Hi everyone, I am new to this field and I am wondering if there are any differences between a stockbroker trainee and a prop. trader trainee, in terms of work functionality or compensation. Thanks!
You do know that a stock broker is a salesman don't you? Most of them don't know shit as far as what is going on. They regurgitate the daily brokerage strategy. At least most of them work on a % basis of money managed now. Used to be where they would actually sell inventory - whatever the firm was trying to push. It can be a very scummy job if you work for the wrong firm. I lasted all of a few months as a broker and went straight into trading after. No training back in those days though (1987).
I can offer a little here - I was a stockbroker for 4.5 years before deciding to become a full-time trader. I can tell you this - you will learn NOTHING about trading in your stockbroker training. You will learn how to sell. And sell some more. The firm will tell you what to sell. Don't even bother mentioning technical analysis or anything like that. Your job is to sell - mutual funds, annuities, managed funds, insurance, etc. If you are interested in trading - day-to-day plays, hour-by-hour, minute-by-minute - don't bother wasting your time as a broker trainee. If you want to sell and like working on commission, the broker is a good way to go. In case I was not clear, as a broker your job is to SELL. Forget about active trading or even coming up with your own ideas.
I obviously agree with Brownsfan above. We get quite a number of stockbrokers that want to be traders...(they are a little harder to train than those from other vocations, LOL..but that's another story). As my brother says "brokers make you broker" and it's hard to keep generating commish when your clients hate you. Most new brokers suck in their friends and family and then do "cold calling"....not much fun...either "produce" or get fired. We, as a nation, don't need retail brokers much anymore anyway, a real dying breed. IMHO, Don
Shouldn't we stipulate that "stockbrokers" are no different than "traders" in that some are terrible, lose money, and quit while others work hard, are successful, make a lot of money over a career. Some "stockbrokers" (although they are now called Financial Advisor's) are terrible, have know idea what they are doing, lose money for their clients, and quit to find another job while others are very sharp guys, successful, consistently make money for their clients and a heck of a nice living for themselves as a result. My cousin is a "Financial Advisor" with Merrill and a very sharp guy when in comes to investments, stocks, etc., and yes-even trading. He has a book of business managing about $500 million with a return on assets of about .5%=$2.5 mm gross X a 40% payout =$1,000,000 take home. Not bad. His clients range from hedge funds to foundations and endowments to high net worth families all of whom I doubt would stay with him if he was a total boob. He of course is in the minority, but I also know many others that fit the same bill but on a smaller scale. I'm just sayin...
snoop - you are 100% correct that some are good and some are bad. I guess I was viewing the request on a trader forum and the post sounded like there was no difference in going prop or stockbroker route. There obviously is and if the poster would like to trade, he/she should look at the prop/on their own route. You are not going to learn how to trade at brokerage firm. Once you have a large book, like your cousin, you can pretty much do what you want. Once you reach that level you have the firm by the balls, whereas at the beginning the firm has you by the balls. Snoop brings up great points though. If going that route is what you want to do, work hard and bust your butt on the phones. It can be done. I just got tired of it. 4.5 years of calling, knocking on doors, being everyone's 'friend' - it just got tiring.
I still have nightmares about making those 300 plus a day cold calls, and that was over twenty years ago....oh the memories!
Yeah, and 20 years ago everyone couldn't do it all themselves via the Web. When Dean Witter laid off 80% of brokers back in (I think) 1999, I think it pretty much signaled the end of the retail broker (exceptions of course, mine calls himself something like "Special Client Advisor" or something, LOL. But he knows better than to ever call me, LOL. Don
Don, End of the retail broker? I'm not sure. Big wirehouses like Merrill, UBS, Morgan Stanley etc have roughly 10,000-12,000 "brokers", average take home pay is about $160,000 with about $50 million under management. Upper end guys take home between 400K and 1 million and have between 250 mm and 500mm under management. Sure, anyone these days can "do it themselves" at E-trade for $20 which means they can execute trades themselves. But do they actually make money for themselves long term? I highly doubt most do. Like my previous post mentioned-sure some are bad, some are good. The ones I know personally are smart guys who have consistently made money for people over the years. You are obviously in a business where you would hate to have someone (probably even buffett) call you and tell you to buy a stock. But fact is, most people can't make themselves money in the market, even if they think they can. It takes them years to finalyy figure it out. Many probably never do.
I agree with Snoop here - the 'stockbroker' may be going to the waste side, but the 'financial advisor' is not. While we look at this stuff daily, MANY Americans do not want to even touch it. Just go ask some people what's in their 401k's. You'll probably hear 'I have no idea' or 'stuff'. It's true and that's where I made my living for 4.5 years. The business itself is not bad and as Snoop said, you can make some good money there as well. I think some people hear 'stockbroker' and immediately think of someone at Scottrade or someone just sitting by the phone waiting for you to call an order in. That does not happen anymore. But, getting back to the original poster's questions, to get into trading you need to talk to guys like Don. To get into cold calling and selling products, talk to Snoop's cousin.