What is a stock broker?
According to the Business Dictionary, a stock broker is a licensed individual or body with the following qualifications. He or she has passed a certain test and is certified to offer investment advice. He can counsel customers on if to hold or sell securities. He or she can execute the selling or buying of investment orders by his or her clients. He or she also charges a percentage of the transaction to cover his or her fee (Downes, J., & Goodman, J. 2014).
Qualifications and Licensing of stock brokers
You can become a stock broker with as little as a high school diploma in a business related field. This is, however, a field where once qualification and past successes dictate one’s future. Bearing this in mind, having extra qualifications is an added advantage. These extra qualifications can come in form of, a bachelor’s degree. According to the Bureau of Labor Statistics, a bachelor’s degree is the least requirement for a career as an entry-level stock broker. The common stock broker degrees include economics, finance business, and accounting. For you to work in an investment firm or bank a bachelor’s degree is also mandatory (Bodie, Z. 2013). There is, however, no specific majoring needed but one in a business related field is recommended. Extra classes in statistics or mathematics can allow you to stand out among a pool of stock brokerage candidates.
Duties of a stock broker
Similar to other occupations stock brokers have duties and responsibilities. Among these duties include the duty of fair dealing. The security industry demands fair dealing from all of its employees. Fairness and honesty must be exercised in all the dealings with customers. There are even bodies like the Financial Industry Regulatory Authority (FINRA), put in place to ensure that these virtues are practiced. These bodies also ensure that these laws are legally enforceable.
Stock brokers are also expected to be loyal. Due to the fact that stock brokers earn their money through a commission, there is a chance of a conflict of interest to take place. Stock brokers can focus on their interests and increase their own income or focus on the customer’s needs and increase their interests. Duty and loyalty ensure that the needs of the customers are always put first.
As a stock broker, you are expected to disclose all the relevant information to an investment to your customers. For a customer to make a decision that is most profitable, he or she needs reliable information (Prentice, R. A. 2011). Stock brokers are expected to provide their customers with this information regardless of their other investments or possible personal loss. Brokers are also obligated to inform their customers of any risks that may affect their investments. No stock broker should perform any activity in the customer’s account without their approval. The only way a broker can do this is if the customer has given a broker power of attorney to make trading decisions.
In conclusion, a stock broker is anyone or anybody that is licensed to offer financial investment advice. To become a stock broker is possible with as little as a high school Diploma. Additional qualifications in a business related field are an added advantage. Among the duties of any stock, broker includes loyalty to their customer, fair dealing in their operations, a full disclosure of information to their clients and fair.
Bodie, Z. (2013). Investments. McGraw-Hill.
Prentice, R. A. (2011). Moral Equilibrium: Stock Brokers and the Limits of Disclosure. Wis. L. Rev., 1059.
Downes, J., & Goodman, J. (2014). Dictionary of finance and investment terms. Barron’s educational series.