Broker Facts ~ A Guide for the Aspiring Stockbroker

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  A Guide for the Aspiring Stockbroker

Your Stockbroker Employment and Career "Indoctrination Station"!

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Following is an excerpt from Alan Abelson's "Up & Down Wall Street" column as appeared in Barron's:

"the average barge-toter and bail-lifter" (retail stockbroker) "in the securities industry this year took home north of $175,000", "the average institutional broker earned something like $350,000, the average investment banker in pay and bonus will cart away around $850,000, more than 1,000 deserving Street souls will receive bonuses of $1 million or more and the overall bonus pie weighs in at close to $12 billion."

Would you like to make that kind of money?

Before we continue, let's separate a few FACTS from FICTION...

Question: Do you need to have a degree in business, finance or economics to be a stockbroker?

Answer: The FACT is that there is no particular education requirement. Successful stockbrokers have come from all backgrounds and walks of life, ranging from the high school drop-out to the Harvard M. B. A. One of the positives about our business is that the stock market is the "great equalizer". Integrity and tenacity are far more important than where you came from or what school you went to.  

Question: Wouldn't it be safer to work on a salary for a major corporation?

Answer: The FACT is that in the the last 10 years the major corporations in this country laid off millions of Americans while, during that same period, their stocks soared to previously unimagined heights!
 
Question: Since the attack on the World Trade Center the stock market has already moved much higher.  Shouldn't I wait to start my career?

Answer: The FACT is that this is the PERFECT TIME to start your career.  Why?  Consider this:

The FACT is that most of the tremendous upside moves of the last decade have largely been fueled by Baby Boomers investing for their retirement. The Baby Boom generation doesn't start to retire for another 10 to 15 years.  Their money is in search of high returns.  As the stock market declined last year, much of that Baby Boomer retirement money,  literally TRILLIONS of dollars, was put into money market funds.  Returns on money market funds are near their all time lows!   That money has only just begun to return to the stock market!

Also, keep in mind, as a new broker you will be calling on people who, more than likely, already have accounts with competing brokers.  The chances are GREAT that the people you will be calling upon have NOT been particularly pleased with the performance of their current broker.  This makes them EXCELLENT PROSPECTS for doing business with YOU!

Question: Isn't the Internet rendering the full service stockbroker obsolete?

Answer: The FACT is that the Internet really doesn't present a new challenge. It simply adds a technological variation to an old challenge. This is what we mean:

Back in the 1970's brokerage commissions were regulated. That is to say, at that time, BY LAW, all brokerage firms were required to charge the exact same commissions. Subsequently, when brokerage commissions were deregulated, for the first time a new breed appeared on the scene... THE DISCOUNT BROKER.

Many believed then that the coming of the discount broker would spell the end of the full service, full commission broker. Of course, as we know, that did not happen. The reason it didn't happen in the 1970's is the same reason why the online brokers won't spell the end of the full service broker in the 21st Century either.

You see, Internet not withstanding, there are a great many wealthy people who made their money doing something other than investing in the stock market. These people are content to continue doing what made them successful in the first place and are more than willing to hire someone they perceive to be successful in stock market investing to give them good advice and guidance.

Also, there is another breed of investor out there who believed the internet would be his or her salvation. They thought they would save tons of money on commissions paying $4.95 a trade and take their broker out of the picture in the process. MANY of those people learned THE HARD WAY that paying only $4.95 per trade actually COST THEM TONS OF MONEY because, in the final analysis, THEY DIDN'T KNOW WHAT THEY WERE DOING! These very same people are now excellent prospects for the full service stockbroker than can demonstrate professionalism and competence!

The brokerage business always has been, is today, and always will be competitive. That is why salesmanship is so KEY! However, take with MANY grains of salt all that you are hearing about the "death" of the full service broker. Those reports are very premature.

  Question: How do I know if I have what it takes to be a stockbroker?

Answer: The FACT is that, while there is never any way to know for sure, there IS a way for YOU to make an informed, intelligent career decision!

Would you like to learn more? Read on...

Permit me to introduce myself. My name is Warren Arthur. I have spent the better part of the last 20 years on Wall Street in New York City. During my career I have worked for Lehman Brothers and Drexel Burnham Lambert. I started as a stockbroker. Over time I moved into management. I have interviewed, hired and trained many successful stockbrokers. Some went on to become partners in their own firms. Others became division heads and supervisors.

During the interview process I look for two primary characteristics:

#1: Does the person being interviewed strike me as being fundamentally honest?

#2: Does the person being interviewed exude enthusiasm... a willingness to go the extra yard?

All other factors, including education and prior business experience are secondary considerations, not only for me, but also for many others who are in a position to make hiring decisions in our business!

I started in the spring of 1982. At that time we were in the full throws of a BEAR MARKET!  The prime rate at most banks was near 20%.  Inflation had been running near 10%.  AAA rated municipal bonds were paying as high as 16%. NOBODY wanted to be in the stock market, which had been in a bear phase for more than a year. The Dow Jones Industrial Average had been declining from a high of near 1,000.   By August of 1982, the Dow hit a low of 776 (that's seven hundred seventy six). As the market lifted off it's low in the summer of 82 we had our first ever 100 million share day on the NYSE. 

Contrast that with today.  As of this writing, Tuesday, October 1, 2002, The Dow Jones Industrial Average closed at 7,938.79, up 346.86.  Volume on the NYSE was more than 1.7 BILLION shares.  Also, the Nasdaq composite closed at 1,2913.73, up 41.67 on volume of nearly than 1.7 BILLION shares.

As stock market volume has risen, so has the income of the average stockbroker. Back when I started the average income was roughly $33,000. According to the Wall Street Journal, in 1992 the average had climbed to over $116,000. It has risen every year since, with last year coming in at around $175,000. That's the national average at all firms in all 50 states!

There are only 2 other professions I know of where that kind of income is typically found. One would be the legal profession. The other is the medical profession. Let's compare the requirements:

Lawyer: Requires 4 years of college, 3 years of law school and passing the bar examination.

Physician: Requires 4 years of college, 4 years of medical school and 2 years of residency.

Stockbroker: Requires only passing the series 7 examination, a 250 question multiple choice exam.

In addition, following their schooling, many doctors and lawyers spend 5, 10 or 15 years "paying their dues" before achieving a six-figure income.

Many stockbrokers study for, take and pass their required exam inside of one month and get to a six-figure income level in their first year.

Everything I have ever read on the subject of our profession has either idealized or demonized the stockbroker. I have never found any source of information that gives an honest, true to life appraisal of our business for the person considering a career in our industry, let alone offering the tools needed to find a job with a reputable firm.

In order to fill that information void, I have authored a 2 1/2 hour audiocassette program entitled:

"Broker Facts I... A Guide for the Aspiring Stockbroker"

Here is a synopsis of the valuable information contained within the chapters of "Broker Facts I":
 
"Is being a stockbroker for you?": Takes a very real and candid look at what it means to be a stockbroker. We discuss the positives and negatives, giving you the objective information necessary to make an informed, intelligent career decision.

"Mind Set!": In this chapter we get into the "mind set" necessary for success, giving you insight on what you must do to succeed as a stockbroker.

"The Direct and Indirect Method": Here we discuss methods of entry into the business, showing you a direct and indirect way to "break in"!

"The Series 7 and Series 63 exams": We discuss in detail the series 7 exam, a 250 question multiple choice exam required in all 50 states. Some states also require the series 63, a much shorter, 50 question test. We enable you to understand what will be expected of you and how to prepare for it.

"Large Firms versus Small Firms": We weigh the advantages and disadvantages associated with working for the very large, high profile, multi faceted firm versus the smaller, more specialized "boutique" operation, helping you to target the style of firm best suited to your personality and individual goals.

"Compensation": We discuss how you get paid! We cover, in detail, various industry standard formulas used to determine your compensation, giving you the information necessary to negotiate from an informed point of view. Knowledge is power!

"Getting the Interview": Here we show you how to get in front of the right people. We show you ways to do that by giving you information that could only come from someone who knows the ropes... and shows YOU how to use them!

"Dressing for Success": You will only get one opportunity to create a good first impression. It doesn't do any good to go to all the trouble of getting an interview if, when you show up, you make the wrong impression. We make sure you make the right one!

"Questions to Expect on the Interview": Did you ever go on an interview where you were asked questions and found yourself grasping for the right answer? Would it have helped to know the questions before they were asked? We discuss such questions and give you the answers!

"Questions You Should Ask on the Interview": What is at least as important as having the right answers to the questions you are asked is asking the right questions of your interviewer. Not only does it make a great impression, but the answers will help you to determine if you are interviewing at a firm where you would want to work in the first place. Beware the "charlatan element" in our industry!

We believe you will find "Broker Facts I" a very valuable tool, whether you are considering a career in our profession or have already decided to enter it. "Broker Facts I" skips the fluff and goes right to the heart of the matter, giving you the objective facts you need and should have. After all, where are you most likely to get them... from "Broker Facts"... or from the person you are interviewing with?

Warren Arthur
President
 
 


Reset August 15, 2000