Independent Stock Brokers – Is CEO in Your Career Path?

Becoming an Independent Stock Broker is no easy task, it takes hard work, dedication and knowledge. However, once there, a fulfilling career awaits.

Independent stock brokers receive more freedom as they’re not restricted by policies from large brokerage firms.

They can also earn more of the income generated from clients rather than a graduated commission rate.

Essentially, it’s an ideal position to be in once an established broker. It could even be a stepping stone to running your own firm.

When deciding to be a stock broker, you have three levels of independence you can choose from:

(1) – Minimal Independence: You can work for a large brokerage firm or wirehouse like Goldman Sachs or Morgan Stanley.

  • This is beneficial for younger stock brokers as they’ll be offered rigorous training (with pay) and time to prepare for various licensing exams.
  • Once established, all the resources large firms offer like name recognition, knowledge-sharing from co-workers and networking opportunities can be available.

(2) – More Independence: Alternatively, one could work for an independent broker/dealer (IBD) like Independent Financial Group or LPL Financial.

  • This allows for a bit more freedom without the strict sales quotas or direct supervisors watching your every move.
  • You’ll be an independent contractor operating under the IBD name or can create your own name as a DBA (Doing Business As).
  • The IBD will offer a trading platform to buy and sell securities online, back-office support (compliance, accounting, record-keeping), handle payroll and allow you to earn a higher percentage of the commissions you generate.

(3) – Totally Independent: Lastly, you can choose true independence by starting your own firm that you manage.

  • This is ideal for experienced independent stock brokers who’ve built up a client base loyal to them and not any particular firm.
  • The potential for growth and building wealth is greater here. Just think Merrill Lynch or Edward Jones.
  • You’ll have even more freedom to do things as you see fit. No bureaucracy or approvals to wait for. Simply make decisions and implement.

From Independent Stock Broker to Broker/Dealer CEO

Tips for Independent Stock Brokers

Series 24 License:

If choosing to be a totally independent broker/dealer, in addition to having the series 7 license, you must also have the series 24 license as well.

With this license you’ll be able to supervise/manage stock brokers, sales and customer accounts related to investment banking. This license is necessary for compliance officers or branch managers of a firm and is called the General Securities Principal.

Series 27 License:

Also, the series 27, or Financial Operations Principal, license will be required. This license is for anyone who desires to be a Chief Financial Officer of a FINRA member firm.

  • It is meant to protect the investing public as it covers net capital rules, costumer protection, various regulations and Uniform Practice Rules.
  • You’ll also be responsible for the record-keeping of the purchasing and sale of securities, supervising back office activities and financial compliance like submitting reports to the SEC.

FINRA and SEC Membership:

In addition to obtaining those licenses, your firm must become a member of FINRA and register with the Securities Exchange Commission (SEC) using Form BD.

FINRA registration is a meticulous process that includes reviews, repeated application inquiries and interviews with FINRA staff. It can take 4 to 6 months to complete.

Capital Needed:

You’ll need a sufficient amount of capital (typically a year’s worth to be safe) as your firm will not be able to conduct any transactions until an approved member of FINRA.

SIPC Membership:

Finally, becoming a member of the Securities Investors Protection Corporation (SIPC) is required. Don’t worry, once a registered broker, you are automatically a member. The SIPC will step in to protect investors’ assets of up to $500,000 if your firm fails.

Read More: Find Out More about Becoming a Stock Broker Here.

How Independent Stock Brokers Can Maximize Their Potential

Here are some pointers to keep in mind for independent stock brokers:

  • Pick A Great Team: Partnering with other experienced financial advisors and independent stock brokers will increase the likelihood of success. It’s a good idea to choose a team you know you’ll work well with. That’s why building a strong professional network during your career is important.
  • Be Constant and Predictable: Providing your clients with up-to-date information, analysis and accurate recommendations will remind them of your value. This helps with retention and encourages referrals.
  • Spread the Word: Many independent stock brokers have their own radio shows, TV news segments or even host charity events just to interact with the public and stay fresh in their minds. Implementing marketing strategies will increase clientele.

Read More: Learn Ways to Market Yourself as a Stock Broker Here.

Choose Wisely

When it comes to choosing your level of independence as a stock broker, understand that the more independence you have, the more work will be required. Prosperity will come to those who have sound business plans, exceptional knowledge of the industry and a persistent determination to succeed.

Independent Stock Brokers LPL Financial Securities Investors Protection Corporation series 24 license series 27
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