Stock Broker Salary Guide: Types, Licensing, and Industry Trends

As a newcomer to the world of finance, you're probably wondering how much a stock broker can earn. According to the industry, stock brokers can earn a median salary of around $84,000 per year.

There are several types of stock brokers, including full-service brokers, discount brokers, and online brokers. Each type has its own unique characteristics and earning potential. Full-service brokers, for example, often earn higher salaries due to their more comprehensive services.

To become a stock broker, one typically needs to obtain a Series 7 license, which requires passing a comprehensive exam. This license is a crucial step in starting a career as a stock broker.

A stock broker is a professional who helps individuals and organizations buy and sell stocks on major exchanges like the NYSE or NASDAQ. They must be a member of the exchange or belong to a member firm, and are licensed by FINRA.

To trade on these exchanges, you need to be a member or work for a member firm. This used to be prohibitively expensive, but the rise of discount brokers has made it more affordable.

Discount brokers provide online services with cheap, fast, and automated access to the markets, making it easier for individual investors to buy and sell stocks. Most online brokers are discount brokers, and offer trades for free or a small commission.

To trade on major exchanges like the New York Stock Exchange (NYSE) or the NASDAQ, you must be a member of the exchange or belong to a member firm.

Member firms and many individuals who work for them are licensed as brokers or broker-dealers by the Financial Industry Regulatory Authority (FINRA).

Buying or selling stocks requires access to one of these exchanges, which can be a barrier for many individual investors.

It was cost-effective only for high net-worth investors or large institutional investors, such as the managers of pension funds, until the rise of the internet and related technological advances.

While an individual investor can buy stock shares directly from the company that issues them, it is much simpler to work with a stockbroker.

Most accounts in the markets today are managed by the account owners and held by discount brokers.

A stock broker helps individuals and companies buy and sell stocks, bonds, and other securities on the stock market. They act as intermediaries between buyers and sellers, facilitating transactions and providing advice on investment opportunities.

Stock brokers often work with clients to understand their financial goals and risk tolerance, and use this information to recommend specific investments. They may also provide research and analysis to help clients make informed decisions.

Stock brokers can work for a variety of firms, including investment banks, online brokerages, and traditional brokerages. They may also work independently as registered investment advisors.

In addition to buying and selling securities, stock brokers may also provide other services, such as managing clients' portfolios and providing financial planning advice.

To become a stockbroker, you'll need to obtain specific licenses, which can be a challenging but crucial step in your career.

In the U.S., you'll need to hold the FINRA Series 7 and Series 63 or 66 licenses and be sponsored by a registered investment firm. This is a standard requirement for all stockbrokers.

To pass the Series 7 exam, you'll need to be sponsored by a legitimate brokerage firm, and the firm sponsoring you expects you to pass. This is a critical step in becoming a registered representative.

In addition to the Series 7 and Series 63 exams, you may also need to obtain other licenses, such as the Series 3 or Series 31 licenses for commodities and managed futures. The specific licenses you'll need will depend on your job duties and employer.

To become a registered investment adviser (RIA), you'll need to obtain a Series 65 or Series 66 license. This will also require passing a strict background check that examines your criminal and financial history.

In Canada, would-be stockbrokers should be currently employed by a brokerage firm and are required to complete the Canadian Securities Course (CSC), Conduct and Practices Handbook (CPH), and the 90-day Investment Advisor Training Program (IATP).

There are two main types of brokers: full-service brokers and discount brokers.

Full-service brokers often specialize in specific areas, such as IRA rollovers or employee stock options.

Discount brokers, on the other hand, are geared towards providing effective service for walk-in clients and usually pay their brokers a flat salary.

At discount firms like Charles Schwab or Fidelity, brokers are expected to be knowledgeable in a broad array of research and services, including basic technical and fundamental analysis, and are often required to perform administrative duties.

They have either very low or no production quotas, which means they're not subject to the same level of sales pressure as full-service brokers.

Discount brokers are geared toward providing effective service for walk-in clients and usually pay their brokers a flat salary, with some minor bonuses or other incentives.

Many brokers who don't make it at full-service firms end up at discount firms where they can learn the business and get a feel for the markets.

Discount brokers are likely to gain a much broader base of experience than many full-service brokers, who generally specialize in certain areas.

A discount broker, such as Charles Schwab or Fidelity, can provide a broad array of research and services, including basic technical and fundamental analysis, rollovers, stock options, and more.

Reps at discount firms are not subject to the kind of sales pressure as their full-service counterparts and, generally, have either very low or no production quotas of any kind.

In contrast, full-service brokers provide a broader breadth of financial services such as research, advice, portfolio management, and more.

Today, discount brokers have distinguished themselves by providing research and other services in addition to pure execution.

Full-Service firms like Bank of America/Merrill Lynch and Morgan Stanley are traditional approaches to selling investments. They offer comprehensive training packages, including sales and product training, administrative procedures, and compliance regulations.

Brokers working for these firms are typically provided with office space, business cards, a guaranteed salary or draw against commission, and a high sales quota to meet within a short period.

Some firms have changed their models to allow reps longer time periods with bigger starting salaries for a better chance of succeeding.

A relatively large percentage of trainees will wash out of these programs because they can't generate enough business to meet their quotas.

Many successful brokers eventually leave full-service firms to join independent broker-dealers like Raymond James or Linsco Private Ledger.

These firms offer a wider array of products and services, don't require reps to sell proprietary products, and offer much higher payouts on commission.

However, they usually only provide back-office administrative support and don't offer amenities like office space. Those who work for these firms must pay all their own expenses and overhead.