What Are the Requirements to Be a Stockbroker?

by Chris Blank

If you've seen movies like "Wall Street," you may view stockbrokers as high powered individuals who spend their days wheeling and dealing. Alternatively, you may believe stockbrokers spend their entire working day in the trading pit, waving their arms wildly amidst a sea of flying paper. These aspects of the job are important, however, stockbrokers must complete rigorous training before they are ever allowed to make their first trades.

Job Description

Stockbrokers trade in what are known as securities -- essentially, the rights to particular goods or assets, or the right to purchase specific goods or assets at a given future date. Many stockbrokers work for large brokerage houses who make trades for several clients, while other stockbrokers work independently for a few individual clients or for smaller groups. Whether employed by a brokerage firm or working independently, stockbrokers perform trades on behalf of clients who are unable to directly access the trading floor. Stockbrokers who perform trades for a firm or for themselves are known as traders.

Training and Education

Many stockbrokers begin their careers as sales assistants, while others undertake special brokerage training programs. Some of the most successful stockbrokers transfer sales and finance experience from different industries into positions within the securities sector. More than two out of every three stockbrokers holds at least a bachelor's degree, according to the Bureau of Labor Statistics. Even entry level brokerage clerks often hold college degrees. There are no specific educational requirements for the job, however, many stockbrokers have a background in economics, finance, business or accounting. For higher level positions, a masters degree in business administration (MBA) is a definite asset.

Series 7 Exam

Stockbrokers must register with the Financial Industry Regulatory Authority (FINRA) and earn a passing grade of 70 percent or more correct responses for the General Securities Registered Representative Examination, commonly called the Series 7 Exam. The Series 7 Exam, administered by FINRA, is six hours long and includes 250 multiple-choice questions. Topics for the Series 7 Exam include individual retirement accounts (IRAs), the Securities and Exchange Commission Act of 1934, insider trading and questions that determine test taker's knowledge of the stock market.

Stockbrokers Versus Financial Advisers

Many stockbrokers perform dual duty as financial advisers; however, the two roles are not identical. Unlike stockbrokers, financial advisers oversee much of the financial portfolios of their clients; some financial advisers handle all their clients financial affairs. A major difference between stockbrokers and financial advisers is the standard to which the securities industry holds workers in each position. Financial advisers must meet a fiduciary standard, including placing the interests of clients first. Stockbrokers, on the other hand, are held to a less stringent suitability standard, which requires the stockbroker to offer products that are "suitable" to the client based on several factors, including time and investing experience.

About the Author

Chris Blank is an independent writer and research consultant with more than 20 years' experience. Blank specializes in social policy analysis, current events, popular culture and travel. His work has appeared both online and in print publications. He holds a Master of Arts in sociology and a Juris Doctor.

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