Stockbrokers are securities market experts who work to align retail investors with the most suitable investment options. The Texas Securities Act uses the term securities dealer agent to describe stockbrokers, who must meet exam requirements and submit to a federal background check in order to become registered with the Texas State Securities Board and an SEC-recognized self-regulatory organization (SRO).
Follow the steps in this guide to learn about the sponsorship, examination and SRO affiliation requirements for becoming a stockbroker in Texas.
Step 1. Get Your Education
The Texas State Securities Board has no established educational requirements for becoming a stockbroker, but many broker-dealer firms will require that applicants for sponsorship hold a bachelor’s degree. Additionally, if you choose to pursue professional designations during your career, a bachelor’s degree, at minimum, is usually required.
As you explore your options, consider the following degrees as they are highly relevant to the work you’ll perform:
- BS-Business Administration- Finance
- BA-Consumer and Family Financial Services
- BS-Business Administration- Finance
Business and finance courses will prime you with knowledge of the financial industry; while sales and marketing courses will help you establish and maintain a loyal client base. The following courses will give you a solid introduction to the world of finance and investing:
- 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
- You must obtain sponsorship through a broker-dealer firm registered in Texas before applying for the comprehensive Series 7 Exam, or another more limited securities product exam. Explore your options thoroughly and consider both large global firms and smaller independent regional firms. Research each firm’s investment philosophy to determine which firm would fit you best.
- Your sponsoring firm will help you complete and submit the proper application forms and accompanying material used to apply for the required exams and for registration with the Texas State Securities Board.If you are associated with a Financial Industry Regulatory Authority (FINRA) member firm:Fill out Form U-4, Uniform Application for Securities Registration or Transfer. This will serve as an application for the required exams and for registration with the Texas State Securities Board. Once complete, you firm will submit it to FINRA through the Central Registration Depository (CRD) along with the required accompanying material:
- FINRA’s $85 registration fee
- All applicable Series Exam fees ($245 for the Series 7, $147 for the Series 63, and $177 for the Series 66)
- You will also be required to provide a copy of your fingerprints to FINRA used for an FBI background check. If your sponsoring firm cannot assist you with fingerprints, contact your local police station or sheriff’s office to obtain them for a small fee.
- The Texas State Securities Board’s $285 initial registration fee
If you are associated with a non-FINRA member firm, you’ll enroll for your FINRA exam on the FINRA website. To enroll for FINRA exams, you must be sponsored by a state regulator or regulatory authority approved to sponsor candidates for FINRA qualifying exams. Upon receipt of your eligibility information from a sponsoring organization, FINRA will email enrollment instructions to you.
- Once your exam application has been reviewed and approved, you will be allowed to register for the Series 7, General Securities Representative Examination, or any other more limited securities exam as directed by your sponsoring firm, and EITHER the Series 63, Uniform Securities Agent State Law Examination, OR the Series 66, Uniform Combined State Law Examination.Register for and schedule exams directly with the exam facilitator, choosing the exam location in Texas nearest you.
- Be well prepared and take full advantage of exam preparation materials made available to you by your sponsoring firm. Arrive an hour before your scheduled time and be sure to bring identification with you as indicated by the exam facilitator.
- You will receive your exam score immediately after completing each test. Once you have passed all required exams, you will be licensed as a securities dealer agent in Texas.
Step 3: Get Your On-The-Job Training
Take advantage of all opportunities to observe the firm’s most successful senior agents in action. Listening in on their sales calls may provide you with the most valuable exposure to effective sales practices possible as you work to hone your skills in retaining clients and aligning them with suitable investments. For this reason, on-the-job training will usually include job shadowing a senior agent, in addition to classroom based formal group session training.
Your on-the-job training will expand your product knowledge by exploring the securities covered in the Series 7 Exam in greater depth:
- Options on stocks
- Variable contracts
- 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 Texas securities license will be renewed automatically before the end of each year. Your employer will cover the Texas State Securities Board’s $275 renewal fee, which is distributed through the Web-CRD (Central Registration Depository). If you are employed by a non-FINRA member firm, your renewal fee will be submitted directly to the Texas State Securities Board at P.O. Box 13167Austin, TX 78701-3167.
Continuing Education Requirements
The Securities Industry Continuing Education Program is made up of two elements that must be completed on an annual and tri-annual basis respectively in order to keep your securities license current.
- The Regulatory Element
The first Regulatory Element is due at the beginning of your third year (within 120 days of your second annual registration), and then once every three years throughout your career.The Regulatory Element for stockbrokers who hold the Series 7 license is called the S101 General Program. The S101 addresses regulatory standards, compliance and ethics in the context of sales-practices. S101 consists of four modules that include:
- Communicating with the Public
- Client/Product Suitability
- New and Secondary Offering & Corporate Finance
- Handling Customer Accounts/Trade and Settlement Practices
- The Firm Element
Relevant financial industry topics are determined by FINRA each year, which serve as the basis for the Firm Element. The Firm Element generally addresses the following topics:
- Investment features and associated risk factors
- Regulatory requirements related to products, services, and strategies
- Sales practices and suitability standards
Updating your Form U-4
You must inform your employing broker-dealer firm’s compliance department of any changes that occur affecting your Form U-4 registration. Your firm will update your registration information within 30 days of the following:
- Address updates
- Changes to name or marital status
- Pending or completed disciplinary actions
- Customer complaints
- Civil judgments against you
- Financial judgments against you
- Criminal disclosure
The public can access your securities registration information by visiting FINRA’s BrokerCheck, so it is wise to review it periodically to ensure its accuracy.