Start A Career In Stockbroking
If you’ve a head for figures and numbers, then a career as a stockbroker could be your calling. It is not that easy, though. This area requires determination, hard work, patience and a broad set of skills to succeed. The upside is that the rewards are enormous. As a novice, you might have to toil for a couple of years before you accumulate a large base of customers to allow you to live comfortably.
If you are game, then here is what you need to know about a career in stockbroking:
A stock broker’s job description
Stockbrokers usually work with their clients in three distinct ways as explained below:
– Discretionary Manner- a stockbroker who works with his clients in a discretionary manner makes decisions and manages all investments on the client’s behalf.
– Advisory Manner- if you are working in an advisory capacity with your clients, it means you provide them with investment advice.
– Execution Only- if you operate on an ‘execution only’ basis with the client, it means your job is only to carry out the explicit instructions from the clients.
It is also possible that a broker may work in all of the listed ways- and that depends on the broker’s client base.
A stockbroker’s daily tasks include tracking and researching various financial markets, communicating with clients, reviewing clients’ investment portfolios, marketing services to potential clients and instructing traders. Stockbrokers who are employed by large firms, such as CMC Markets, may specialize in certain regional markets, industries or services.
A Stockbroker’s Skill Set
While there aren’t any set academic qualifications a prospective stockbroker should have, potential employers will want to find out if you communicate well as well as work easily with numbers. It is noteworthy that of late potential employers have started to look for stockbrokers with at least a bachelor’s degree. While the degree can be of about any field, you’ll have a competitive edge over other candidates for a stockbroker position if your degree is in business, economics, accountancy, or finance.
It is not enough to know how financial markets work- a stockbroking career will also need you to be well-versed with economics and geopolitics. That is because world events have a big impact on financial markets- therefore, the ability to anticipate the effects of world events is handy.
New stockbrokers commence work as trainees and scale the career ladder depending on their performance and knowledge. It is advisable that you continue advancing in knowledge and developing your skill set as that will both improve your performance and enable you to rise through the ranks. In fact, many people look to enter into the stockbroking business, and as competition heats up, firms are looking for postgraduate qualifications, such as MBAs and MSc.
To become a fully-fledged stockbroker, you need to register with an authorizing body- if in the UK, you’ll have to register with the Financial Services Authority (FSA). The authorizing body will give you the license to operate as a stockbroker- in some jurisdictions such as the UK, you will have to pass an appropriate exam.
Other important skills that you’d need here include:
– The ability to be calm under extreme pressure.
– Quick decision making.
– Ability to decide which risks are worth taking.
– Ability to crunch complex financial data and explain it to clients in layman terms.
Career growth in the stockbroking industry is hinged on your performance. At the onset of the career as a stockbroker, you’ll be given a portfolio to manage. After five years of exemplary performance, you might be promoted- and a team of brokers might be assigned to you to manage. If you keep posting good results and maintain an impressive track record, you can get into fund management or consultancy.
While the career of stockbroking appears open to anyone, it is only those who have degrees who can receive job offers. And, it is only those who have great stamina and the willingness to endure long working hours and grueling tasks of poring over numbers who will eventually rise through the ranks to more lucrative positions.
But don’t be intimidated. Be encouraged that the returns are equally lucrative. If you don’t see a challenge in putting in long hours of work, are skilled with numbers, are a good communicator, and possess an intuitive feel for how global events can affect the financial markets, then you can plunge into the stockbroking career.