Broker Facts... A Guide for the Aspiring Stockbroker
Greetings from Wall Street!
Following is an excerpt from Alan Abelson's "Up & Down Wall Street" column as appeared in Barron's:
"the average barge-toter and bail-lifter" (retail stockbroker) "in the securities industry this year took home north of $175,000", "the average institutional broker earned something like $350,000, the average investment banker in pay and bonus will cart away around $850,000, more than 1,000 deserving Street souls will receive bonuses of $1 million or more and the overall bonus pie weighs in at close to $12 billion."
Would YOU like to make that kind of money?
Before we get started, let's separate a few FACTS from FICTION...
Question: Do you need to have a degree in business, finance or economics to be a stockbroker?
Answer: The FACT is that there is no particular education requirement. Successful stockbrokers have come from all backgrounds and walks of life, ranging from the high school drop-out to the Harvard M. B. A. One of the positives about our business is that the stock market is the great equalizer". Integrity and tenacity are far more important than where you came from or what school you went to.
Question: Wouldn't it be safer to work on a salary for a major corporation?
Answer: The FACT is that in the last few years the major corporations in this country laid off millions of Americans while, during that same period, their stocks soared to previously unimagined heights!
Question: In the last couple of years the stock market has already moved much higher. Shouldn't I wait to start my career?
Answer: The FACT is that this is the PERFECT TIME to start your career. Why? Consider this:
The FACT is that last year, 2011, marked the official beginning of the retirement of the Baby Boomers. The number of retirees will only be increasing in the years to come. Their money is in search of high returns. Interest rates are at near record lows. If an investor wants to remain "liquid" while searching for high returns the stock market is one of the few vehicles remaining to provide that opportunity. In addition, there are literally TRILLIONS of dollars in money market funds earning close to ZERO! That money has only just begun to return to the stock market!
Also, keep in mind, as a new broker you will be calling on people who, more than likely, already have accounts with competing brokers. Many clients exited the stock market in the aftermath of the 2008 financial meltdown as the Dow Jones hit a low of around 6,600 in March of 2009, placing that money in "safe" cash instruments yielding next to nothing as they waited for the proverbial smoke to clear. The Dow recently closed above 13,000 for the first time since 2008, but it is still substantially off the all time high of 14,164 made in October of 2007. Many are coming to the conclusion that the worst is over with a slowly improving outlook for future economic growth and are tempted to reenter the stock market. At the same time, they were NOT particularly pleased with the past performance of their current broker. This makes them EXCELLENT PROSPECTS for doing business with YOU!Question: Isn't the Internet rendering the full service stockbroker obsolete?
Answer: The FACT is that the Internet really doesn't present a new challenge. It simply adds a technological variation to an old challenge. This is what we mean:
Back in the 1970's brokerage commissions were regulated. That is to say, at that time, BY LAW, all brokerage firms were required to charge the exact same commissions. Subsequently, when brokerage commissions were deregulated, for the first time a new breed appeared on the scene... THE DISCOUNT BROKER.
Many believed that the coming of the discount broker would spell the end of the full service, full commission broker. Of course, as we know, that did not happen. The reason it didn't happen in the 1970's is the same reason why the online brokers won't spell the end of the full service broker in the 21st Century either.
You see, Internet not withstanding, there are a great many wealthy people who made their money doing something other than investing in the stock market. These people are content to continue doing what made them successful in the first place and are more than willing to hire someone they perceive to be successful in stock market investing to give them good advice and guidance.
Also, there is another breed of investor out there that thought the internet would be his or her salvation. They thought they would save tons of money on commissions paying $4.95 a trade and take their broker out of the picture in the process. MANY of those people learned THE HARD WAY that paying only $4.95 per trade actually COST THEM TONS OF MONEY because, in the final analysis, THEY DIDN'T KNOW WHAT THEY WERE DOING! These very same people are now excellent prospects for the full service stockbroker than can demonstrate professionalism and competence!
The brokerage business always has been, is today, and always will be competitive. That is why salesmanship is so KEY! However, take with MANY grains of salt all that you are hearing about the "death" of the full service broker. Those reports are very premature.Question: How do I know if I have what it takes to be a stockbroker?
Answer: The FACT is that, while there is never any way to know for sure, there IS a way for YOU to make an informed, intelligent career decision!
Would you like to learn more? If you answered "YES", click NEXT.