67% of American adults who have a financial advisor say that they feel prepared for the next recession. Only 38% of people without an investment broker feel the same.
Would you like to have that kind of impact on your clients’ financial well being and peace of mind?
Becoming a broker can be a profitable career choice while allowing you to make a difference in people’s financial future. If you’re wondering how to become a broker dealer, this guide will tell you what you need to know.
What Is a Broker Dealer?
A broker dealer can also be called an investment broker, stockbroker, or financial advisor. A broker acts as the middleman between buyers and sellers of financial securities like stocks and bonds. Brokers manage their clients’ investment portfolios and provide investment advice.
Many broker dealers work in investment management firms like Edward Jones, Charles Schwab, or Merrill Lynch. An investment broker can also work as an independent consultant.
All broker dealers must have a license. For higher-level positions, an advanced degree and certifications are often necessary.
Education
A bachelor’s degree is usually the minimum level of education you need to become a broker dealer. Choose a major that will prepare you to understand the risks and techniques for working with money. Finance, business, economics, and accounting are some good options. Try to find a program that offers courses focusing on financial and investment planning.
You may want to continue your education with a master’s degree in business administration (MBA) or a finance-related field. A master’s degree will increase your chances of getting hired. It may also help you to advance in your career, work with bigger clients, and make more money.
To maximize the benefits of an MBA program, look for one that has a curriculum developed in partnership with the Certified Financial Analyst Institute.
Some companies will support going to school while working. They may even pay for some of your tuition. If you’re on the job market before starting your master’s degree, look for a company that will help you with your continuing education.
Exams, Licensing, and Registration
To work as a dealer broker, you need a license. You must pass two exams and register with the Financial Industry Regulatory Authority (FINRA) as a firm representative to become licensed.
SIE Exam
The first exam is the Securities Industry Essentials (SIE) Exam. FINRA administers this exam. It assesses your knowledge of basic concepts that are fundamental to the securities industry.
Series 7 Exam
After you pass the SIE, you need to pass the General Securities Registered Representative Examination, also called the Series 7 exam. FINRA administers this exam also. It tests your basic knowledge about buying and selling investment options.
You must be sponsored by an established financial institution to be eligible to take the Series 7 exam. Getting sponsorship can be somewhat complicated because most securities firms require you to have your Series 7 license before they hire you.
Here are 3 strategies to get sponsorship.
1. Internships
While you’re in college, look for internship opportunities. If the company thinks you’re a good fit, they will probably sponsor you for the Series 7 exam.
2. Prioritize Series 7 Sponsorship in Your Job Search
Try to find companies that frequently sponsor Series 7 candidates. You may also be able to find firms that don’t list Series 7 as a prerequisite for hiring lower-level positions. Taking a job at one of these companies will allow you to get noticed and earn their sponsorship.
3. Get Other Licenses First
Getting other licenses before you take the Series 7 exam increases your chances that a sponsoring firm will hire you. Potential exams include Series 65 to become a registered investment advisor, Series 63 to become a uniform securities agent, or Series 3 to work in the commodities futures market. These qualifications demonstrate your commitment to the industry and your ability to pass exams.
After you pass the SIE and Series 7 exams, you can register with FINRA as a General Securities Representative.
Additional requirements
Some states and employers require you to pass the Uniform Securities Agent State Law Exam (Series 63). This exam covers state laws for broker dealers. You don’t need a sponsor for the Series 63 exam.
After you pass the Series 63 exam, you can register with the Securities Commission in your state.
Registration Exemptions
Working as an unlicensed broker dealer can have serious professional and legal consequences. There are some broker dealer registration exemptions, though, for people who buy and sell securities but don’t fulfill all the functions of a broker (“finders”). Some mergers and acquisitions (M & A) brokers are also exempt.
The criteria in the regulations are not always clear, so it’s safer to get registered.
Finding a Job
When you start looking for a job, you may be tempted to apply for every position you see. You’ll be better off in the long run by being more selective.
Try to find firms that will sponsor your Series 7 exam if you aren’t already licensed.
Look for a position that will let you work with the types of securities you’re interested in. If you want to manage large transactions, apply to firms like Merrill Lynch or JP Morgan. If you’re more interested in the customer service side of the financial industry, apply to companies like Fidelity Funds or Charles Schwab.
Finally, think about the income and salary structure you’re comfortable with. Some positions pay primarily by commission. Others offer a more consistent salary, but the pay is generally less than a commission-based position. A position with a lower starting salary may also be attractive if there are benefits like the employer paying for your MBA.
Additional Steps
To make yourself as competitive as possible, you can pursue several additional steps.
Be Prepared to Work Your Way Up
Your first job will probably be a junior position. You will need to prove yourself to advance to senior status. Instead of focusing on starting salary, look for training opportunities and possibilities for internal promotion.
Financial Planner and Analyst Certification
Certified Financial Planner (CFP) status gives you credentials for creating financial plans for your clients. Certified Financial Analyst (CFA) status shows that you can research, analyze, and manage investment options. These certifications increase your chances of getting hired. They will also help you advance in your career.
Build Your Social Skills
A successful investment broker needs excellent communication, customer service, and sales skills. Take advantage of opportunities to participate in social activities with different types of people. Consider taking classes in public speaking or joining an organization like Toastmasters.
Now You Know How to Become a Broker Dealer
Becoming a broker takes planning and effort, but a career as an investment broker can be financially and personally rewarding. A bachelor’s degree will get you started. Then you need a license and the all-important first job. Pursuing additional educational opportunities will increase your marketability.
Now that you know how to become a broker dealer, you’re ready to take the first step towards your new career.
Do you have more questions about career and professional development? Take a look around at the rest of our posts. We’re sure you’ll find answers to all of your questions!
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