What is a Securities Broker?

Cassie L. Damewood
Cassie L. Damewood
Businessman with a briefcase
Businessman with a briefcase

A securities broker is the liaison between people who desire to invest their money in bonds, stocks, commodities and other securities and the sellers of such products. He advises his clients based on their liquidity, preferred length of investment and desired level of risk. Once they have invested in the market, he may also advise them on selling their securities. His work may be conducted from an office in a bank or securities firm or from a home office.

Each investor with whom a securities broker interacts is normally quite different. His clients may range from those with small sums to invest to those with a great deal of wealth. Attitudes of investors generally vary from the staunchly conservative to the bold risk taker. One investor may be looking for a quick return on his venture while another is content to watch his outlay ebb and flow over a period of years.

If the investor has conservative leanings and is not looking to get rich quick, the broker commonly recommends putting the money into a mutual fund or a corporate or government bond purchase. Conversely, a wealthy investor looking for a risky venture may be guided to putting his investment into a company with unproven performance but tremendous potential to generate fast and substantial returns.

Successfully advising clients depends highly upon a securities broker’s communication skills and his ability to remain objective. He is normally required to advise his clients based on their long and short-term goals, so his ability to listen and keep those goals in mind without wavering is important. Even if he is excited about an investment opportunity, he is generally expected to remain objective and not influence his customer to take atypical risks. The broker should generally never present himself as a salesperson or representative for a particular company or investment category.

A securities broker is typically trained to present available investment opportunities without bias or prejudice through recommending diversified portfolios. Regardless of his client’s stated desires, he is traditionally schooled to keep emphasizing the advantages of diversification. A securities broker generally reminds his customers that despite current market trends, a particular sector could dramatically rise or fall at any time. If they follow his recommendations to not put all their money into one stock, they may reduce the risk of losing everything in the event of a crash.

Most securities brokers have a bachelor’s or master’s degree in some area of accounting, business management or finance. Experience in banking or financial services is highly preferred this position. Licenses and certifications are required in many regions for securities brokers to trade specified stocks and bonds.

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