Recently I was speaking with a cousin who is contemplating a career change after working in the same industry for more than 30 years. I suggested to him that in choosing a new direction, he might want to leverage the enormous fund of knowledge and contacts he has acquired in his work. Why throw all that away?
This is the central idea of my book The Sequel, in which I look at various ways to make a mid-career occupational change without starting from scratch. One of the sequel careers that I discuss is brokering.
A lot of buying and selling goes on in every industry. People who have a lot of work experience in an industry usually are well informed about how these deals get made. They know who the main sellers are, what they have to offer, how much they’re likely to ask in payment, and what makes the difference between and good deal and a bad one. They also know about the buyers: where they come from, what they’re looking for, what they’re able to pay, and what makes the difference between a good customer and a bad one. Old industry hands may also know about arrangements besides price that are commonly involved in the deal, such as warrantees and common modes of delivery.
People with these kinds of knowledge may be able to make a career of bringing buyers and sellers together and earning a commission on the sales. That is what brokers do.
Brokers act as matchmakers. For example, a freight broker finds a business that needs to ship some kind of cargo and matches it with a carrier that can provide the appropriate kind of shipping service at an acceptable price. The freight broker never takes possession of the cargo and merely arranges the deal. The company producing the cargo appreciates the broker’s ability to quickly identify a reliable and low-priced shipper. The shipper appreciates the added business, which may result in more trucks plying their routes with full loads.
Brokers often advise and inform buyers to help them make a wise choice and understand the necessary paperwork. For example, a mortgage broker may counsel a borrower on how to correct a situation that harms the borrower’s credit rating or may explain the pros and cons of different loan arrangements. An energy broker may explain to a commercial client the benefits and risks of entering a contract with an electric company that locks in a specific rate for electric power for a year.
Some brokers facilitate the sale of a division within a business or even the entire business. Working with a broker in a confidential arrangement keeps news of the planned sale off the street so customers of the business do not lose confidence in it.
Brokers spend much of their time making decisions. The decisions need to be correct and can have a large impact. The pressure of time and competition can add to the stress of this work. Although brokers have a lot of independence, the context in which they make their decisions tends to be structured and even repetitious. Brokering provides the satisfaction of helping clients achieve their goals. This can be especially rewarding when people can live better lives by achieving goals such as a college degree or the purchase of a home.
Here are some occupations that act as brokers:
- Agents and Business Managers of Artists, Performers, and Athletes
- Cargo and Freight Agents
- Customs Brokers
- Energy Brokers
- Insurance Sales Agents
- Investment Underwriters
- Loan Officers
- Purchasing Agents and Buyers, Farm Products
- Purchasing Agents, Except Wholesale, Retail, and Farm Products
- Real Estate Brokers
- Sales Agents, Financial Services
- Securities and Commodities Traders
Besides knowledge of an industry, brokers often need to carry insurance to protect their clients from loss. Sometimes they are also required to be bonded, an additional expense when you set up a brokerage.
Knowledge of applicable laws is important in many industries, so it may be necessary for you to take one or more classes to become fully informed and, in many cases, prepare for a licensure exam. (A college degree is rarely necessary, although it can be helpful.) The license assures clients that you know the laws and may also indicate that you possess appropriate insurance. In some industries, a criminal background check is a common requirement. Because there is so much variation, you should check the requirements for your industry and state.
Transportation brokers need to register with the Federal Motor Carrier Safety Administration.
In many industries, a common entry route is to work first as an agent on the staff of a brokerage. Agents usually are not required to carry the level of responsibility, including legal liability, that a broker carries. Licensing and insurance requirements tend to be much lower. Real estate brokers usually begin as sales agents. In fact, work experience in sales is a requirement for a real estate broker’s license, although in some states it is waived for those with a bachelor’s degree in real estate.
It’s easier to set up a brokerage business in some industries, such as the highly regulated insurance industry, than in others where a few major players dominate.