stock broker - financial consultant -
financial advisor - securities broker
How do I become a stockbroker? First you have
to define the term "stock-broker".
financial consultant, financial advisor, securities broker -- these are all
terms loosely used by individuals and brokerage firms alike, to refer to a
regulatory term of "registered representative" -- or shortened to "registered
rep". A registered rep is an agent of a Broker/Dealer who is paid commissions on
the trades placed through the firm on behalf of their customer.
A stockbroker who wants to offer general (or a "full line" of) securities would
sit for the Series 7 exam. The Series 7 exam
was created by the New York Stock Exchange and is administered by the Financial
Industry Regulatory Authority ("FINRA"). Most Series 7 reps are referred to as a
Registered representatives, however,
may want to "limit" their registration and offer only a specific group of
securities. As an example, "mutual funds", or investment company products
representatives, sit for the
Series 6 exam—and only offer comments on mutual funds; Series 22 representatives only offer
direct participation programs, and Series 62 representatives only offer
corporate securities. Some people sit for the Series 6 or Series 62 exam to get
into production faster, and then take the Series 7 later on.
Stockbrokers often offer commodity futures, commodity limited partnerships or
"managed futures". A separate registration is required, however, and that is
having passed the Series 3 exam and being registered with the National Futures Association ("NFA")
as an "Associated Person". The securities firm that the stockbroker is
registered with must also be registered with the NFA / CFTC in order to offer
You need to interview with the
kinds of firms that you feel will provide you with the best opportunity to be
successful and offer the kinds of securities you would like to work with. If
you're looking to lower your trading commissions or just to trade your own
account, most firms will not be interested in hiring you.
Firms are looking for individuals who can create
commissions for the firm. If you're well contacted or are "sales oriented" and
can generate new leads and accounts, firms like Merrill Lynch, JP Morgan, etc., will be a good fit -- since your income will depend upon
the commissions you generate.
If you want to be "service oriented" and receive a
salary, you will want to interview with firms like Fidelity Funds or Charles
Schwab. In either case, arrange directly for an interview with the
branch/location where you would like to work; generally, brokerage firms will
not pay a relocation allowance for a new representative. If the firm wants you
-- they will sponsor you for the Series 7 exam. Most FINRA exams require a
sponsor in order to sit for the test.
Some think having passed the
Series 7 exam prior to
interviewing makes the candidate more likely to get a job as a stockbroker. It
might -- if two candidates are interviewing and are identical in all skills
except one has passed the Series 7 and one hasn't. What the firms are looking
for are the right skills.
When you're new to the
securities business, though, you want to learn as much as you can before
interviewing. One of those ways, if your situation allows, is to pass any exam
that you'll probably need in production before your interview -- if your
situation allows. You can sit for the
Commodity Futures Exam, the Series 63 Uniform State Laws Exam, and the Series 65
Uniform Registered Investment Advisor Exam without a sponsor. This also saves
the Broker/ Dealer some money and (some think) shows the candidate is motivated.
The current exam fee for the Series 7 exam is $290.00, the Series 3 is $115.00,
the Series 65 is $135.00, and the Series 63 is $96.00. You have two years from
the date you pass the exam to complete your registration - otherwise you have to
sit for the exam again. What this means is that if you pass an exam and then
don't go to work for the firm for some reason, you have two years from the date
you passed the test to find another firm and register (with FINRA).
Remember, passing an exam is only one step in the
registration process. You must be complete the registration process before you
attempt any type of solicitation.
There are no
educational or citizenship requirements to sit for the
Series 7 exam; there is
an age requirement where you must be of "legal age" and this is established by
each state -- generally being 18 years. Keep in mind, the brokerage firm
that hires you may have more restrictive requirements (for example a college
degree and 21 years of age).
After having passed the
necessary exams you must complete your registration by having a background
check, fingerprint card, register with FINRA/NFA, and register with the
Securities Commission of each state that you will do business in. In securities
registration there are two levels of registration: federal and state. On the
federal level you take the Series 6, 7, 62, etc., and then on the state level
the State Securities Administrator will generally require you to have passed the Series 63 exam.
The application form for the FINRA exams that the
Broker/ Dealer uses is called the U-4 form. If the firm you are going to work
for is not a FINRA-member firm (for example a Registered Investment Advisor) a
form U-10 is usually used. For further information on Registered Investment
Advisor registration, click here.
FINRA administers exams for its own requirements (that is they create their own study outlines and data bank of exam questions), as does the North American Securities Administrators Association (NASAA). Tests are given
through test sites run by Prometric Test Centers and Pearson VUE Testing
Centers. Test Centers are located in many cities throughout the U.S. NFA exams
include the Series 3, 30, and 31. NASAA exams include the Series 63, 65, and
Securities Exam Preparation, Inc. is a
consulting organization specializing in
self-study programs for FINRA(NASD) test
preparation -- and in coordinating
registration services for Investment
Advisors, Broker Dealers, Commodity Trading
Advisors, and Introducing Brokers.
You can review our specially designed self study
materials for the Series 7, 65, 63 and 3 exams at our site. Click