If you’ve seen the Wolf of Wall Street, you may have already formed an opinion about what the deal is with stockbroking…
Artistic licence aside and sneaky illegal activities aside, the majority of stockbrokers are a very honest bunch! The industry is highly regulated and they must act within the interests of their clients – and not for their own financial benefit. But what is it that stockbroking actually involves?
Stockbrokers are the inbetweeners of investment. The crux of what they do is to buy and sell securities on the financial markets – that’s generally stocks and shares (shares of ownership of companies) in this case – on behalf of their clients.
This takes guts! Buying and selling on the financial markets can be exhilarating – and intense and pressurised industry to work in. Stockbrokers can make a lot of money for their clients in an instant (quite literally a click of a button)…or lose it. As part of the job they have to keep on top of developments in the financial markets with daily research and monitor investment performance for clients. This means 6am or 7am starts to get research together before the stock exchange opens at 8am (in London) – perhaps not the job for you if like your lie-ins!
Stockbrokers will be at their desks for most of the day. Trading is all done with snazzy computer systems now. They advise clients on investment opportunities, source potential new clients and use their powers of persuasion to try and win them over the phone, and liaise with investment analysts to source the best investment opportunities for their clients. When the London Stock Exchange closes at 4.30pm stockbrokers spend time
With all that buying and selling on behalf of others, how do stockbrokers make their money? Well, they receive a base salary (what they get before any juicy bonuses), and then take a commission on what they buy or sell. Some bonuses can be rather huge! Graduates could start on anything from around £25,000, and quickly shoot up the pay scale and boost their pay packets if they make the right investments for clients. Associates and more senior stockbrokers at specialist broker firms, private banks and investment banks can easily make big bucks well in excess of £80,000 a year if they play their cards right!
However, with hefty payslips and a City lifestyle comes big responsibility! It can a stressful job with some long hours. Stockbrokers need to keep calm under pressure and make snappy decisions which could have a drastic impact on whether they make or lose money for clients – a bit of a sink or swim environment…
Once upon a time you could get into this area with next to no qualifications, but now stockbroking is increasingly becoming graduate territory. You’ll usually need a strong degree (sometimes in a relevant finance subject) to get in the door – particularly if the job you go for is with an investment bank. Once you’re in you can pick up professional qualifications like the IMC and CFA qualifications as you gain more experience. Stockbroking can provide a great foundation to move into more exclusive and highly sought-after asset management roles.