the latter focuses on designing that investment strategy as part of a holistic financial plan.
How Do You Become a Stockbroker?
“To become a stockbroker is not as difficult as someone might imagine,” says Josh Simpson, financial adviser with Lake Advisory Group in Lady Lake, Florida. All you need is a bachelor’s degree and then to pass the licensing exams required by the Financial Industry Regulatory Authority, your state and your employer.
While there is no college major requirement, a degree in business, economics or finance can be helpful. “Knowing what I know now, I would have also included psychology and sociology classes – bonus for behavioral finance – as you are in the business of people, and whatever you do to understand them will help you, not only individually with clients, but also with understanding markets and their movements,” Palacios says.
With a bachelor’s degree in hand, your next step is to determine which licenses your state requires. “Almost all states and large brokerage firms will require a Series 7 (the FINRA General Securities Representative Exam), so plan on taking that one first,” Simpson says. Then your firm will help you determine if you need the Series 63 (Uniform Securities Agent State Law Exam), Series 65 (Uniform Investment Adviser Exam) and/or Series 66 (Uniform Combined State Law Exam), which is a combination of the 63 and 65.
None of these tests is particularly difficult if you take the time to study beforehand, Simpson says. There are several different study courses available online to help you prepare.
“Another popular route into the business is to become part of a team,” Palacios says. You can start as a client service associate, a role that is available at a variety of wealth management firms from independent registered investment advisors to banks to broker dealers.
Starting as a client service associate “can help you learn how to communicate with clients, understand paperwork involved so you can be an expert in helping onboard clients and simply understand how everything works from a practical point of view,” Palacios says. “Then you can progress into licenses or certifications to deepen your understanding of specialty areas like financial planning and investments.”
When you start looking for your first job as a stockbroker, she recommends seeking positions on teams with others you can learn from. “A common team structure is composed of one or more lead wealth managers (financial planners or financial advisors), investment-focused personnel, associate financial planners or paraplanners and client service associates.”
Wherever you begin, make sure there is a path for professional development that interests you. And let it be known you want to progress on that path.
“Inquire as to how the firm might support you in seeking professional development opportunities like obtaining certifications,” Palacios says. “A firm that has a healthy growth rate should be able to provide opportunities for professional growth (so) there wouldn’t be the need to jump firms.”
Her firm, for example, has a clear professional development path with guidelines for how you can progress from entry level to partner.
Should I Become a Stockbroker?
“The most important thing to consider, if you are thinking about becoming a stockbroker, is not the licenses,” Simpson says. It’s how you want to serve the clients you work with.
As a stockbroker, you would be the conduit between investors and the stock market. Your role would focus more on placing trades at your client’s request. As a financial advisor, your focus would be on guiding people through investing their life savings and helping them plan for financial goals like retirement.
“There is no one path to success, but there is the path that is right for you,” Palacios says. She points to Michael Kitces’ “Financial Advisor Success Podcast” for examples of unique ways to build a career in the financial industry.
“Listen to your own instincts and follow what passions you have and want to share, and with some hard work, you will find clients to align with you,” she says.
