Role of Stockbrokers

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Role of Stockbrokers

The term broker has been used to describe financial transaction agents since the seventeenth century. Brokers are part of a bigger category known as investment bankers, a group that is also not new. Investment bankers have been around since at least the Middle Ages when they were responsible for raising the monies necessary for kings and queens to wage war on one another. The adjective "investment" describing banker only means that the banker focuses on investment as opposed to other banker functions such as retail banking, which deals with such things as checking and savings for the general public.

Modern standards are substantially less dramatic and violent. A stockbroker today is a person who has passed a test called a Series 7 Exam administered by the Securities and Exchange Commission (SEC) and, as such, has the necessary qualifications to buy and sell stock for his or her clients . A brokerage firm is nothing more than a firm composed of, you guessed it, stockbrokers.

What kind of people become stockbrokers? Those who obviously have some sort of interest in finance, economics, and the stock market. This would be necessary, as the Series 7 exam is not easy and the career of a stockbroker, because of the high pressure, is generally pretty short (about two to three years ). For those reasons, most brokerage houses will pay for new brokers to take classes, similar to preparing for the SAT, and even pay for the new broker to take the exam. The new broker would then, however, be committed to work for the brokerage house for a period of time, again, usually a couple of years. Most of the people who go through this are also attracted by the availability of high income. As brokers work on commission, their pay is directly tied to how motivated they are to sell stock. An aggressive broker can make hundreds of thousands, or even millions of dollars per year.

In addition to having the qualifications including licensing and knowledge of stocks and the markets, brokers are the only ones legally permitted to buy and sell stock, so they've got a lock on the market. Like it or not, you've got to use a broker or brokerage firm to buy stocks.

Luckily, since the abolishment of standardized broker fees in 1975, many different types and price structures for stockbrokers now exist. Everyone has access to any number of competing firms, so you can pick the type of broker or brokerage that is most applicable to your needs.

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Stock Market Investing 10 Minute Guide
Stock Market Investing 10 Minute Guide
ISBN: 0028636104
EAN: 2147483647
Year: 2000
Pages: 130
Authors: Alex Saenz

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