IN THIS CHAPTER

Understanding how to survive and prosper as a stockbroker

Socking away (or investing) money

Passing the Series 7 exam can be one of the high points in your life. You’ve dedicated yourself to attaining your goal, put your life (and partying) on hold while you studied, and fulfilled your commitment to long hours of studying and hard work. You’re now ready to reap the rewards. As you begin your new profession, you’ll encounter many new hurdles. I give you this chapter to help prepare you for what to expect and, hopefully, to maximize your chances of a long, successful career.

Win at the Numbers Game

As with any other sales job, selling securities to investors is a numbers game. Some people actually track the number of calls it takes to open a new account, but I’m not among them. There are no specific economic benchmarks; however, you may have to make 500 cold calls to get to talk to 150 people. Out of these 150 people, you may generate ten leads. Out of every ten leads, you may open up one account.

The point is that you have to pick up that phone day in and day out and make the calls. If you’re making 200 to 300 phone calls per day, you’re likely to open an account every few days. However, if you’re making 50 phone calls a day, you’ll probably open up an account every couple weeks, and unless you hook a whale (a huge investor who likes to trade), you’ll have trouble paying for gas for your new car. Remember that you’re participating in a numbers game and that every “no” brings you one call closer to a “yes.”

Be an Apprentice

There’s no better way to hit the ground running than to have a top producer as a role model. Find the person in your firm with sales techniques that are most comfortable for you and invest as much time as possible watching how this mentor conducts herself on a daily basis. Top producers earn the most income because they’ve found a way to stand out in a competitive market.

Maybe this person can take you under her wing and show you the ropes in return for leads you develop while under her supervision. You can even have a contract between you and your mentor that sets forth the agreed-upon terms for each of you for a fixed period of time.

Do Your Homework

Take time to find out as much as possible about the securities you’re trying to sell. When you know what you’re talking about, you inspire confidence from potential new customers. Spend some of your free time watching investing programs and reading the Wall Street Journal or any other trade magazines or newspapers you can get your hands on. The more you learn, the more comfortable you’ll be on the phone, and the more sales you’ll make.

Treat the Minnow like a Whale

More often than not, new customers don’t disclose all their financial background to you. However, whether a customer has $10,000 or $10 million to invest, the money is important to her. Treat every customer as though she’s the most valuable person in the world. Who knows? You may be speaking to someone with a lot of money to invest now or someone who will have a lot of money to invest in the future, or your customer may be a friend or family member of someone with substantial resources. Remember, a strong referral is a most influential lead.

Smile When You Dial

Be positive. You’re going to have good days and bad days. You have to accept that as part of the business, but don’t let it get you down. If you need to, take a five-minute break to gather your thoughts. If you aren’t in a positive state of mind, you’ll reflect that in the way you talk to existing or potential customers.

When a Security Falls, Don’t Be a Stranger

You can’t guarantee success, and that’s okay. Savvy investors know that not every investment can end up a winner, no matter how good the situation looks in the beginning. If you recommend a security and it gets beaten down, call your customer. The customer is just waiting to hear from you. This call may be right up there with the most uncomfortable tasks you’ll ever have to perform. Remember, however, that a savvy customer is most likely aware of what’s going on, and your news won’t be a surprise. Customers just want to be comforted and reassured that you’ll be there with them — in good times and bad. Hopefully, the other seven or eight securities that you recommended are doing well.

Put In the Hours

Of course, you have to educate yourself about selling your products and cold-calling. In the beginning, be prepared to put in approximately ten hours each day. As you grow more experienced, you’ll receive more leads and open more accounts in a shorter period of time, but in the beginning, you have to play the numbers game in order to earn money while you develop a more confident sales pitch.

Broaden Your Horizons

Consider obtaining other licenses to increase your skills and your ability to compete in the securities and financial industry. For example, the Series 65 or 66 (investment adviser exams) allows you to receive a fee for giving investment advice; Series 24 (the principal’s license exam) allows you to manage other registered reps; and a Life, Accident, and Health Insurance license allows you to sell insurance policies and variable annuities to customers. If you take prep courses to obtain these licenses, you may also be exposed to a network of professionals who can become a source of future referrals.

Pay Yourself First

The stock market (and you with it) will have many peaks and valleys, but your financial security doesn’t have to be quite so uneven. In the peak times, put away half your earnings when you receive your big paychecks. Tell yourself that you aren’t going to make a big purchase until you have a certain amount socked away (see the upcoming section on setting goals). I’ve seen too many new brokers go out and buy a new car, a new boat, or whatever with their first big paycheck, expecting to make that much every month. The first time they have a bad month, they’re wondering how they’re going to make the payments (and possibly pay the rent). Remember, stockbrokers are supposed to be good with money. Burying yourself in debt looks kind of bad.

Set Some Goals: The Brass Ring

Focus on your goals. Successful people have realistic short-term and long-term goals and a plan to achieve them. Whether your short-term goal is to put $5,000 away per month or to open ten new accounts, identifying what you want to do is the first step in creating a plan for your future.

What’s the first thing every broker wants to do with the first big paycheck? You guessed it — buy a new car. Although that glistening Porsche can be an awesome incentive, set yourself smaller milestones to reach prior to making a big purchase. You can break down long-term goals, such as paying for a wedding, buying a new car, or purchasing your first house, into monthly income goals after you figure out the costs involved. Take a picture of your dream car or house and put it in a frame on your desk to remind you of the reward that awaits you.

Whatever your plan is, setting your mind on what you want, defining the steps you have to take to get there, and focusing your efforts on accomplishing each goal are the essential elements of a lucrative and rewarding career. Remember, you control your destiny.