Stock brokers play a most important role in the Brokerage Firm. Stock Brokers are the Middleman between the stock exchange and trader/client/customers. Stock Brokers are a Professional trader. They buy & sell shares on behalf of clients and their standing instructions. The stock broker may also be known as a registered representative or an investment advisor.
Stock brokers maintains the number of transactions of individual clients of institutional customers. Brokerage firms & Broker dealers are sometimes referred to as stockbrokers. This includes both full service brokers & Discount brokers.
As a representative of his clients, a stock broker seeks the best deals to buy and sell stock. They usually deal in all types of securities and also handle derivatives, such as Commodity Futures, Currency Market, Option Market, Future Market. They also advise their clients about when to make transactions and guide them about what to look for in market dealings.
Stock brokers are paid in form of commissions which usually consist of a percentage of a value of the trade transaction in a stock market. Brokerage firms are also known as discount brokers as they offer trade transactions at a single price.
A stock broker provides advisory services for investing in a stock market and in return an investor pays a fixed fee to them. Margin interest payments are charged to investors for borrowing against the brokerage account for investment in a stock market. They also take service charges from their clients for performing administrative tasks, such as for handling Individual Retirement Account (IRA) and for mailing stocks in the form of certificates.
Stockbroker Pros and Cons
The job of a stockbroker is not without its challenges. Here are some of the pros and cons of becoming a stockbroker:
Pros:
- Great career option for people who have in-depth knowledge of the stock market.
- Offers high commission-based income potential
- Good fit for ambitious individuals with strong selling skills
Cons:
- Must be able to handle rejection.
- Extremely competitive work environment.
- May require excessively long work hours.
- May have difficulty building a significant client base due to availability of online trading.
