# data[].attributes.attachment_link.readable_text
Buying stocks isn't like buying groceries or books. There are no stores on every corner where stocks are sold, and the average person can't buy stocks simply by handing money to a cashier.

Stocks are bought and sold through stock markets, such as the New York Stock Exchange and NASDAQ. And for the average person to buy stocks via these exchanges, they usually need a middleman to actually execute the trade. This middleman is called a stockbroker.

These days, the actual execution of stock trades for individual investors is often carried out electronically by a discount brokerage firm, such as Fidelity, Scottrade, E-Trade, or Charles Schwab. But many trades, especially those of large institutional investors, are still handled by human brokers.

Stockbrokers are usually very well-versed in the markets and can offer advice on the best time to buy and sell. It is their job to find clients the best possible price. In exchange for his executing the trade and offering advice, a stockbroker then gets a commission for his work, in the form of a flat fee or percentage of the value of the transaction.

In the age of online trading, there is less demand for human stockbrokers. But there may be instances in which an investor wishes to work directly with someone else to execute a stock trade. For example, they may want to work directly with a broker to ensure the sale is executed at a specific price, or have multiple transactions they'd like executed in a specific order.

While there are no specific educational requirements for becoming a stockbroker, a person who wants to enter this profession should consider pursuing an undergraduate degree in business. Many stockbrokers also have a Masters in Business Administration (MBA) or a Masters in Finance. It also helps if you have some education in mathematics, statistics, and quantitative analysis.

Stockbrokers will often start working for a brokerage firm or bank in a different role (many start as college interns) then gain on-the-job experience. To become a broker, they must show that they have a deep understanding of financial markets, regulations, and accounting practices and then pass the General Securities Representative Exam, commonly known as the Series 7 exam, which is administered by the Financial Industry Regulatory Authority (FINRA). To take this exam, a person must be sponsored by a firm that is a member of FINRA or a similar self-regulatory organization (SRO).

The Series 7 exam is difficult and consists of 250 multiple choice questions that must be completed in 360 minutes. After October 1, the test will be 125 questions and 225 minutes long, but must be combined with a separate Securities Industry Essentials Exam. That exam will consist of 75 additional questions and lasts 105 minutes.

These exams will permit a broker to buy and sell most securities, may be other exams required to trade certain things. For example, someone who wants to buy and sell municipal bonds may have to take the Series 53 exam. There are also other required exams, including the Series 66 and Series 63 exam to be registered in a state.

It was once impossible to invest in stocks without going through a human stockbroker. That's no longer the case. Now, most investors can buy and sell stocks and manage their investment portfolio without dealing with another person. Discount brokerage companies allow an individual to trade stocks using an online platform, usually for less than $10 per trade. (In fact, these companies have been recently undercutting one another with lower and lower fees.) It's even possible now to trade via a smartphone app.

Discount brokerages have broken down barriers and lowered the cost of investing for most people, ensuring that trading stocks is not an activity only practiced by the wealthy.

This is not to say that stockbrokers can't provide a valuable service. They can help execute complicated trades and provide advice to investors. But if you're an average investor who wants to simply purchase 20 shares of Coca-Cola, a human stockbroker probably isn't necessary.

There will always be people and institutions who need assistance in buying and selling stocks. There are millions of stocks and other securities trading on the New York Stock Exchange alone every single day, and not all of them will be executed via computer.

But there's no question that the number of people working as stockbrokers has been on the decline. FINRA reported 630,132 registered representatives as of December 2017, down from 672,688 a decade ago. FINRA reported more than 5,000 member firms in 2007, but 3,835 at the end of 2016.

# data[].attributes.attachment_link.description
What a stockbroker does, and how to become one. Job prospects for stockbrokers in the age of internet trading and discount brokers.

# data[].attributes.attachment_link.readable_text
What is a 'Stockbroker'

A stockbroker (also known as a registered representative, investment adviser or simply, broker) is a professional individual who executes buy and sell orders on behalf of clients for stocks and other securities in a listed market or over the counter, usually for a fee or commission. Stockbrokers are usually associated with a brokerage firm and handle transactions for retail and institutional customers alike. Brokerage firms and broker-dealers are also sometimes referred to as stockbrokers themselves.

BREAKING DOWN 'Stockbroker'

It used to be that only the wealthy could afford hiring a broker to have access to the stock market. However, advances in technology, such as the internet, gave rise to discount brokers that allowed small investors to trade the stock markets at a small fee. Because of discount brokers, nearly anybody can afford to invest in the stock market, even individuals who are based overseas. A recent development is the introduction of roboadvisers, algorithmic investment management carried out via web or mobile app interface with minimal human interaction, for little to no ongoing cost. One downside to these discount platforms is the lack of personalized service only a dedicated stockbroker can offer.

Educational Requirements

A bachelor's degree in finance or business administration is typically required for stockbrokers. A deep understanding of financial laws and regulations, accounting methods, principles of economics and currency, financial planning and financial forecasting are necessary to ensure success in the field.

Various Country Licensing Requirements

Different countries have different credentialing requirements for stockbrokers. In the United States, registered brokers must hold a minimum of the FINRA Series 7 and Series 63 or 66 licenses, and must be appointed with a registered investment firm. Floor brokers in the U.S. must also be members of the stock exchange where they are housed. 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). In Hong Kong, applicants have to be working for a licensed brokerage firm and pass three exams with the Hong Kong Securities Institute (HKSI). However, passing all three exams does not guarantee a license because it still has to be approved by the financial regulatory body.

In Singapore, becoming a trading representative requires passing four exams, Modules 1A, 5, 6 and 6A, administered by the Institute of Banking and Finance. A license is applied through the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX). In the United Kingdom, stockbroking is heavily regulated and brokers must achieve qualifications from the Financial Conduct Authority ( FCA). Precise qualifications will always depend on the specific duties required of the broker as well as his employer.

Global credentials are also becoming increasingly popular as signals of legitimacy and financial acumen. Examples include the certified financial planner ( CFP) and chartered financial analyst ( CFA) designations, among several others.

# data[].attributes.attachment_link.description
A stockbroker is an agent or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.

# data[].attributes.body
By: Evan Fisher

# data[].attributes.attachment_link.readable_text
Once upon a time, being a stockbroker was comfortable, genteel and lucrative.

In the "old world," brokers, as members and owners, controlled the exchanges. Exchanges were run as quasi-non-profit clubs or utilities to support their members. Exchanges had monopoly on liquidity and brokers controlled access. By providing investors access to markets, brokers earned commissions and also received trading fee rebates from the exchange. A long time ago, brokerage commissions were even fixed (remember?). Brokers thus competed on the basis of service and relationships, rather than price.

The introduction of negotiated commissions in the U.S. in 1975 (eventually followed by most other markets in the world) marked the beginning of constantly increasing competition and challenges for brokers. In the last 10-15 years, this process accelerated.

Capital markets experienced a revolution driven by technology and radical change in market structure.

Electronic trading dramatically increased trading volumes and liquidity and slashed the cost of intermediation and broadened access to markets. Exchange demutualization led to a dilution of the status of exchange member. Access to liquidity was "democratized". Liquidity became fragmented among exchanges, alternative trading platforms, lit and dark pools and so on. Exchange "specialists" (market-makers) disappeared.

In many ways, brokers and exchanges now compete with each other: brokers may internalize order execution, they may use alternative exchanges or dark pools; established exchanges offer "direct market access" (DMA) and are occupying increasing space in the investment process, both pre-trade and post-trade.

Life has become very tough for brokers.

Evolution of the securities industry

The US and UK markets - New York, Chicago, London - are pretty much the "laboratory" for the securities industry worldwide. We shall draw on their experience to illustrate the evolution of the securities industry and extrapolate to other geographies.

The "sell-side" securities industry (i.e. the brokers), has been experiencing deteriorating economics, due to pricing pressures, increasingly stringent regulation, and changes in market structure.

Their clients - the asset managers - the "buy-side" - drive demand. The buy-side itself has been experiencing increasing pressure due to a changing business mix.

Traditional, active asset managers, who charge investors significant fees (~1% of assets under management), and could thus afford to pay brokers full commissions for full service , i.e. execution and fundamental equity research, have steadily lost market share to low-cost passive managers.

Passive management - index funds and exchange-traded funds - has been growing very fast: in the U.S. passive has already captured around 20% of mutual fund outstanding assets; by now, new asset inflows into passive funds outstrip those into active funds. Relative to active funds, which is "1% business", passive funds charge much smaller asset management fees (0.1% basis of assets for a large cap ETF) and clearly cannot afford to spend as much on brokerage services. They choose low-cost execution, such as "direct market access" (DMA) and do not use traditional research. The consequence is pricing pressure for the sell-side, as illustrated by the declining commission rate on institutional equity trades. At the beginning of the century, institutional commissions were around 5 cents/share. They are now around 1.5 cents / share, a 70% decline in about a decade...
Erosion of institutional commission rates Source: Bernstein analysis
A historical perspective reveals that the securities industry, which was a growth industry in the 1980's and 1990s, has become, since 2000, a highly volatile business with no clear growth trend. Industry revenue cycles reflect overall market conditions, as tracked by the S&P500 index.
Revenues of the securities industry Source: SIFMA, Bernstein analysis
Not surprisingly, the securities industry has been undergoing major consolidation. Since 2000, the number of brokerage firms in the US has fallen by almost 25%.

So, in view of these difficult conditions, what can brokers do?

How did US brokers' adapt their business models? What lessons can brokers in other countries extract from US experience?
Institutional Brokerage Business Models
Institutional brokerage business models may be classified into several broad categories.

"Traditional" brokers are defined as those that offer full service intermediation, including investment banking, research, trading and sales and asset management.

Execution and "quant" brokers: they offer low-cost, high - speed, high-tech execution platforms.

This type of broker serves passive investors seeking low-cost execution and/or highly sophisticated, high-tech players.

Research firms: produce analysis and investment ideas. They may get paid via commissions or hard dollars.

Service providers: These firms provide services or technology to the investment process and get paid via commissions

"Disintermediators": new business models, such as Liquidnet, which dis-intermediate the buy-side and the exchanges

The table below (click to expand) provides a more detailed description of this typology of institutional brokerage business models and examples of successful firms in each category:

It is clear the institutional brokerage business requires specialization. Successful firms have each found a unique combination of customer focus and products/services that match the needs of the targeted customers.

On the issuer side, firms may pursue large caps, mid-caps or small cap firms, or they may focus on certain industry sectors such as technology, health care, financials etc. or other niches.

On the investor side, firms may focus on traditional active asset managers, on hedge funds, on "quants" or "indexers".

Regarding products/services firms also need to specialize: while some have remained traditional full-service, many have become narrowly focused on areas such as research e.g. Bernstein Research or execution for professional traders e.g. Interactive Brokers.

Following the 2008 financial crisis, it has become clear that minimizing risk-taking and proprietary trading is a very good idea. Successful forms have learned to focus on customer flow earned by offering superior service, rather than by taking risk

An interesting category in the typology is "Disintermediators" with one prominent example: Liquidnet.

While Liquidnet is technically a broker, in some ways it performs the functions of an exchange.

"Liquidnet is the global institutional trading network. We connect more than 700 of the world's top 4 asset managers to large-scale equity trading opportunities in 42 markets across the globe. Asset managers rely on Liquidnet to enter and exit their investments more efficiently".

Liquidnet accesses "latent liquidity" - it matches buyers and sellers anonymously, based on their intention to trade large blocks of shares (typically around $15 million per trade) and executes the matched trade on the exchange without market impact. Obviously, execution in these conditions is little more that "printing the trade" to meet regulatory requirements.

To sum up, institutional brokerage as a business is under pressure - the industry is likely to continue consolidating. The winners will be those firms that specialize and innovate.
Retail Brokerage Business Models
In both developed and emerging economies, populations are rapidly aging. This demographic change requires steady growth in retirement savings, since "pay-as-you-go" , or "social security" retirement are under pressure everywhere. The need for retirement savings drives increasing demand for investment services and financial advice. Thus, retail brokerage promises to be a growth business overall.

The nature of retail brokerage has changed a lot in the last 20 years or so: the business has "democratized" and evolved from "transactional" towards holistic financial advice.

We will first address the "advisory channel", i.e. firms that deliver investment services through brokers or financial advisors.

Traditionally, brokerage clients were either wealthy people and/or people with a passion for the stock market or speculative streak (most people saved at the bank....). Brokerage clients usually expected the broker to give them "stock tips", help them "pick stocks" (and bonds) and make money fast. Savvier clients asked the broker to help them manage their portfolio, seeking diversification and the right asset allocation (e.g. stocks vs. bonds). In this business model the broker earns commissions on trades. This compensation model may lead to excessively active trading - "churning the account" which is obviously against the client's interest.

In the 1980s, starting in the US, the industry changed: brokers became primarily "asset gatherers" while

the investment responsibility (picking securities) migrated to professional asset managers. This drove the rapid growth of mutual funds. Basically brokers understood that stock picking for their clients could be a risky game - a client who lost money may blame the broker and leave. It became much more attractive for the broker to collect client assets, offer asset allocation and diversification advice and then farm out the money management to several external asset managers and mutual funds in the so-called "open architecture". The broker's value proposition thus became: customer relationship management, asset allocation (based on customer age, income and risk profile), selection of mutual funds/asset managers. In this business model, broker compensation is a combination of sales commissions and "retrocessions" paid by the "manufacturers", the asset managers to the distributors, the brokers. The retrocessions are typically about half of the asset management fee.

By now this business model has become common in Europe and elsewhere. A number of issues have surfaced:

Is the broker an "advisor" for the client or a salesman for the manufacturer?

To what standards should the broker be held by regulators : a "fiduciary standard" - i.e. do the best for the client, in particular minimize the expenses of investing, or a simple "suitability standard" - i.e. as long as the broker sells products suitable for the client's profile (e.g. selling penny stocks or futures to an unsophisticated client would be "unsuitable")?

Does broker compensation via retrocessions from asset managers create a conflict of interest and the risk that brokers will push products with high fees (and retrocessions) rather than the products that are best for the client?

The Top 50 Wealth Managers
The annual Top 50 Wealth Managers list is proof the industry continues to boom. This year's Top 50 Wealth Managers oversee a combined $224 billion in assets. That's roughly 15% of the entire RIA market. To address these problems, brokerage firms have introduced "wrap programs", in which the client pays a single comprehensive fee, a % of assets under management. This fee is meant to pay for all of the advice, transactions and asset management fees. Note that manufacturers retrocessions continue, which still creates a conflict of interest and the suspicion that brokers will select those funds that pay the distributor most. Typically retrocession rates are highly confidential.This entire debate is being complicated (or perhaps radically simplified) by the rapid growth of exchange-traded funds (ETF). In an ETF, the management fee is very small, ranging from around 0.75% for exotic products to as little as 0.05%. ETFs are exchange-traded, like a stock. Brokers still earn a commission but commissions have become very small as a result of discounting. So, there is no way to pay for the distribution of an ETF.

Many clients opt for portfolios of ETFs. So, the only way to pay for a broker's advice is by charging explicit fees.

What about financial advice?

Clients want and appreciate advice, but have often resisted paying for it explicitly. Strangely enough, they have preferred to pay for it indirectly, through higher asset management fees

Increasingly, regulators in Europe and North America are forcing transparency and explicit fees. They are also demanding higher professional standards for advisors (e.g. UK Retail Distribution Review)

These pressures will force advisors to deliver more value to their clients. There is plenty of evidence that advisors can deliver value. The value is not in "stock picking", since by now, most people understand that markets are efficient. Rather the value of the advisor is more holistic, more planning-oriented: helping the client plan his financial life, setting goals, sticking to a discipline of saving money, investing in a disciplined manner, through careful diversification , asset allocation that reflects stage-in-life, income and risk profile, using methods such as dollar-cost averaging and avoiding "market-timing". In addition, the advisor must help the client take advantage of all tax incentives and show him how to manage financial risk, through life insurance and long-term care insurance.

Another important issue is the organizational affiliation of the advisor. Brokers or advisors may be "employee" or independent financial advisors.

Employee advisors usually work exclusively for their firm and follow the instructions of their supervisors.

Employees get significant support from their firms, including training (very important), supervision, regulatory compliance, office space, marketing support, sales assistants etc. The firm must pay the cost of this support. As a result advisor compensation or payout tends to be in the range of 30-50% of the production, i.e. the revenue they generate for the firm. The profit margin of the firm might be in the 15% of revenue range.

Independents are pretty much on their own. Their firms only offer a regulatory and technology platform and access to products. The advisor typically pays for his/her own office and infrastructure. Advisor payout is much higher, typically 80-90% of production. The producer is the "brand"

The independent model can be very attractive to an advisor who has completed his training (usually as an employee of a wirehouse), has already built a book of business and wants to go on his own.

The independent model however cannot finance training programs, since these firms make a very skinny profit margin, typically around 5% (or less) of revenues. So, the independent channel "feeds off" the employee channel and attracts advisors who are either pushed out or seek a different lifestyle or simply a higher payout.

Today the US brokerage industry accommodates multiple types of firms, as illustrated in the table below

Retail Firms US business models and headcount:

The traditional firms, wire houses and regional firms, have consolidated over the past 20 years. Today only 5 giant wire house firms dominate the business. There are still a few regional brokerage firms, which probably will consolidate further. All this consolidation has created turmoil and many advisors have left and moved to Regional Investment Advisors, often boutique firms, or to Independent Broker-Dealers or Financial Planning firms.

With the overall pressure on fees, smaller accounts cannot afford an advisor.

The direct channel offers all types of investment products, but without the benefit of an advisor. It is suitable for smaller investors or "do-it-yourself" types. Some firms in this channel offer very sophisticated online interfaces, which can replicate some of what an advisor does. Others offer products which incorporate some light "advice-like" features: for instance target-date funds. Very likely, technology will help the direct channel expand and offer more to the client.

Nevertheless, we believe that many clients will continue to seek a human advisor, be it for the "hand-holding" value, the "trust factor" or simply convenience.

We have focused on the US retail brokerage industry, which is considered as a model and trendsetter around the world. We believe other countries are likely to evolve in similar directions, with one key difference - banks. Continental European systems and Latin American systems tend to be dominated by banks. Banks usually try to thwart open architecture, because they would prefer to distribute the products of their captive managers and make money in both manufacturing and distribution. This bank resistance is formidable but it will erode over time under pressure from clients and competitors.

To sum up our forecast is simple: retail brokerage will be a growth business for the foreseeable future. We are likely to see the types of business models outlined above emerge and develop in most countries, as the need to retirement savings continues to create demand.

# data[].attributes.attachment_link.title
The Brokerage World Is Changing, Who Will Survive?

# data[].attributes.attachment_link.description
The brokerage world is under pressure.; to survive, firms will need to specialize and innovate.

# data[].attributes.attachment_link.readable_text
Learn details about any occupation including what you might do on the job, how much you might earn, and how much education or training you might need.

Get started by entering a keyword for a career, a job title, or a type of work in the box below. Then enter your location and click "Search". Or, click "List of Occupations" to select from a list of careers.

# data[].attributes.attachment_link.description
Create, customize, and save an Occupation Profile for any one of more than 800 careers.

# data[].attributes.body
1) Executes buy and sell orders for clients for a commission
2) The middleman
3) Discount brokerage firms are 100% electronic (E-Trade, Charles Schwab)
4) Most investments are done by human brokers
5) Offers advice and finds best prices
6) Rarely anything like the Wolf of Wall Street

# data[].attributes.body
1) Office Space (desk, cubicle, office)
2) Competitive environment
3) Chaotic, stressful

# data[].attributes.body
1) 6% growth in jobs
2) Electronic trading is becoming more popular
3) Passive management has been growing fast
4) At the beginning of the century, institutional commissions were around 5 cents/share. They are now around 1.5 cents / share, a 70% decline in about a decade

# data[].attributes.body
1) As many math classes
2) Business Law
3) Public Speaking
4) Accounting

# data[].attributes.body
1) Active Listening
2) Persuasion
3) Reading Comprehension
4) Critical Thinking
5) Speaking

# data[].attributes.headline
    Training and                  Education 

# data[].attributes.subject
    Training and                  Education 

# data[].attributes.body
1) Bachelor's degree
2) No prior job experience
3) 1-12 months on the job experience

# data[].attributes.body
This career is for me because I like being under pressure. I believe I am a pretty persuasive person as well. I like convincing people to buy a product. I like high energy environments.