Stock broking is done by a person who deals with shares and different kinds of financial instruments (also called securities) through different companies or agencies as a representative of people who invest in different enterprises (also called investors). The person may be self-employed or he may be employed by a firm that is called a brokerage firm. The income that a stock broker obtains is called a stock broker salary.
There are three types of work that a stock broker generally does, which are mentioned below. Depending upon the type(s) of work that a stock broker does, his broker salary will vary.
- The first type of work is called ‘execution only’ work, where a stock broker carries out his client’s wishes in terms of which securities to sell and buy
- The second type of work is called ‘advisory dealing’ work, where the role of the broker is to simply give advice to his client on which securities to buy and to sell. Here, the broker salary will be more since the stock broker takes on the role of an investment advisor, whose expert advice the client pays for.
- The third type of work is called ‘discretionary dealing’ work, where it is the stock broker’s job to make all decisions for the client, and carry out all the work. The client simply gives the stock broker his investment objectives and the stock broker takes it from there.
Stock Broker Salary
From the three types of work given above, we can see that the broker salary will increase from the first type of work, which involves minimal effort by the stock broker to the third type of work, where the stock broker plays the most demanding role.
Different countries in the world have different requirements for a person to be qualified as a stock broker. In the United States of America, to qualify as a stock broker and hence to be paid a salary, people must attempt to write and subsequently pass an exam called the GSE Exam. In Singapore, a stock broker is called a trading representative. However, a trading representative is just another name, as he is paid a broker salary. A trading representative in Singapore acquires his title by passing two exams called Module 1A and Mod 6 from the Institute of Banking and Financial, and then applying for a trading representative license.
In the United Kingdom, a stock broker has to pass two exams in order to receive a Chartered Institute for Securities and Investment Certificate in Securities (also called the XII Certificate). After the stock broker gains this qualification, he can join a brokerage firm and earn a broker salary. In Hong Kong, a stock broker needs to pass three exams and then work for a licensed brokerage firm in order to become a stock broker. Only then can the person be eligible to obtain a stock broker salary.