How Much Do Stock Brokers Make? An average trading fee of $150 on each transaction and the trading fee for the discount stockbroker is $10 per financial transaction.?
In a typical stock market, traders and investors buy or sell financial products based on the prediction that their value will increase or decrease. A stock exchange market is a highly risky market. An average stock exchange market sees an average of $5 trillion in trade daily. Investors have to go through the brokerage firm, stockbrokers, and speculators to earn a profit on their financial assets. It does not matter they are earning profit or loss; they pay brokerage fees and commission on each transaction they do to the stockbrokers. And this is how a stockbroker earns his/her living.
Role of the Stock Broker | How Much Do Stock Brokers Make?
Stockbrokers sell financial products and services to customers for investment purposes. They employ their knowledge of funds, market conditions, investment plans, financial regulations, and financial situation in a country and sell financial plans. A stockbroker identifies potential clients by their contacts, advertising campaigns, and mailing lists. They also converse with the customers to evaluate the financial resources, available assets, financial position, and financial goals. They also guide their clients and give them financial advice.
If you are a potential stockbroker and want to make your mark on Wall Street, you are at the right place. Do you know, in the USA top stockbrokers can make more than $200,000 a year! It is indeed the best career to start but also a challenging one. In this article, we are going to discuss what the job of a stockbroker is, how you can be a successful stockbroker and all you want to know about the stockbroker profession. We will also discuss the challenges you will face during your journey.
If you have seen the movies, Boiler Room and Wall Street, then you may think it will involve all kinds of these nefarious activities, but believe it won’t. You can make a good career and decent money out of stockbroking. According to the US Bureau of Labor Statistics, the median pay of a stockbroker in 2018 was $64,120 while the maiden pay for all other stockbrokers in the US is $50,620 per week.
And if you are a passionate person and eager to learn fast, you can make much more than this amount per year. Many people dream of becoming Wall Street millionaire then buying a penthouse in Manhattan and driving a legendry Aston Martin. Stockbrokers are considered wolves of Wall Street and who can help people make money. They are typical financial gurus but at the same time earn a lot of money themselves. But exactly what they do and do they make a lot of money as we have seen in movies? The reality is yes, they earn a lot of money but not as easy as it seems. You have to follow a procedure to start your career at Wall Street, In the US, you need to get a license before practically starting as a broker.
If you want to be a successful stockbroker, you need to start working as a trainee first at a brokerage firm. A trainee stockbroker is a person, who has not taken any required exam to get the license of working as a professional stockbroker in the market. When you are working as a trainee, you will get a faxed base salary with any commission or brokerage bonus, as you are starting with zero clients. The brokerage firm will teach you how to start trading, what information you need to know, and in some cases, they can also sponsor you to take a professional exam and get your license.
In the New York stock exchange in 2020, the average salary of a trainee broker is ranging from $20,000 to $50,000 per year. And per hour earning of a stockbroker is average $ 20 to $30 per hour as a trainee. And if you clear your exam and get a professional license to work as a stockbroker, with some years of experience, you can earn a salary of $ 100,000 to $150,000 on average per year. But it does not include the commission or brokerage fees.
The above provided average salary information gives a clear view of per year earning of trainees and professional stock brokers. And addition to this, stockbrokers can also earn financial incentives, bonuses, and commission. A stockbroker can earn a lot of money but based on his/her experience and knowledge of the financial market.
How to Become a Stock Broker?
You cannot become a stockbroker out of blue and earn millions of dollars instantly. To become a professional licensed stockbroker, you have to follow a procedure. You have to follow the following steps.
Get a professional financial Degree
Yes, to be a professional stockbroker, first, you have to earn your college degree with a major in finance. It is important to get hired by the leading investment firm in your country. Mainly a degree with a major in Accounting, economics, and finance is recommended. But if you can do an MBA, it will give you an edge over your competitors. The knowledge you get from your financial degree will help you to understand the financial market and apply it as an intern.
Apply for professional brokerage license exams
If you want to be a successful stockbroker, after getting a degree your next step must be passing the financial industry regulatory exam. Apply for the exam and prepare your best.
Get your professional stockbroker license
After you are working as a trainee, get sponsorship to pass the exam, and get your license. Mainly a stockbroker can your exam series will include 7, 63, 3, 31, 65, and 66. And if you are a professional and already working in the stock market but do not have a professional license, you have to start again as a trainee and pass your professional exam to start as a stockbroker. But yes, you will get some edge over your competitors by having familiarity with the stock market. Your license will allow you legally to trade in the stock market and start earning as a professional stock exchange trader.
Yes, the next step is working hard. Now after getting your license to start trading securities in the market. You need to have a gift of gab, unlimited motivation, and determination to court your customers and build your business book. You do not have to be riskless ambitious or need to cross all boundaries to earn more and more. As a broker, it requires a lot of work in the evening and at the weekends. It involves meeting with clients and calling them offering investment opportunities. You can also organize special events to get new investors.
According to the US Bureau of Statistics, one in three brokers selling financial products work more than 40 hours a week in their first five to ten years. Yes, your earlier years can be the toughest ones as you will be building a portfolio for your clients. It also involves coming before the working hours in the office, staying longer after office hours, and conducting seminars and cold calling to the potential clients. The life of a typical stockbroker is far from a regular job of 9 to 5 but getting the same pay each month and getting occasional bonuses, commissions. The more you hustle the more you earn a commission.
Choose the right sector
The next step for professional stockbrokers is to select the right sector for investment. A stockbroker usually works with a brokerage firm to sell its securities, financial services, and products. Working with a brokerage firm provides fix a salary of $96,550 per year but if you are working with a bank or other financial sector firm your average salary can be $47,260 or even less than this. So after getting a license, choose your sector wisely.
How does Stockbroker work?
To understand the nature of the Stockbroker job, first, you have to understand how stockbrokers work. What are their job responsibilities and how they make money out of their sales? First, a stockbroker is also called an investment broker and trader. He is a professional who sells and buys shares on behalf of the client. They help their clients to sell and buy shares and securities in the financial market. They purchase bonds, securities, stock, and similar financial products from stock exchanges like NASDAQ, London Stock Exchange, NY stock exchange, etc. Mainly, a stockbroker works as a middle man and executes a financial transaction on behalf of its client. In the stock market, there are mainly two types of stockbrokers working right now. The first kind is called Full-service stockbrokers and the other is discount stock brokers.
Full-time stockbroker offers services more than just helping their customer to buy and sell securities. They deeply analyze a portfolio, offer customized financial advice, and offer directions on the best possible investments to put client money. Clients, who don.t know about the investment regulations and are first-timers in the stock market, prefer to work with full-time stock brokers. As they are financial experts and have worked professionally in a full-service brokerage firm. The professional stockbroker must have worked in the financial market for a longer period and knew the ins and out of the broking. A person, who wants to be a full-service stockbroker, should start and work in a brokerage firm and you can also start your own investment company after a few years of practice.
On the other hand, a discount stockbroker is professional offering financial transaction assistance. They do not offer investment guidance and advice on whether you should invest or not. They only do the transaction. Discount stock brokers are for the people who knew the financial market very well and can handle their securities on their own. They work in the brokerage discount firms and operate online.
How Stockbrokers Make Money?
Stockbrokers are mainly the salespeople and make big bucks getting commission and financial incentives. If a customer buys and sells its stock through a stockbroker, they pay a commission to the stockbroker on conducting their trading transaction. The earning of a stockbroker is based on the number of transactions they make, the more stocks they sell more money they can earn as their fees or commissions. Only in the USA, a full-service stockbroker is paid an average trading fee of $150 on each transaction and the trading fee for the discount stockbroker is $10 per financial transaction.
First, to be a stockbroker, you have to build your career and look for clients having high-value financial securities in the stock market. The amount of money you earn can also be different based on the market you are working in. At the start, it is not going to pour dollars on you but gradually your earning will increase. You will be paid a fixed monthly salary along with commission when you start working in a stock brokerage firm.
Types of Salary a Stockbroker Make
Stockbrokers working in Wall Street earn millions of dollars each year, some earn more than average and some earn less than expected. A stock broker’s salary mainly depends on his/her experience and the financial market he/she is working in. A stockbroker working in the New York Stock exchange will make far more than a stockbroker working in any other stock market.
Recent statistics show that the top 10% of stockbrokers in the NY stock exchange earns $300,000 per year. A stockbroker earning potential is unlimited if he/she manage to deliver higher profits to their investors. A typical broker can make money in various ways, some of the most famous ways are written below.
Fees of brokerage
If you are looking for a report on your stocks? Or you are looking for guidance on a newly released ETF? Each time you call your broker for the required information, you have to pay a certain fee for all his services. And that fee is called the brokerage fee. It worth it as before doing any transaction, you need certain stock market information. And on providing this information, a stockbroker gets his/her fee.
A second way to earn a broker is the referral bonus, when you are working in a stock brokerage firm and your company wants you to sell a specific kind of investment or funds such a mutual funds, then on selling these funds, you get a bonus. Your firm will offer you a bonus or brokerage referral fees on getting new investors.
The largest source of earnings for the stockbrokers is their brokerage commission. If you are working in a brokerage firm and a sales professional, experienced broker, salary is an undeniable component of your earnings. But you also earn commissions based on your promotions and experience, the better you work the higher commission you get. In some cases, a stockbroker can earn up to a six-figure salary from only commission.
Another way for brokers to earn their profits is by high leverage. It is a powerful tool for multiplying trading volumes and widening their positions in the stock market. If there is leverage available with a ratio of 1:100, a stockbroker can earn 100 times more profit on one transaction.
Another way is to spread swaps. A stockbroker pays overnight swaps to the traders and earns from the difference between the interest rate and financial product trading. If the difference in both transactions is positive, a stockbroker can earn a profit but if the difference is negative, the broker does not earn a profit. But in most cases, a broker gets the benefit and earn a large sum of money.
Finally, a stock trader can also earn by charging extra when it comes to offering customer service, extra support, and information sharing. Brokers can also charge extra fees for signals, market in-depth analysis, and sometimes they also provide training, educational materials, personal educational classes, webinars, and much more for their client assistance and confidence. However, if a stockbroker can understand the basics of the stock market, how it works, involved risks and securities management, he/she can earn a lot more than the average broker earning in the market. You simply need to become the best in what you are doing and up to date with the current situation.
The earning of stockbrokers are based on their number of transactions. The more they can trade the more they earn. When they chase the fluctuation in stock prices from one sector to another, they get high commission and more fees for each new transaction they do. Even if you are not providing high profits to your clients, you can still earn brokerage fees and your fixed salary.
A stockbroker can also charge yearly maintenance charges and operating fees in addition to commissions, broker fees. Brokers also charge inactivity fees if their client’s portfolio is not active for months. You can also charge minimum balance fees from your client if their portfolio dips below a certain level or amount. Working as a broker, make sure you knew all kinds of fees you can earn and profits apply to your investor account and how to realize them.
World-famous Stock Markets with the highest stockbroker salaries
Wall Street and particularly the New York stock exchange is the highest and most recommended stock market for stockbrokers looking to earn high salaries. The NY stock exchange topped with an average salary of $162,550 per year. According to BLS, it involves chunks of Connecticut and New Jersey. It also has the highest attentiveness of stockbrokers and all financial services sales agents.
In the US, the top states for the stockbrokers selling financial products and services are New York stock exchange with an average earning of $162,550 per year, Rhode Island stock exchange with an average earning of $130,040, Connecticut stock exchange with an average earning of $126,080, Massachusetts stock exchange with average earning of $116,030 and Vermont stock exchange with average earning of $113,520 per year.
On average there are more than 375,700 brokers selling financial products and services in the U.S and this number is inclined to grow by 6% each year by 2026.
A stockbroker can earn good and decent money in his/her job if the beginning is right. So if you are wondering know, how much a stockbroker can make each year? The answer is simple that a stockbroker can earn in many ways based on his/her preferences and hard work. Some ways of earning as a stockbroker are legal and ethical while others are not recommended. We do not recommend you to take advantage of your client but work hard for your client and build your portfolio with honesty and confidence. Earn experience and earn money.
Your main responsibility as a stockbroker is to make sure you investigate the financial product or service you are offering to your client. What is the product and whether it is a good deal for your client or not? You can also start working as an assistant with a professional and experienced stockbroker. In the end, the stock exchange is a risky business; it involves non-transparent prices, unethical broker practices, and hidden fees for the clients. Always work with honesty and determination.
also read: Best Entry Level Finance Jobs in 2021