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What is the difference between a Stockbroker, an Investment Banker and a Trader?

Trader vs Stockbroker vs Investment banker
What different tasks do you do in each profession?
Which earns the more on average/has the potential to earn the most
Which is more/less stressful?
Which have better/worse hours?
Which is harder to get into?
What would you say is best overall?

(edited 8 years ago)

Reply 1

username738914

Original post by HamzahPatel

'Stockbrokers' don't exist in any given quantity anymore. The paths you should be looking into are: inter-dealer broking, trading, sales, private banking, asset management, equities/credit/fixed income research and investment banking.

Tonnes of info out there already:

Mergers and Inquisitions, the Unofficial Guide to Banking, AllAboutFinanceCareers and the Investment Banking Guide by Vault, Wall Street Oasis - FAQ

- I-banker will earn more than a broker in most circumstances, but a good broker can earn a lot
- I-banking is more hours and greater stress at the entry level but then becomes more about sales/wining and dining at the senior level (hours decrease too). Broking is about shmoozing/closing accounts more than anything
- I-banking is more difficult to get into
- Best overall is subjective, I'd go for IB because of the exit opportunities and skillset it gives you

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Reply 2

Commercial Paper

Original post by HamzahPatel

A trader is a market maker providing liquidity to the financial system. A stockbroker/inter-dealer broker gives advice and facilitates buying and selling of stocks. An investment banker advises large corporates on capital raising services and mergers and acquisitions.

Senior investment bankers and traders will typically earn more than stockbrokers but this is dependent on the role/bank/product/team. A top senior investment banker or trader can normally earn over £500,000-£1,500,000 after bonuses.

Investment bankers have more chronic stress, traders have a lot of short-term stress and to a lesser extent, stockbrokers do as well. Arguably, an investment banker has the most stressful job.

Investment bankers have by far the worst hours followed by traders/stockbrokers.

Investment banking and trading are equally as hard to get into. Arguably, inter-dealer broking may be slightly easier.

Investment banking because of hard skills development, and exit opportunities.

Posted from TSR Mobile

(edited 8 years ago)

Reply 3

username2385417

Original post by Commercial Paper

I'll add that IDB, if you are thinking ICAP, BGC, GFI etc has less barriers to entry, you should consider your exit carefully. Traditional voice broking is a dying industry and many of these companies are slow and clumsy in implementing the technological changes that are needed to ensure their survival. There is also a lot of consolidation going on in the industry and at least many of the older brokers have recently found themselves either doing **** all every day, or out of work. On top of this, you must consider the massively different cultures and how that will very likely impact how you are able to move around.

Broking in an IDB is the most stressful situation you could find yourself in. 8 hours screaming at the top of your lungs, client entrainment doing what it does to your liver several times a week getting home at 3 then getting up at 5, everyone trying to f*** you over for your clients money, incredibly aggressive characters (concentrated at management level often), getting abuse all day long from traders when they're loosing money and see you as a punch bag, and if you don't like casual nudity, forget it.

Stockbrokers exist today as agency brokers that offer a research service, as well as additional services such as deeper trade analytics and CSA's. Entry reqs higher than IDB and similar to banks, as many analysts will have started at a bank and moved to one of these, probably with the aim of hopping over to the buy side at some point. Regulation is throttling these guys in many cases, so do your research on MiFiD.

If you can, go to an investment bank.

Reply 4

username2385417

I'll also add that broking at an IDB or market maker is rarely intellectually simulating work.

You don't need to know why the market moved. You don't need to know why your client is selling that day. You don't need to be able to make a price based on anything other than the last x number of prices that have dealt that day.

You don't care.

All you care about is a bid and an offer.

Of course the best brokers are smarter, but you'll essentially be matchmaking and it's bloody repetitive.

Reply 5

username2281157

I was so clueless two years ago loool. I'm proud to say I now know all this and more thanks to you guys, WSO and M&I

Reply 6

alexp98

Original post by Princepieman

Hey Prince,

I know this thread is old but I wanted to get into the sales part, and wandering what the graduate schemes are noramlly called? I want more of the sales job but in the financial indsutry like the term 'stock broker', but not sure what is is now. Eg. the IB and asset management stuff is all finance related, not sales.

Also I have found a lot of private banking grad schemes, would these be sales related? and how competitive are they to get into

(edited 5 years ago)

Reply 7

username738914

Original post by alexp98

i mean, most finance jobs have some element of "selling" to someone at a given point in the career path.

but what you should be looking at that directly fits what you're aiming for is the sales part of S&T, sales/marketing/distribution within AM, private banking/PWM, commercial real estate (or "property" in british parlance) broking and inter-dealer broking.

Reply 8

alexp98

Original post by Princepieman

Perfect, thanks! i have heard generally broking seems outdated and most firms in london and wall street in NY have been majorly downsized due to internet progression, so leaning more into property broking instead. Are property brokers essentially the same as estate agents?