Steps to owning your own trading broker
A broker is a narrow specialist acting as an intermediary between the parties of a deal and representing his client’s interests. Today, the most common type of broker is a stockbroker who works in the securities market. This profession perfectly matches those who are interested in economics and social studies.
The advantages of working as a trading broker include:
- High income with interest and bonuses.
- The ability to work for an employer or establish your own business.
- Acquaintances with famous and influential people.
- A wide range of potential customers around the world.
- Continuous self-development and the development of financial literacy skills.
A trading broker must predict situations, have numerous business connections, and be communicative and diversified. He should respond quickly and be able to analyze information obtained from different sources. Sober thinking and ability to plan are also important for a good broker.
Below you will find the steps you should follow to become a successful broker.
Step 1. Education and self-education
If you want to be a competitive specialist, you have to get a diploma. A degree in finances, economics, mathematics, or business management will be appropriate. A Master of Business Administration degree will be an additional advantage.
Be engaged in self-education: read various sources and watch financial programs. If you are still learning, you need to be already aware of the asset movements in the markets.
Step 2. Internship
Before starting your own business, it would be good for you to become an intern in a well-known brokerage firm or try to work with an experienced broker. You can be engaged in such activity in the last academic year of study. Join an "Investment Club" at the university or create your own.
You will receive valuable experience, create your investment portfolio, and learn how stock markets work from the perspective of an investor. You will be able to show this investment portfolio to your potential clients.
Step 3. Instruments and legal part
There is a specific procedure for the registration of a brokerage company in every country. Moreover, brokers are required to obtain several licenses before they are allowed to conduct business with clients. The most famous ones are Series 7 and 63 licenses. Each of them is obtained by passing the corresponding exam.
To start trading as a broker, you will first need specialized software to watch market activity, collect information about clients, and make deals quickly and with comfort. Also, you will need a business bank account, a marketing strategy, a well-branded website, and a client base.
Step 4. Building a client base
A trading broker can attract clients in many ways, including by making cold calls using a phone book and the principle "smile and dial." Another variant is to buy a list of pre-screened clients from a marketing firm or to become a member of an organization, like the local chamber of commerce, to build a network and meet prospective clients. Of course, you always can tap friends or relatives to obtain referrals.
Step 5. Starting trading
Usually, the starting point in the relationship between a broker and a client is the conclusion of a brokerage service agreement.
The day-to-day activities of a broker include contacting clients, managing funds of high net worth clients, running financial analysis, and preparing financial plans for his business.
A broker makes money mostly by gathering assets under management (AUM) and charging a fee as a percentage of these assets. Moreover, some brokers also charge a flat fee per account. The details regarding payment for brokerage services should be provided in the corresponding agreement with a client.
Therefore, those who can get past the initial obstacles and make every effort will enjoy an advantageous career with high income, special incentives, and social status.
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