Not any Tom, Dick or Harry can buy or sell stocks on the stock exchange: it has to be done through a professional and regulated broker, which is why stockbrokers exist, providing a service for clients wishing to buy or sell shares on the stock exchange. It’s a very attractive and popular career, not least because of the substantial pay packets.
There are three types of services offered by a stockbroker: execution-only, where the stockbroker follows clients’ instructions to buy or sell; advisory, where the broker helps the client to decide on which shares to buy or sell, although the client has the final decision; and discretionary, where the broker, after being briefed on the client’s investment objectives, is given complete control over all the dealing decisions made on the client’s behalf.
The “buy low, sell high” maxim is engraved on a stockbroker’s soul. They keep a finger on the pulse of the financial market, researching stock and shares and keeping up to date with all the latest financial news. They put all these factors into speculating the ripe time to buy or sell a share, making their money through the brokerage they get after every transaction is made.
It’s a highly client-facing role. Stockbrokers try to build up and maintain a healthy roster of clients: this means reporting to them, keeping track of their investments and trying to maximise their financial assets. Portfolio management plays a big part in this, assessing the needs and risk-taking abilities of the client and matching it with the right type of stocks and shares.
Consequently, stockbroking is very much a sales role, in that they have to convince new clients to entrust them with their funds and assets. In between all the buying and selling, a good stockbroker spends plenty of time marketing themselves and networking their socks off to get new clients.
Salary & benefits
The salary is a big draw to the profession. Starting salaries can be high, ranging from £24,000 to £35,000.
Experienced stockbrokers usually pocket a salary of £45,000 to £80,000 a year, whilst those at the top of their game can earn well over £100,000 a year.
As they are essentially sales agents, stockbrokers’ salaries are often significantly increased through commissions and bonuses.
Life as a stockbroker is no easy walk in the park. It can be extremely pressurised, stressful and draining. The hours, in particular, are very long. The London Stock Exchange opens at 8am so most stockbrokers will be at their desks at 7am and stay until about 6pm. If they’re dealing with overseas clients or markets, their hours are likely to be far more irregular and longer.
There are no strict academic requirements to become a stockbroker, but most employers will be looking for those with a degree. This can be in any subject, but a degree in economics, business or finance might put those wishing to enter the profession at an advantage.
A good understanding of how financial markets work is essential, and most employers will expect trainees to have previous work experience in an investment bank, firm of stockbrokers or similar.
Employers will also be looking for strong decision making skills, top notch communication skills and bucket loads of confidence. High energy levels are needed to keep up with the pace and high pressure of the working environment, whilst good mathematical and I.T. skills will put a trainee stockbroker in good stead, as will the ability to process complex information.
If you want to work with overseas clients, language skills (such as in French, German, Japanese and Russian) will be extremely helpful.
Training & progression
Stockbrokers need to be registered with the Financial Services Authority (FSA) as an ‘authorised person’ before they can practise, which means passing a number of exams.
Much of the training is on the job, although many trainee stockbrokers will probably study towards qualifications from the Chartered Institute for Securities and Investment (CISI) or the Chartered Financial Analyst (CFA) Society, such as an investment management certificate.
Progress can be meteoric with top brokers pulling in staggeringly high salaries. It’s a tough world, but many stockbrokers manage to rustle up a successful list of clients, moving onto account or fund manager positions.
Others will choose to specialise in trading or investment management, building up a high-profile client list and reaping the rewards.