Stock broker

Stock brokers act on behalf of their individual or institutional clients to buy and sell stocks and other securities. They are in close contact with their clients and ensure that what they buy or sell through the stock exchange market is according to their clients’ wishes. Stock brokers undertake analyst research to make recommendations to their clients and expand their client base through various methods.

The duties of a stock broker typically include, but are not limited to:

• Providing accurate investment advice to clients
• Managing client investment portfolios
• Evaluating financial reports accurately
• Staying updated on the latest financial news
• Updating clients regularly regarding the status of their investment portfolios
• Informing clients of new investment opportunities
• Making changes in investment strategies based on client goals and market conditions
• Finding new clients through cold calling and networking.

Depending on the client base, stock brokers can be:

• Institutional: services are provided to accounts they manage for groups or institutions. These include insurance companies and pension funds. Institutional clients are generally quite knowledgeable and independent from the broker – they can also use different stock brokers for other markets. Institutional broking brings higher revenue for the stockbroking firm.
• Retail (individual): services are provided to retail investors, generally wealthy individuals with whom stock brokers work directly.

Stock brokers provide different levels of service, depending on how much control the client wants to have over their investment decisions:

• Execution-only: they engage in buying and selling activities on explicit request from their clients and won’t offer any advice or guidance on potential risks or suitability
• Advisory: they provide a fuller service, advising on appropriate securities to deal in, but will only act on the orders of their client
• Discretionary: they have complete authority to buy and sell shares on their clients’ behalf. They determine their investment aims so they can make the right decisions for them.

The following job titles also refer to stock broker:

stockbrokers
institutional stock brokers
stockbroking dealer
institutional stock broker
stockbroking dealers
stockbroker
stocks and shares broker
stocks and shares brokers
securities brokers

Stock brokers typically work in a financial institution, regularly communicating with clients and other stockbrokers. Stock brokers can expect the following work environment characteristics:

• Frequent use of computers and other technical equipment
• A stressful work environment at times
• Regular communication with clients
• A fast-paced work environment that is constantly changing
• Local and international travel often required

Stock brokers work in a fast-paced environment that can be stressful. The stock market can drastically change from when it opens until it closes, and stock brokers must be comfortable in a volatile market. Regular communication with clients is crucial, as they will have to update them on returns and request additional portfolios to spend as needed. Some stock brokers may be required to travel to meet with personal and corporate clients that live in other states or other countries.

A bachelor’s degree in finance or business administration is typically required for stock brokers. A strong understanding of financial laws and regulations, accounting methods, principles of economics and currency, financial planning, and financial forecasting all help work in the field. A Master of Business Administration (MBA) provides a competitive advantage over other candidates. Employers might reward candidates with an MBA with more advanced positions, better compensation, and more significant signing bonuses.

Global credentials are also becoming increasingly sought-after as signals of legitimacy and financial acumen. Examples include the certified financial planner (CFP) and chartered financial analyst (CFA) designations.

Stock brokers must be licensed to practice their profession. The requirements for the license vary by location, but in general, it always involves passing an exam.

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

• the nature of the work performed in an occupation in relation to the characteristic tasks and duties
• the level of formal education required for competent performance of the tasks and duties involved and
• the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Stock broker is a Skill level 3 occupation.

These occupations, although different, require a lot of knowledge and skills similar to stock broker.

securities broker
securities underwriter
stock trader
financial broker
financial trader

These occupations require some skills and knowledge of stock broker. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of stock broker with a significant experience and/or extensive training.

investment fund management assistant
securities analyst
investment analyst
corporate banking manager
middle office analyst

This knowledge should be acquired through learning to fulfill the role of stock broker.

• Financial products: The different types of instruments that apply to the management of cash flow that are available on the market, such as shares, bonds, options or funds.
• Securities: The financial instruments traded in financial markets representing both the right of property over the owner and at the same time, the obligation of payment over the issuer. The aim of securities which is raising capital and hedging risk in financial markets.
• Economics: Economic principles and practices, financial and commodity markets, banking and the analysis of financial data.
• Financial markets: The financial infrastructure which permits trading securities offered by companies and individuals govern by regulatory financial frameworks.
• Stock market: The market in which shares of publicly held companies are issued and traded.
• Modern portfolio theory: The theory of finance that attempts to either maximise the profit of an investment equivalent to the risk taken or to reduce the risk for the expected profit of an investment by judiciously choosing the right combination of financial products.
• Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.

These skills are necessary for the role of stock broker.

• Protect client interests: Protect the interests and needs of a client by taking necessary actions, and researching all possibilities, to ensure that the client obtains their favoured outcome.
• Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
• Assess risks of clients’ assets: Identify, evaluate and determine the actual and potential risks of your clients’ assets, considering confidentiality standards.
• Review investment portfolios: Meet with clients to review or update an investment portfolio and provide financial advice on investments.
• Advise on financial matters: Consult, advise, and propose solutions with regards to financial management such as acquiring new assets, incurring in investments, and tax efficiency methods.
• Apply technical communication skills: Explain technical details to non-technical customers, stakeholders, or any other interested parties in a clear and concise manner.
• Trade securities: Buy or sell tradable financial products such as equity and debt securities on your own account or on behalf of a private customer, corporate customer or credit institution.
• Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
• Forecast economic trends: Gather and analyse economic data in order to predict economic trends and events.
• Handle financial transactions: Administer currencies, financial exchange activities, deposits as well as company and voucher payments. Prepare and manage guest accounts and take payments by cash, credit card and debit card.

This knowledge is sometimes, but not always, required for the role of stock broker. However, mastering this knowledge allows you to have more opportunities for career development.

• Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
• Statistics: The study of statistical theory, methods and practices such as collection, organisation, analysis, interpretation and presentation of data. It deals with all aspects of data including the planning of data collection in terms of the design of surveys and experiments in order to forecast and plan work-related activities.
• Holding company activities: The principles, legal actions and strategies of a holding company such as influencing the management of a firm through the acquirement of outstanding stock and other means, more specifically by influencing or electing the board of directors of a company.
• Tax legislation: Tax legislation applicable to a specific area of specialisation, such as import tax, government tax, etc.
• Financial jurisdiction: Financial rules and procedures applicable to a certain location, whose regulatory bodies decide on its jurisdiction
• Accounting: The documentation and processing of data regarding financial activities.

These skills and competences are sometimes, but not always, required for the role of stock broker. However, mastering these skills and competences allows you to have more opportunities for career development.

• Trace financial transactions: Observe, track and analyse financial transactions made in companies or in banks. Determine the validity of the transaction and check for suspicious or high-risk transactions in order to avoid mismanagement.
• Communicate with customers: Respond to and communicate with customers in the most efficient and appropriate manner to enable them to access the desired products or services, or any other help they may require.
• Perform stock valuation: Analyse, calculate and appraise the value of the stock of a company. Use mathematic and logarithm in order to determine the value in consideration of different variables.
• Maintain records of financial transactions: Collate all the financial transactions done in the daily operations of a business and record them in their respective accounts.
• Communicate with banking professionals: Communicate with professionals in the field of banking in order to obtain information on a specific financial case or project for personal or business purposes, or on behalf of a client.
• Examine credit ratings: Investigate and look for information on the creditworthiness of companies and corporations, provided by credit rating agencies in order to determine the likelihood of default by the debtor.
• Provide support in financial calculation: Provide colleagues, clients or other parties with financial support for complex files or calculations.
• Obtain financial information: Gather information on securities, market conditions, governmental regulations and the financial situation, goals and needs of clients or companies.
• Manage financial risk: Predict and manage financial risks, and identify procedures to avoid or minimise their impact.
• Operate financial instruments: Work with financial instruments such as stocks, bonds, mutual funds and derivatives.
• Build business relationships: Establish a positive, long-term relationship between organisations and interested third parties such as suppliers, distributors, shareholders and other stakeholders in order to inform them of the organisation and its objectives.
• Create a financial report: Finalise project accounting. Prepare an actual budget, compare the discrepancy between the planned and actual budget, and draw final conclusions.
• Provide financial product information: Give the customer or client information about financial products, the financial market, insurances, loans or other types of financial data.

3311 – Securities and finance dealers and brokers

---

References

1. Stock broker – ESCO
2. Stockbroker job profile | Prospects.ac.uk
3. Learn About Being A Stockbroker | Indeed.com
4. How To Become A Stockbroker? | Indeed.com
5. Stockbroker: Definition, Types, Requirements, and Salaries – Investopedia
6. Featured image: By Andyhill8 – Andy Hill, Public Domain