| What most people refer to as a stock broker is | | | | commission. In the past, some unscrupulous brokers |
| basically a securities broker. The broker works with | | | | have increased their earnings by "flipping" stocks, or |
| clients, which may be individuals, pension funds, or | | | | buying and selling more frequently than is needed. |
| other institutions to buy and sell stocks, mutual funds, | | | | Those who work for online discount brokerage firms |
| and bonds. For his services, the securities broker | | | | are usually compensated on a flat salary basis, |
| receives a commission based on the amount of the | | | | regardless of the activity in their clients' portfolios. |
| transaction. | | | | A securities broker may specialize in one aspect of |
| A full service securities broker will work with clients | | | | investing, such as initial public offerings, mutual funds, |
| to determine how much they have available to invest | | | | or government securities. Or the broker may handle |
| and what their goals and needs are. He will usually | | | | all investment opportunities for the general public. |
| recommend certain stocks, but get the approval of | | | | Other brokers work primarily with pension fund |
| the client before purchasing them. | | | | investments, real estate investments, or investment |
| Securities brokers are often involved in the IPO, or | | | | banks. |
| initial public offering, of a new company or one that | | | | A full service securities broker will take the time to |
| has heretofore been privately held. The Securities | | | | meet with prospective clients to carefully analyze |
| and Exchange Commission has very strict guidelines | | | | their financial picture. He will recommend investments |
| for stock that is to be sold to the general public, and | | | | based on factors such as the length of time until |
| the services of a securities broker is often of great | | | | retirement, the amount of liquid assets the client has, |
| benefit in these cases. | | | | and other aspects such as insurance or home equity. |
| When searching for a securities broker, prospective | | | | Additional services, such as the sales of insurance |
| clients should make sure that they are registered | | | | policies, may be offered by the firm or one of its |
| with the Financial Industry Regulatory Authority, also | | | | affiliates. |
| known as FINRA. The firm for which they work | | | | Securities brokers are subject to various laws and |
| must also be registered, and the broker must have | | | | rules passed by the Securities and Exchange |
| worked there for a minimum of 4 months as well as | | | | Commission. Brokers are required to offer not only a |
| pass the Series 7 exam, or the General Securities | | | | prospectus to clients but also disclose any public |
| Registered Representative Exam. Many individual | | | | information not included in the prospectus that could |
| states also require further licensing, such as the | | | | impact the investment. Insider trading is a criminal |
| Uniform Securities Exam. | | | | offense, and brokers are not the only ones who can |
| Securities brokers who work for a traditional | | | | be charged. |
| brokerage firm are typically compensated by | | | | |