Buying bonds is a complicated process, and you need the help of a broker to make it easier. The process begins by deciding what you want to invest in, and then finding bonds that meet those requirements. Purchasing bonds requires research, identifying a good broker, and regularly reviewing your investments. Most people buy bonds through brokerage firms, and these brokers are also dealers. In fact, many of these companies hold the bonds in their inventory.
The first step to becoming a bonds broker is to take the General Securities Representative exam (Securities Industry Regulatory Authority) to gain access to the financial markets. This exam is required for most bond brokers to purchase and sell securities. However, you can become a bond broker even if you do not have experience in the financial field. You can begin by seeking employment or internship at a brokerage firm and work your way up. After October 1, 2018, you’ll need to take a separate exam called Securities Industry Essentials, which will require you to be a registered investor.
Once you’ve established a good relationship with a brokerage firm, you’ll need to hire a bonds broker. Most brokers receive part of their commission from the dealer’s markup and markdown, so it’s important to negotiate the fee. Whether you decide to pay the full commission or a percentage of the dealer’s markup, make sure you ask all of these questions when choosing a broker. If you are a first-time investor, you might want to negotiate a lower commission with the broker you select.