# Stockbroker Guide: Roles, Types, Requirements & Salaries Explained

## What Is a Stockbroker?

A stockbroker is a financial professional who executes orders in the market on behalf of clients. Stockbrokers are also called [registered representatives](https://www.investopedia.com/terms/r/registeredrepresentative.asp) (RR) or investment [advisors](https://www.investopedia.com/terms/a/advisor.asp). Most stockbrokers work for a brokerage firm and handle transactions for several individual and institutional customers. Stockbrokers are often paid on commission, although compensation methods vary by employer.

There are two main types of stockbrokers: full-service brokers, who provide investment advice and portfolio management, and discount brokers, who primarily execute trades at lower fees.

To become a stockbroker, individuals generally need at least a bachelor's degree in finance or a related field and must pass licensing exams such as Series 7 and Series 63 in the U.S. Compensation can vary widely, with earnings often coming from commissions, fees, or salaries depending on the firm.

In recent years, technology and online trading platforms have significantly changed the role of stockbrokers, shifting many routine trading functions to automated systems and lowering trading costs for clients.  

### Key Takeaways

*   Stockbrokers execute buy and sell orders for clients and often work for brokerage firms.
*   Online discount brokers have reduced fees with automated trading processes.
*   Stockbrokers must be licensed by organizations like FINRA and hold specific qualifications.
*   Stockbrokers earn primarily through commissions and fees but may also receive salaries and bonuses.
*   While stockbrokers focus on transactions, financial advisors offer broader financial planning services.

![Stockbroker](https://www.investopedia.com/thmb/9F54DmUgCJSc4ChsiJZ2lqmUAD8=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/stockbroker-9f4de5c87f654845ac14221fab78fe18.png)

*Investopedia / Joules Garcia.*

## The Role and Responsibilities of a Stockbroker

To buy or sell stocks, you need access to major exchanges like the NYSE or NASDAQ. Trading requires being a member of these exchanges or part of a member firm. Member firms and many individuals who work for them are licensed as brokers or broker-dealers by the Financial Industry Regulatory Authority (FINRA).

In the past, accessing stock markets was very costly—only high-net-worth and large institutional investors, like pension fund managers, could afford it. They used full-service brokers and could pay hundreds of dollars for executing a trade.

> **Fast Fact**
>
> While an individual investor can buy stock shares directly from the company that issues them, it is much simpler to work with a stockbroker.

The rise of the internet allowed discount brokers to offer cheap, fast, and automated online market access. Apps like Robinhood and SoFi now serve micro-investors, allowing them to buy [fractional shares](https://www.investopedia.com/terms/f/fractionalshare.asp). Most accounts in the markets today are managed by the account owners and held by discount brokers.

Brokerage firms and broker-dealer companies are often called stockbrokers. This includes full-service and [discount brokers](https://www.investopedia.com/terms/d/discountbroker.asp), who make trades without offering personal investment advice. Most [online brokers](https://www.investopedia.com/best-online-brokers-4587872) are discount brokers, at least at their basic service levels, in which trades are executed for free or for a small set-price commission. Many online brokers offer [robo-advisors](https://www.investopedia.com/the-best-robo-advisors-8764849) that automate the buying and selling process.

## How Stockbrokers Operate Today

Brokers who are employed by discount broker firms may work as over-the-phone agents (known as voice brokers) available to answer brief questions or as branch officers in a physical location. They also may consult with clients subscribing to premium tiers of the online broker.

A comparatively smaller number of stockbrokers work for investment banks or specialized brokerage firms. These companies handle large and specialized orders for institutional clients and [high-net-worth individuals (HNWI)](https://www.investopedia.com/articles/professionals/111715/private-banking-vs-wealth-management-not-quite-same.asp).

Another recent development in broker services is the introduction of [roboadvisers](https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp), programs that use algorithmic investing techniques carried out via web or mobile app interfaces. There is minimal individual interaction, keeping fees low.

> **Important**
>
> Mobile phone apps like Robinhood and SoFi cater to micro-investors, allowing even fractional share purchases.

## Essential Education for Aspiring Stockbrokers

A bachelor's degree in finance or business administration is typically required for stockbrokers. A strong understanding of financial laws and regulations, [accounting methods](https://www.investopedia.com/terms/a/accountingmethod.asp), principles of economics and currency, financial planning, and financial [forecasting](https://www.investopedia.com/terms/f/forecasting.asp) are all useful for working in the field.

Global credentials are also becoming increasingly sought-after as signals of legitimacy and financial acumen. Examples include the [certified financial planner (CFP)](https://www.investopedia.com/terms/c/cfp.asp) and [chartered financial analyst (CFA)](https://www.investopedia.com/terms/c/cfa.asp) designations.

> **Fast Fact**
>
> Most successful stockbrokers have exceptional interpersonal skills and can maintain strong sales relationships, market knowledge, and investing skills.

## Licenses Needed to Become a Stockbroker

In the U.S., registered brokers must hold the FINRA Series 7 and Series 63 or 66 licenses and be sponsored by a registered investment firm. [Floor brokers](https://www.investopedia.com/terms/f/floorbroker.asp) in the U.S. must also be members of the stock exchange where they work.  

In Canada, would-be stockbrokers should be currently employed by a brokerage firm and are required to complete the [Canadian Securities Course (CSC)](https://www.investopedia.com/terms/c/csc.asp), Conduct and Practices Handbook (CPH), and the 90-day Investment Advisor Training Program (IATP).

In Hong Kong, applicants must work for a licensed brokerage firm and pass three exams from the Hong Kong Securities Institute (HKSI). Those who pass the exam must still be approved by the financial regulatory body to receive a license.

In Singapore, the Institute of Banking and Finance administers nine different modules while the Singapore College of Insurance administers five modules. The Monetary Authority of Singapore (MAS) and the [Singapore Exchange (SGX)](https://www.investopedia.com/terms/s/singapore_exchange.asp) have licensing authority.

In the United Kingdom, stockbroking is heavily regulated, and brokers must achieve qualifications from the [Financial Conduct Authority (FCA)](https://www.investopedia.com/terms/f/financial-conduct-authority-uk-fca.asp). Precise qualifications depend on the specific duties required of the broker and the employer.

## What Stockbrokers Earn: Salary Insights

Before we touch on actual numbers, let's talk about the types of pay a stockbroker may receive. One of the primary ways stockbrokers earn money is through commissions. Whenever a broker buys or sells securities on behalf of their clients, they receive a commission which is usually a percentage of the transaction value. In addition to commissions, stockbrokers may charge various fees for their services. These can include account maintenance fees, advisory fees, and fees for specific services such as financial planning or investment research.

Stockbrokers employed by larger financial institutions or brokerage firms often receive a base salary along with performance-based bonuses. The salary offers steady pay, while bonuses depend on sales targets, gaining clients, or reaching performance goals.

According to Salary.com, the average stockbroker salary in the United States as of July 2024 was $161,399. The average salary range is between about $122k/year to $188k/year. The top 10% of stockbrokers made over $213,000 annually.

## Stockbroker vs. Financial Advisor: Key Differences

A stockbroker is primarily focused on the buying and selling of securities such as stocks and bonds on behalf of their clients. On the other hand, a financial advisor offers a much broader range of financial planning services. Financial advisors assist clients with comprehensive financial planning which includes retirement planning, tax advice, estate planning, insurance needs, and budgeting.

Financial advisors take a more holistic approach to managing a client’s financial well-being. A financial advisor is generally more likely to help clients achieve long-term financial goals, while a stockbroker is more useful in executing short-term investment strategies. Financial advisors usually charge fees based on managed assets or hourly rates, while stockbrokers' pay differs.

The key difference between a stockbroker and a financial advisor lies in the scope and nature of the services they provide. While stockbrokers focus on specific transactions within the market, financial advisors engage in overall financial strategy and planning. Note that a stockbroker can be a financial advisor (with the qualifications), and a financial advisor can also be a stockbroker (again, with the right qualifications).

## What Do Stockbrokers Do?

Stockbrokers serve as intermediaries between markets (e.g., exchanges) and the investing public. Brokers take customer orders and try to fill them at the best price possible. In return, they earn a fee known as a commission. Today, many stockbrokers have transitioned to financial advisors or planners as online brokerage platforms allow users to enter their own orders via the web or mobile app.

## What's the Difference Between a Discount and Full-Service Broker?

Traditionally, a discount broker would only buy and sell on customers' behalf. In contrast, a full-service broker would provide a broader breadth of financial services such as research, advice, portfolio management, and more. Today, as online brokerages have forced commissions down to zero, discount brokers have distinguished themselves by providing research and other services in addition to pure execution.

## How Do Stockbrokers Execute Trades?

Stockbrokers execute trades by placing orders on behalf of clients through stock exchanges or electronic trading platforms. These orders can be market orders (executed immediately at current prices) or limit orders (executed at specified prices). The client may choose what level they wish these orders to be placed at or may elect to have the stockbroker decide on their behalf.

## Do Stockbrokers Have Access to Insider Information?

No, stockbrokers are prohibited from using insider information for trading as it is illegal and considered securities fraud. They rely on publicly available information and research. Keep in mind that stockbrokers may have access to insider information but are precluded from profiting from the information.

## The Bottom Line

Stockbrokers act as intermediaries between investors and exchanges while also providing personalized investment strategies. They are required to be licensed by the Financial Industry Regulatory Authority and usually have a college degree in finance or business administration.

As online brokerage platforms and robo-advisors have reduced the need for traditional order execution, many stockbrokers now focus on advisory roles, offering broader financial planning similar to financial advisors. Technology has further reshaped the industry by enabling micro-investing and fractional share purchases, making services more accessible to retail investors.

> **Article Sources**
>
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>     
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>     
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>     
> 8.  Hong Kong Securities Institute. "[Licensing Examination for Securities and Futures Intermediaries](https://www.hksi.org/qualification/practising-qualifications/licensing-examination-for-securities-and-futures-intermediaries/overview/)."
>     
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