The term stockbroker refers to registered broker-dealer sales representatives, as stockbrokers work in a sales capacity for the broker-dealer firms that employ them. As a registered representative in California you must become licensed to sell securities through the California Department of Corporations, Securities Regulation Division before you’ll be allowed to solicit clients.
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You must find sponsorship from a broker-dealer firm in order to register for the exams required for licensure. Your sponsoring broker-dealer firm will assist you in registering with the Financial Industry Regulatory Authority (FINRA). You will be licensed by the state of California to solicit clients when your FINRA registration has been accepted.
Step 1. Get Your Education
- Choose the right degree. While the California Securities Regulation Division does not have established educational requirements, most broker-dealer firms will require you to have a college degree. A bachelor’s degree is also commonly required if you choose to pursue professional designations.
As a stockbroker, you’ll benefit from majoring in the following areas:
- Business Administration
- Consumer and Family Financial Services
- Business communications
- Business law
- Business ethics
- Quantitative applications in business
- Behavior of organizations, persons and groups
- Accounting, in particular courses in financial accounting and managerial accounting
Step 2: Take the Required Exams to Become a Licensed Stockbroker in California
- Seek sponsorship through a broker-dealer firm registered in California so you can take the Series 7 Exam. Research open positions by networking, reviewing online job boards, or applying for a position directly through a firm that interests you.
- Submit a Form U-4, Uniform Application for Securities Registration or Transfer. Your broker-dealer’s compliance department will assist you. When complete, your broker-dealer firm will file it electronically through the Central Registration Depository (CRD).
- The Form U-4 application includes information on your residential and criminal background history.
- FINRA requires a registration fee of $85. Your broker-dealer will most likely pay this fee on your behalf.
- The test fees that are required to participate in the exams are $265 for the Series 7, $96 for the Series 63, and $128 for the Series 66.
- FINRA also requires that you provide a copy of your fingerprints. You can visit your local police station or sheriff’s office where you can be fingerprinted for a small cost. To process the fingerprint card, FINRA charges your broker-dealer $30.25. In addition, California’s processing fee for each fingerprint submission is $20
- The registration fee in California is $25, which is paid by your broker-dealer to the California Securities Regulation Division through the CRD.
- There several Pearson and Prometric testing centers in California
- You are not allowed to take multiple exams in the same day
- Be sure to schedule the Series 7 and the Series 63 or 66 within 120 days of FINRA registration
Step 3: Get Your On-The-Job Training
Your broker-dealer will provide you with in-house training sessions. You may shadow a fellow employee or attend training sessions in order to gain a better understanding of how your broker-dealer conducts business, as well as to learn the fundamentals of securities sales. On-the-job sales and product knowledge training will be provided to you as you progress in your career.
Your on-the-job training will prepare you to solicit clients and offer them advice on appropriately suitable financial vehicles. You will most likely learn about the following securities products:
- Variable contracts
- Options on stocks
- Mutual funds
- Corporate, municipal and treasury bonds
- Corporate equity and debt securities
- Government securities
- Open-end and closed-end investment company shares
- Direct participation programs like non-publicly traded real estate investment trusts or oil and gas leases
Step 4: Ongoing Requirements for License Renewal and Continuing Education
- Annual License Renewal and Fees
Your securities license in California is automatically renewed each year. There is no charge in California to renew securities licenses.
- Continuing Education Requirements
Continuing Education requirements as defined by the Securities Industry Continuing Education Program apply to all registered representatives. Continuing education is made up of two elements:
- The Regulatory Element
One Regulatory Element training program is required by FINRA at the beginning of your third year in practice, within 120 days of your second annual registration. You are required to complete one Regulatory Element module every three years. The Regulatory Element is frequently updated to reflect new industry trends. Your broker-dealer’s compliance department will alert you when you are required to complete training.
Series 7 licensed registered representatives must complete the S101 General Program as the Regulatory Element requirement. The S101 addresses the following general subject areas:
- Handling Customer Accounts/Trade and Settlement Practices
- Communicating with the Public
- Client/Product Suitability
- New and Secondary Offering & Corporate Finance
- The Firm Element
Each year your broker-dealer firm will complete an internal evaluation based on FINRA-identified criteria. You are required to complete Firm Element training once a year. It covers relevant product and industry related training as it relates to your broker-dealer. Firm Element training will likely touch upon the following topics:
- Regulatory requirements related to products, services, and strategies
- Sales practices and suitability standards
- Investment features and associated risk factors
- The Regulatory Element
- Updating your Form U-4
Changes that occur affecting your Form U-4 must be disclosed to your broker-dealer’s compliance department. Your registration information will be updated and FINRA will be alerted of the changes. Changes in the following require updates to Form U-4:
- Address updates
- Criminal disclosure
- Civil judgments against you
- Changes to name or marital status
- Customer complaints
- Financial judgments against you
- Pending or completed disciplinary actions
The status of your registration is available to the public through FINRA’s BrokerCheck.