If you are interested in a career in finance and have ever wondered how to become a stock broker in the UK we’re here to help.Â
Follow our guide on what a stock broker does, different types of stock brokers, their responsibilities and finally, how to actually become one!
Table of Contents
What Does A Stock Broker Do?
A stock broker picks stocks but also manages the investments of his or her clients. This means a stock broker buys and sells stocks, shares and other financial instruments on behalf of the client, which could be a private or commercial client.Â
The work of a stock broker is usually done on the stock exchange, and often he will charge a fee or a commission for his services. He is in essence an intermediary between the stock exchange and the client.Â
Most stock brokers work inside small or larger financial institutions but there are different types of stock broker that work by different methods.Â
You’ll often hear a stock broker buying stocks, REIT’s, commodities, ETFs and nowaways even crypto / blockchain technology too. It really depends on the type of financial institution they’re working for as often they will dictate a stock brokers investment strategy or portfolio allocations.
Â
Different Types Of Stock broker
Broadly speaking there are three types of stock broker.Â
Full Service Broker
A full service broker works on behalf of his clients delivering a fully personalised service. This includes sharing information that is only available to clients who have chosen this type of service.
This type of stock broker is normally paid by commission.Â
Full service brokers may work for full service firms who offer a range of investment services such as an investment bank. They will offer investment advice and services such as estate planning and portfolio analysis.
Discount Broker
Discount brokers will only act on the instructions of the client and do not offer services such as financial advice or investment management.
By allowing the client to do their own research and analysis, discount brokers can keep their administration fees down.Â
In this way they can carry out their services for a lower commission and save their clients some money. They still carry out buying and selling of stocks, shares and securities for their clients but only under instruction.Â
Online Broker
As the name suggests an online broker works solely online. This type of brokerage agent came about with the advent of the internet. Previously to that brokers took instruction from their clients over the phone.Â
The online broker does not have any personal contact with the client but instead offers support remotely normally through a proprietary trading platform. It allows brokers to act faster and make changes to orders and instructions quickly.Â
Online brokers will have no bias toward the client.Â
What Are The Daily Responsibilities Of A Stockbroker?
Research & Analysis
A stockbroker will carry out research and analysis for their client if they are a full service broker. This ensures that the advice they are giving to clients is accurate and up to date regarding their financial investments.Â
In depth research and advice on investments takes time and this is why the full service broker charges more than other types of broker. This part of the job is important to make sure the client is investing their money correctly.Â
Providing Support To ClientsÂ
A full service broker will also provide full support to their clients. They will stay up to date with all current rules and regulations about taxation and finance so that they can fully inform their clients of any changes.Â
Advising about certain types of investment is a vital part of a broker’s duty to his client and allows him to tailor his services to the specific needs of the client. They will also keep clients fully informed about the condition of their investments.Â
Â
Investigative Work
Investigating is a vital aspect of a stock broker’s job. Keeping on top of the changes that take place as well as any new developments in financial markets and the law relating to them is essential.Â
A stock broker needs to understand the wider market and how performance can be affected by various factors and events. They also look out for changes in businesses, often attaining contacts for as much inside information they can get.
The more information the more likely they are ahead of the trends.
Changes in the stock market can be triggered by global events or a single tweet. For a stock broker it’s important to keep an eye on the big and the small details.Â
Marketing & Building Collaborations
Marketing is vital to most services, so you will have to understand the need for this as a stock broker. It can involve producing summaries for market reports and newsletters which go to potential clients.
Collaborating with investment analysts is an important part of a stock broker’s job. You may decide to specialise in investing in specific areas of organisations such as technology or in different regions.
Brokers also work with stock market traders to achieve the best prices.Â
How To Become A Stock broker in the UK?
Educational Requirement Â
For those interested in becoming a stock broker a degree is useful but not compulsory.
Many job descriptions mentioned a degree in economics, finance, mathematics, accounting, management, or business studies would be preferred but not required.Â
The reason for this is many parts of these degrees can make help getting to grips with the stock market a lot faster.
There is also the option of undertaking an apprenticeship which will entail specific courses in financial services and investment as well as the completion of professional exams.
Certification & Experience
You can also choose to get an MBA or do an online stock broker training course. In the UK there is also a CISI courseÂ
The job is results based so if you demonstrate ability in this area you may be able to apply based on previous experience in a related industry such as insurance or banking.Â
Becoming A Licensed Stockbroker
To practice as a stock broker you need to be licensed. You need to register with the Financial Conduct Authority (FCA) which makes you an ‘approved person’ to be a stock broker.
You will need to work within the FCA’s rules and regulations in the financial sector.Â
What’s a stock brokers salary?
The starting salary of a newly qualified stock broker is £25,000 for those that work for a large bank or financial institution.Â
In some cases this may increase to £40,000 depending on the level of the candidate or for example some smaller companies will pay higher amounts to attract top young talent.
For more established stock brokers with a history of good results and experience the base salary for a stock broker could be anywhere from £100,000 – £150,000.Â
The most important thing for a stock broker is his commissions and bonuses as that’s where you can earn a lot more than your fixed salary. Although this will vary depending on results if you have a few great months it can become very lucrative for you.Â
Final Thoughts
To become a stock broker you have the option of taking a university degree or training through an apprenticeship.
Either route will lead to a satisfying and rewarding career with many opportunities for career progression. You may go on to become a market trader or portfolio manager.
We hope this guide on how to become a stock broker in the UK has been helpful, if you’d like to learn more be sure to sign up to our mailing list to learn about all things money!
Share this article with friends
Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.
