SECURITIES BROKERS California Occupational Guide Number 252 Interest Area 11 1996
THE JOB
Investment firms underwrite and market a wide variety of stocks and bonds and other financial products. The sale of securities furnishes money for many purposes, such as building plants, purchasing equipment, and financing various governmental projects. The opportunity to purchase securities offers individuals and institutions a means for investing funds.
SECURITIES BROKERS bring together the investor and the investment opportunity. Also known as a registered representative, account executive, or investment executive, the broker provides counseling to all parties in an investment interchange.
Securities Brokers supply institutional and individual clients with pertinent facts to assist them in buying or selling stocks, bonds, commodities, and options. They may develop or maintain a diversified selection of securities known as a portfolio. They research the performance record of individual securities, and identify those which are relatively stable, cyclical, or speculative.
Because the performance of a stock, bond, or other investment product is subject to many variables, the Securities Brokers must be skilled in judging the effect of the subtle market factors as well as in analyzing past and present company and industry records. Resources the broker uses include reference manuals, statistical reports, corporation financial statements, and business and government publications. Also, because tax considerations are important to the investor, the broker must know the laws pertaining to securities transactions.
The beginning broker develops a clientele by telephone solicitation, working from the employer's prospect list, or by calling on potential investors in person. By satisfying clients, the broker may gain additional customers through word-of-mouth recommendations.
Brokers employed by discount brokerage houses do not perform research on individual securities, although they may comment on the trend of the market. They quote the price of a security or option and place orders. They may be called account executives or traders. Depending upon the firm, clients may or may not always deal with one particular person.
WORKING CONDITIONS
The Securities Broker usually spends most of the morning hours in the office conferring with clients by telephone. Generally situated in larger metropolitan areas, brokerage firms offer well-lighted, comfortable and attractive surroundings. After hours, the broker may discuss business objectives in social settings or in a customer's home or office.
The broker is subject to regulations of the Securities and Exchange Commission, the stock exchanges, the National Association of Securities Dealers, and the State of California.
EMPLOYMENT OUTLOOK
The cyclical nature of the economy can greatly affect the employment prospects for Securities Brokers. During periods of declining market values, investors are less likely to invest their funds in securities. Correspondingly, when the market is rising, and investment activity is increasing, the need for brokers is greater.
The following information is from the California Projections and Planning Information published by the Labor Market Information Division. The figures represent the broad occupational group Sales Agents-Financial Services which includes Securities Brokers.
Estimated number of workers in 1993 15,910 Estimated number of workers in 2005 22,250 Projected Growth Percentage 1993-2005 40% Estimated openings due to separations by 2005 3,490
(These figures do not include self-employment or openings due to turnover.)
Rising income, the need for investments to keep pace with inflation, and the prospects for increasing personal and business holdings should create a moderate increase in the demand for brokers. Furthermore, a trend towards institutional trading -- purchases usually made in "blocks" or large numbers of shares -- should add future job opportunities for brokers.
The number of institutional investors is expected to rise as more people enroll in pension plans and individual retirement accounts, establish trusts, and contribute to endowment programs of colleges and other nonprofit institutions.
WAGES, HOURS, AND FRINGE BENEFITS
The Securities Broker income is, to a great extent, in proportion to knowledge, initiative, energy, sales ability, and time spent in generating business. Brokers usually receive a percentage of commissions generated, which vary according to the firm, type of security sold, and total sales. A growing number of firms base compensation on portfolio performance, types of assets managed, or other indicators of performance. As a trainee, the broker usually receives a straight salary ranging from $1,200 to $2,000 a month for those with bachelor's degrees, and make more if the firm hires applicants with masters' degrees. Annual earnings of experienced brokers vary greatly, and can range anywhere from around $30,000 for beginning brokers to about $80,000 for experienced Securities Brokers. A few brokers who handle institutional accounts may earn over $200,000 a year.
Many brokers begin work fifteen minutes or more before the opening bell at the New York Stock Exchange (6:30 AM, Pacific Standard Time) and remain as long as is necessary to finish telephone calls and to complete paper work. Evening and weekend work is sometimes necessary, especially for new brokers.
Fringe benefits vary from firm to firm. Profit sharing, retirement benefits, and employer paid health insurance are becoming more prevalent. Moreover, the knowledge brokers gain about general economic conditions gives them an advantage in deploying their own capital.
ENTRANCE REQUIREMENTS AND TRAINING
Educational and employment histories vary among practicing brokers; however, a college education is becoming more important since brokers should have a knowledge of world and economic conditions. Most new brokers come directly from college, and some have had previous business experience. Persons who possess a well-rounded academic background including courses in business and finance have the best employment prospects. Experience in sales or public contact work is regarded as desirable, with particular value placed on positions which involve meeting people with diverse backgrounds and interests. Consideration is also given to recognition achieved for extracurricular campus activities.
The larger brokerage houses normally provide a four to six month training program for new hires, including three to four weeks in New York. On the other hand, some of the smaller "houses" may only hire experienced brokers. Following this, the broker will be expected to generate the minimum volume of business stipulated by the firm to maintain employment. Upon completion of training, employees must pass the General Securities Registered Representative Examination, administered by the National Association of Securities Dealers, Inc. (NASD), pass another examination, in most states, and be an employee of a registered firm for at least four months.
Since brokers deal with other people's finances, integrity, combined with sales ability, heads the list of attributes which are looked for. Brokers must be emotionally well-adjusted and physically able to cope with the pressures of the job. They must be self-reliant, hard working, and have the ability to inspire confidence, because their income is solely dependent on performance. Initiative, poise, sound judgment and a quick mind are needed by the broker, who should also be personable, well-groomed and fluent in speech.
ADVANCEMENT
Recognition of superior sales and management abilities may come to the broker in the form of an invitation to become a partner in the firm, which generally requires a substantial monetary investment. Although the title carries prestige and additional responsibilities, it does not guarantee a higher income. Partners represent their firms on stock exchanges, direct branch office activities, and manage a department in the company. Experience in the investment business sometimes affords opportunity for appointment to a high post in another industry.
FINDING THE JOB
An inexperienced person enters this field through sponsorship by a securities firm. Prospective brokers may apply to brokerage firms directly, or register with their college placement bureau and private employment agencies that specialize in this type of position. Newspapers and financial publications sometimes carry advertisements soliciting experienced Securities Brokers or trainees.
ADDITIONAL SOURCES OF INFORMATION
National Association of Securities Dealers 1735 K St., NW Washington, DC. 20006-1506 (202) 728-8000
Securities Industry Association 120 Broadway New York, NY 10271 (212) 608-1500
RELATED OCCUPATIONAL GUIDES
Insurance Sales Agents No. 455
OCCUPATIONAL CODE REFERENCES
DOT (Dictionary of Occupational Titles, 4th ed., Rev. 1) Registered Representatives 250.257-018 Manager, Brokerage Office 186.117-034
OES (Occupational Employment Statistics) Sales Agents-Financial Services 430140
Source: State of California, Employment Development Department,
Labor Market Information Division, Information Services Group,
(916) 262-2162.
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