Michigan Occupational Information System
 #111 - STOCKBROKER  

Stockbrokers counsel clients regarding investment opportunities, market conditions, and the history and prospects of various corporations. The client may be an individual, a group, or a business. The Stockbroker then proceeds to buy, sell, and/or transfer stocks and bonds for the client. Stockbrokers are also known as Security Sales Agents, Registered Representatives, Account Executives, or Investment Brokers.  

NATURE OF THE OCCUPATION

Stockbrokers may:

Analyze market conditions to determine buy-and-sell prices  

Keep informed about political and economic trends that influence stock prices  

Study corporate annual and 10-K reports and calculate ratios, such as the stock price to earnings ratio, to determine the best prospects for profit on stock purchase  

Meet with and counsel clients on the best investment opportunities  

Develop portfolios regarding investments for clients with particular needs  

Record transactions accurately and keep clients informed about those transactions  

The equipment and work aids used may include:

OCCUPATIONAL SPECIALTIES

Stockbrokers may specialize in serving one type of customer such as an institution. They may also specialize in certain types of investments such as mutual funds, common stocks, commodities, and bonds. Some specialties are:  

250.257-018 SECURITIES SALES AGENTS give information regarding stocks, bonds, market conditions, and the history and prospects of various corporations to prospective customers.  

162.167-034 BROKER'S FLOOR REPRESENTATIVES buy and sell securities on the floor of the stock exchange. They also inform their broker of market changes, stock purchases, and sales affecting customers' accounts.  

162.167-038 SECURITIES BROKER  

In addition to learning about these specialties, you may also find it helpful to explore the following MOIScripts:  

WORKING CONDITIONS AND REQUIREMENTS

Stockbrokers usually work in an office in which there is a great deal of activity. They have access to "quote boards" or computer terminals that provide continuous current information on the prices of securities.  

Stockbrokers may belong to The National Association of Securities Dealers. They are subject to the regulations of The Securities and Exchange Commission, The Stock Exchanges, the firm for which they work, and the particular state requirements.  

Although a Stockbroker may work an average 40-hour week, many hours are often spent making client contacts after the trading day. The beginning Stockbroker may spend long hours building up a clientele. Some financial services sales representatives work exclusively inside banks providing service to "walk-in" customers.  

Broker's Floor Representatives occupy "seats" on the stock exchange. These "seats" must be purchased at costs ranging from tens to hundreds of thousands of dollars. In most cases, especially in large investment firms, the cost of the "seat" is paid by the firm. Floor Traders (those who trade only for themselves) may have to pay the full cost of their "seat". 

You Should Prefer:

• Activities dealing with things and objects  

• Activities that vary from day to day  

• Activities that involve analysis of numbers  

You Should Be Able To:

• Understand the meanings of words and ideas  

• Demonstrate initiative, ambition, and leadership  

• Maintain integrity and honesty  

• Communicate stock market and financial information well  

• Maintain a well-groomed appearance  

• Make decisions and judgments using logic and reasoning  

• Influence people in their judgments about investments  

• Work well with all kinds of people  

• Work well under pressure  

• Perform arithmetic operations quickly and accurately  

• Plan, direct, and control an entire activity  

• Perform a variety of duties which may change often  

Math Problem You Should Be Able to Solve:

Tom Lewis owns 150 shares of Allied Insurance Company. Lewis bought the stock at $21.00 a share. The par value of each share is $25.00. The book value is $14.75, and the current selling price is $22.50 a share. The total market value of Tom's stock is?  

Reading Example You Should Be Able to Read and Comprehend:

Appraised values should be taken as a definite guide to current purchase or sale only if they exceed or fall below the market price by at lease one-third. In other cases they may be useful as a supplemental fact in analysis and investment decisions.  

Writing Example You Should Be Able to Produce:

Develop an investment portfolio for a client.  

Thinking Skill You Should Be Able to Demonstrate:

Should be able to demonstrate excellent analytical skills in analyzing market conditions and consulting clients.  

Training in the use of computers is important. In Michigan, Securities Sales Agents must be licensed by the Corporation and Securities Bureau of the Michigan Department of Consumer and Industry Services. To become a registered Securities Agent, applicants must be at least 18 years old; pass the National Association of Securities Dealers' Uniform State Securities Law examination; submit a fingerprint card; and pay the appropriate fees.  

EDUCATION AND PREPARATION OPPORTUNITIES  

NOTE: On-The-Job Training provided by the employer or an Associate Degree (two years of study beyond high school) or a Bachelor's Degree (four years of study beyond high school) may qualify a person for this occupation.

The following education and preparation opportunities are helpful in preparing for occupations in the MOIScript:  

***SCHOOL SUBJECTS***

0600 BUSINESS , 0700 CAREERS , 0900 COMMUNICATIONS , 1000 COMPUTERS , 1100 ECONOMICS , 1700 GOVERNMENT , 2200 MATH , 3000 SOCIAL STUDIES

***VOCATIONAL EDUCATION PROGRAMS***

There are no Vocational Education Programs related to this MOIScript  

***POSTSECONDARY PROGRAM***

018 BANKING & FINANCE

Programs in Banking and Finance are designed for those who want to work in financial institutions. Such programs are also useful to present employees who desire to upgrade their skills. Banks, savings and loan associations, credit unions, trust companies, credit agencies, and lending institutions are among potential employers.  

Courses vary from school to school and depend on the degree level of the program. Courses may include:  

Search for a College and/or Instructional Program

***APPRENTICESHIP OPPORTUNITIES***

There are no Apprenticeships related to this MOIScript  

***MILITARY PROGRAMS***

There are no Military Programs related to this MOIScript    

E-Learning Courses and Programs

OPPORTUNITIES FOR EXPERIENCE AND METHODS OF ENTRY

Postsecondary programs in banking and finance may offer a co-op position through which experience may be gained. Part-time work developing sales ability and good communication skills is important. Some individuals combine selling securities with selling insurance.  

School-to-Work opportunities include:

informal apprenticeships  

mentorships  

job shadowing experiences  

touring a local Stockbroker employer  

internships  

volunteer work with a Stockbroker employer  

community service work with an agency  

Persons desiring to be Stockbrokers often enter firms as trainees and prepare for examinations given by the Securities and Exchange Commission or the National Association of Securities Dealers, Inc. An individual with no experience may seek sponsorship by a member of a securities firm. Some positions may be obtained through college placement centers or newspaper want ads.  

In addition, you should access and search the Internet's on-line employment services sites such as:  

Michigan Talent Bank

Michigan Jobs & Career Portal

Classifieds Employment  

Yahoo! Careers

MONSTER.COM  

You should also enter an electronic resume on these on-line services.

EARNINGS AND ADVANCEMENT

Stockbroker trainees and the firms for which they will work usually negotiate salaries. Until trainees meet licensing requirements, they are often paid a salary. Once licensed, most Brokers' earnings are based on commissions from sales of securities. Most firms allow their Brokers to keep 30 to 45 percent of the commissions they generate. Institutional Brokers collect a smaller percentage but have higher dollar volumes and get larger bonuses. To provide a steady income during market slumps when buying and selling are at low volumes, many firms pay Brokers a "draw against commission" (a minimum salary based on commissions they are expected to earn).  

Nationally, in 1998, the median annual earnings for Stockbrokers were $39,416.  

according to a 1998 national survey of stockbrokers, very experienced stockbrokers earned an average of $168,700 per year, with earnings ranging from $66,800 to $204,300 per year. Registered representatives ("RR's) who were licensed and had passed the National Association of Securities Dealers exam earned an average base salary of $47,200.  

Institutional Brokers usually deal with large institutions with millions to invest.  

Workers such as Research Analysts, Government Securities Traders or Block Traders often receive significant bonuses that can match or exceed their base salaries.  

Brokers in the New York area generally have the highest earnings in the business. Those who own a seat on the New York Stock Exchange (a seat is a license or permit to deal in stock) had estimated average annual salaries between $200,000 and $300,000 per year.  

Typically this job is a commission-based position. Wages can be greatly increased by the amount of commissions a Stockbroker earns. Since most Stockbrokers are employed by large companies with offices in several states, earnings of experienced Stockbrokers in Michigan are similar to those of Stockbrokers employed nationally.  

Stockbrokers may also receive a bonus depending on their production and the policies of the individual firm.  

Depending on the employer, Stockbrokers receive paid vacations and holidays; life, accident, and disability insurance; and retirement plans. In addition, they usually have stock options and savings plans. These benefits may be paid for, at least in part, by the employer.  

Advancement for Stockbrokers usually consists of an increase in the number and size of the accounts they handle. They may also advance to management positions and supervise securities salespersons or advance to become partners with their employer.  

EMPLOYMENT AND OUTLOOK

Nationally, there were about 263,300 Stockbrokers employed in 1996. About 24.3% of them were self-employed and affiliated with firms which "clear" (process) trades for them. The industry distribution for Stockbrokers looked like this:  

The demand for Stockbrokers depends on an expanding economy. Competition for job openings is keen. Most job openings are expected to be created by replacement needs. Furthermore, many security firms are increasingly providing information and services via Web sites (Home Pages) on the internet for "direct" access by individuals who have PC's and Modems. Thus, individuals may buy and sell stocks, bonds, and mutual funds without any assistance from Stockbrokers. This will adversely affect the overall employment demand for Stockbrokers. At the national level, about 10% of the Stockbrokers employed by securities firms are women.  

In Michigan, there are about 4,250 Stockbrokers employed. Stockbrokers are employed by brokerage firms, investment bankers, and mutual fund companies as well as by some commercial banks and savings and loan associations. Some Brokers represent a small number of large firms with main offices in large cities.  

State of the economy has a direct bearing on the demand for people employed in the securities industry. During a plunge in the stock market, the demand will be less. However, as economic growth and personal incomes increase the funds available for investment, employment of securities sales workers usually expands. The growth of on-line investment by individuals via the Internet has influenced the growth of this occupation. Stockbrokers are essentially middlemen, who provide investment information. Investment firms are now providing their own investment information on-line for access by individual investors. The ability of investors to directly choose investments on-line will decrease the need for stockbrokers. According to one 1999 study, on-line trading accounted for 27% of all retail equity trades and 8% of all retail commissions.  

MICHIGAN'S EMPLOYMENT OUTLOOK TO 2005  

SOURCES OF ADDITIONAL INFORMATION

Printed Occupational information is available upon written request from sources below.  

SUMMARY PROFILE

The occupation of Stockbroker can be summarized by the following:

MOISCRIPTS are Copyright 2003, Michigan Department of Career Development