How Do I Become a Stockbroker


stock broker – financial consultant – financial advisor – securities broker


How do I become a Stockbroker?

People of ask “how do I become a stockbroker?”.  First you have to define the term “stock-broker”.

Stockbroker, financial consultant, financial adviser, securities broker — these are all terms loosely used by individuals and brokerage firms alike, to refer to a regulatory term of “registered representative”.   It’s shortened to “registered rep”. A registered rep is an agent of a Broker / Dealer who is paid commissions on the trades placed through the firm on behalf of their customer.

What Securities to Offer:

A stockbroker who wants to offer general (or a “full line” of) securities would sit for the Series 7 exam. The Series 7 exam was created by the New York Stock Exchange. It’s administered by the Financial Industry Regulatory Authority (“FINRA”).  Most Series 7 reps are referred to as a “stockbroker”.

Registered representatives, however, may want to “limit” their registration by specializing and offer only a specific group of securities. As an example: “mutual funds”, or investment company products representatives, sit for the Series 6 exam.  They only offer comments on mutual funds.  Series 22 representatives only offer direct participation programs.  Series 62 representatives only offer corporate securities. Some people sit for the Series 6 or Series 62 exam to get into production faster, and then take the Series 7 later on.

Stockbrokers often offer commodity futures, commodity limited partnerships or “managed futures” to their clients. A separate registration is required.  You musts pass the Series 3 exam and be registered with the National Futures Association(“NFA”).   Instead of a registered representative you’re referred to as an “Associated Person”.  The securities firm that you are registered with must also be registered with the NFA / CFTC in order to offer futures products.

Securities Industry Essentials Co-Requisite Exam

The Securities Industry Essentials Exam, or SIE, is a a new FINRA exam for prospective securities industry professionals. You do not need a sponsor to sit for the SIE.   This introductory-level exam assesses a candidate’s knowledge of basic securities industry information. You then go on and sit for a specialty registration.  The SIE Exam is a co-request test for certain FINRA registrations, i.e., Series 6, 7, 57, 82, and 99 exams.

Passing the Securities Industry Essentials Exam alone does not qualify you for registration with FINRA or to engage in the securities business.

To become registered to engage in the securities business, you must pass the SIE Exam AND a qualified exam appropriate for the type of business you will engage in.  You must be associated with a member firm to take the qualification exam (e.g., you need a sponsor for the 6, 7, 57, 82, and 99 tests).

Finding a Firm

You need to interview with the kinds of firms that you feel will provide you with the best opportunity to be successful.   And offer the kinds of securities you would like to work with.  If you’re looking to lower your trading commissions or just to trade your own account, most firms will not be interested in hiring you.

Firms are looking for individuals who can create commissions for the firm. If you’re well contacted or are “sales oriented” and can generate new leads and accounts, firms like Merrill Lynch, JP Morgan, etc., will be a good fit — since your income will depend upon the commissions you generate.

If you want to be “service oriented” and receive a salary, you will want to interview with firms like Fidelity Funds or Charles Schwab.  In either case, arrange directly for an interview with the branch/location where you would like to work.  Generally, brokerage firms will not pay a relocation allowance for a new representative. If the firm wants you — they will sponsor you for the Series 7 or other required exam.

Some think having passed the Series 7 exam prior to interviewing makes the candidate more likely to get a job. It might;  if two candidates are interviewing and are identical in all skills except one has passed the Series 7 and one hasn’t. What the firms are looking for are the right skills.

Some Hints

When you’re new to the securities business, though, you want to learn as much as you can before interviewing. One of those ways, if your situation allows, is to pass any exam that you’ll probably need when you are in production before your interview. You can sit for the Series 3 Commodity Futures Exam, the Series 63 Uniform State Laws Exam, and the Series 65 Uniform Registered Investment Advisor Exam without a sponsor. This also saves the Broker / Dealer some money and (some think) shows the candidate is motivated.

Costs

The current exam fee for the Series 7 exam is $245.00, the Series 3 is $130.00, the Series 65 is $175.00, and the Series 63 is $135.00. You have two years from the date you pass the exam to complete your registration.  Otherwise you have to sit for the exam again. What this means is that if you pass an exam and then don’t go to work for the firm for some reason, you have two years from the date you passed the test to find another firm and register (with FINRA).

Remember, passing an exam is only one step in the registration process. You must be complete the registration process before you attempt any type of solicitation.

Other Points

There are no educational or citizenship requirements to sit for the Series 7 exam.  There is an age requirement where you must be of “legal age” and this is established by each state, generally being 18 years. Keep in mind, the brokerage firm that hires you may have more restrictive requirements.  For example, a college degree and 21 years of age.

After having passed the necessary exams you must complete your registration by having a background check, fingerprint card, register with FINRA / NFA, and register with the Securities Commission of each state that you will do business in.  In securities registration, there are two levels of registration: federal and state. On the federal level you take the Series 6, 7, 62, etc.  On the state level the State Securities Administrator will generally require you to have passed the Series 63 exam.

The application form for the FINRA exams that the Broker/ Dealer uses is called the U-4 form. If the firm you are going to work for is not a FINRA-member firm (for example a Registered Investment Advisor) a form U-10 is usually used. For further information on Registered Investment Advisor registration, click here.

FINRA administers exams for its own requirements (that is they create their own study outlines and data bank of exam questions), as does the North American Securities Administrators Association (NASAA). Tests are given through test sites run by Prometric Test Centers. Test Centers are located in many cities throughout the U.S. NFA exams include the Series 3, 30, 31 and 34.  NASAA exams include the Series 63, 65, and 66.


Securities Exam Preparation, Inc. is a consulting organization specializing in self-study programs for FINRA(NASD) test preparation — and in coordinating registration services for Investment Advisors, Broker / Dealers, Commodity Trading Advisors, and Introducing Brokers.

You can review our specially designed self study materials for the Series 7, 65, 63 and 3 exams at our site.