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Stockbrokers act as agents for investor customers. They assist customers in the purchase and sale of investments such as stocks, bonds, options, and mutual funds. PayScale reports that where a stockbroker works may affect annual earnings. Amount of experience influences stockbroker earnings less than investor assets under management. Many stockbrokers work on commission. They often receive a percentage of revenues generated from their clients rather than a guaranteed salary.
Stockbrokers with about a year's experience earn approximately $30,000 to $55,000, according to "Industries and Careers for Undergraduates," a career guide published in 2008. Most stockbrokers in practice for a year or less receive guaranteed compensation, while they learn the securities business. The first several months of training involve studying for the Financial Industry Regulatory Authority's (FINRA) Series 7 license examination. Many large broker-dealers have one- to two-year training programs. During that period, the broker develops clients.
Stockbrokers working for a broker-dealer increase client assets with each year they are in business. Generally speaking, more assets under management increase a broker's compensation at a sell-side firm. Firms selling financial products, services, and securities in exchange for fees are called sell-side companies.
According to the Bureau of Labor Statistics' "Occupational Handbook 2010-2011 Edition," stockbroker trainees receive a salary until they develop customer relationships. After the first two years of training, the financial assets managed by the stockbroker -- and the fees she derives from them -- determine her compensation.
According to PayScale, the average compensation for all stockbrokers in the nation is approximately $39,000 to $64,000 per year. Stockbrokers may receive compensation in salary, bonuses, profit sharing, and commissions.
Many stockbrokers receive compensation based upon revenues generated from the sales of financial products, securities, and fees. For example, clients pay fees for portfolio management services. PayScale reports that the national range for commission-compensated stockbrokers is $25,434 to $241,935 as of November 2010.
Where a broker works helps to determine his compensation. According to PayScale, the most highly paid stockbrokers work in New York City and earn $50,000 to $100,000 per year. Stockbrokers in Dallas, Boston, Chicago, Seattle, Salt Lake City, Miami, and Charlotte earn almost as much. The concentration of customer wealth helps stockbrokers interact with greater numbers of affluent investors in these markets.
According to PayScale, stockbrokers at Scott Trade and Charles Schwab earn less than stockbrokers at full-service firms. Scott Trade and Charles Schwab offer discounted commissions and services to investors. Discount brokerages offer lower commissions and service fees and less access to printed research reports. Scott Trade brokers report compensation of $36,000 to $44,000. Charles Schwab brokers report compensation of $34,000 to $38,000.
Specialty stockbrokers, such as those on the floor of the New York Stock Exchange, earn higher average incomes than retail or individual stockbrokers. According to "Career Opportunities In Banking, Finance, and Insurance," floor stockbrokers earn $101,000 to about $170,000 per year. Their job function differs in that they ensure the execution of orders coming from a broker-dealer firm.
- WetFeet Guide: "Industries and Careers for Undergraduates"; 2008; Page 86
- Bureau of Labor Statistics: "Occupational Handbook: 2010-2011 Edition"
- "Career Opportunities In Banking, Finance, and Insurance"; Thomas P. Fitch; 2008; Page 145: Floor Stock Brokers
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