In the Unites States, the Bureau of Labor Statistics (BLS) is the authorized body for reporting salary numbers for all professions. According to BLS, the median annual wage for stockbrokers in 2010 was $70,190. Now don’t get confused with median annual salary. The median salary amount represents a figure that the half stockbrokers earned below that amount and the other half earned above that amount. So the median annual salary should not be taken as a conclusive evidence of the stock broker salary numbers but rather as a general idea of what can be earned from this profession.
If we analyze the stock broker wages further, we can see that the lowest earning 10% of stockbrokers earned less than $31,330 while the highest earning 10% of stockbrokers earned in excess of $166,400.
How Much Does a Stock Broker Actually Make?
Many aspiring stockbrokers have asked the question regarding the actual salary numbers for stockbrokers. This is because the answer is quite contrasting as some people say that stockbrokers make millions of dollars while others criticize this opinion by saying that the eventual pay for stockbrokers is pretty low. What I want to say is both opinions aren’t exactly correct.
The actual earnings for stockbrokers depend on various factors like geography, qualifications, experience and actual performance. You can’t compare the pay for stock broker trainees with the portfolio managers. One experienced stockbroker has even said that stockbrokers are nothing but high paid salespeople. That means the more products you sell to the clients, the more commissions you’ll make.
As a stock broker trainee, you can expect to earn anywhere between $20,000 and $30,000 per annum. Even this should be considered high compared to the beginning salary for other careers. However, once you gain enough experience and exposure and build a solid client base, your basic salary will decrease while your commission rates will increase.
Similarly, location or geography plays a huge role in determining the stockbroker salary. For example a stockbroker in New York makes higher annual income in the range of $135,700 compared to someone from Kentucky who brings home just around $59,060 in annual salary.
There are around 330,000 stockbrokers operating in the USA so the average salary numbers can fluctuate drastically. On top of that, the amount of commission a stockbroker makes largely affects his/her overall salary.
How Does the Stock Broker Make Commissions?
Basically, the commission is calculated on the monetary value of the transactions conducted by the stockbroker. There are varying rates of commission for selling different products like shares, mutual funds, annuities, etc. Most stockbrokers work for brokerage firms and the firms pay commission to the individual brokers based on their performance during the day.
In the beginning, the brokerage firms pay decent salary to the stockbrokers. However as the stockbrokers start to build a portfolio of clients, their commission will increase while the salary will decrease to the point that it becomes almost nil. So to keep up with your earnings, you need to attract more clients and grow your sales. So, your client base eventually determines how much you make.
How Do Stockbrokers Build Client Base?
To make more money as a stockbroker, you need to grow your client base. To do this, you need to scour for prospective clients through various channels be it offline or online. Below are few tips that you can implement to effectively increase your client base.
You don’t need to look too further. Just look around you. Your friends and relatives are your most important contacts. They are the ones having a high likelihood of becoming customers. Tell them about the products you have on offer. Be honest in your approach and list the benefits associated with the product. You’ll definitely acquire a few customers.
Networking is another important process through which you can acquire prospective clients. One thing you have to keep in mind is that always network with like minded people. Since you are looking for investors, you need to target a specific group of people having a lot of capital to invest. Therein lies your opportunity to sell your products. Networking events, parties, functions, seminars are the perfect platforms for you to showcase your selling skills.
Start a Blog
Blogging is the best marketing method today that allows you to connect directly with your fans. Compared to traditional marketing methods, blogging evokes greater response. Just start a blog on investing and create interesting and useful contents that readers love to read. Compelling contents are often liked and shared on Social Medias so you can easily go viral with blogging if you take the right approach. Soon the word of mouth publicity starts to bring in lots of targeted visitors to your blog and they will eventually convert into customers.
Finally, the stock broker salary always depends on several factors like location, experience and client base. So the more you act towards increasing your client base, the more earning opportunity you will have.
Return to How to Become a Stockbroker.