So, You Want To Be A Broker?


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With a fresh batch of college graduates entering the workforce and a recently lively stock market; questions are being asked as to how to become a broker. It seems that in some sectors, there is this rather inaccurate belief that being a stockbroker is a quick and easy way to make a living. Frankly speaking, it is not.

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To begin with, we have to be clear about the HUGE difference between being a stockbroker and a stock TRADER. A broker acts on behalf of other people while a trader primarily trades for their own account. It is when people confuse the latter for the former that misconceptions can arise.

What do I mean? Let’s go straight to the meat of the matter and see how much a BROKER really makes.

Simply put, based on prevailing practices, for every ONE MILLION peso transaction that a broker executes for his client, he will get (net of taxes) Php 1,360 pesos. Still sound attractive? Keep in mind, as a broker, rightly or wrongly, you WILL be held PERSONALLY accountable for your stock picks and recommendations. Put another way, pag kumita – dapat lang di ba? Pag malugi naman, kasalanan mo. :P

In contrast, take a look at people in the managed fund industry (Mutual Funds and UITFs). For a One Million peso placement, there will usually be a sales-load of 1% to 2% (depending on the fund / payment plan). Of that amount, there will be a sharing between the company and agent of some sort.

Then, from the 990,000 pesos or so that actually gets invested, the fund manager will take 1.5% to 2% per year – regardless of performance.

What’s my point? As a BROKER you are expected to perform BOTH of those jobs at a HIGHER level of personal responsibility for LOWER pay. Seriously, when the market dropped, could a person who invested in managed funds called their fund manager and chewed them out? Do you even PERSONALLY know WHO your fund manager is?

Still want to be a broker?

If you do, I can say that the biggest asset you can have is WHO you know. Simply put, if you know enough rich people, then you can potentially succeed in this business. If not, then it is going to be VERY difficult to earn a living.

Aya Laraya, Investment Advocate

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Comments

  1. Henry Luna says

    Good afternoon Mr. Laraya, I am one of the participants who attended your seminar. I would like to ask if you can kindly recall to me why investing in a condominium is not that profitable compared to other investments. You said 1 month rent will go to __________, 3 months rent will go to______________ and another month’s rent will go to _______________. Thank you in advance for the reply. Best Regards.

    • says

      1 Month to the broker who found you the tenant.
      Close to 3 months to taxes since you SHOULD be declaring the rent you receive as income. It is taxable. There is also annual real estate taxes.
      Close to another month or maybe even more for maintenance since units are not always occupied.

  2. says

    Pwede pa din siguro private trader for clients. Open ako another COL account for trading for my clients. Usually client ko malamang yung mga ‘wala interes sa stocks pero may extra pera pang invest’, i’ll charge them 10% of the net gain. Ayos na yun. :D v

  3. says

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