Career Guide for Stock Brokers

Investment sales agents sell different types of securities, bonds, stocks, mutual funds, or other types of investments to individuals and institutional investors. The most common type of securities sales agent is a stock broker.

In this free career guide, you will learn how to become a successful investment sales agent.

Stock Broker Summary

• Most positions require a bachelor’s degree in business, finance, accounting, or economics; a master’s degree in business or professional certification is helpful for advancement.
• Applicants face keen competition for jobs, especially in investment banks.
• Turnover is high for newcomers, but those who are successful have a very strong attachment to their occupation because of high earnings and considerable investment in training.

Working as an Investment Sales Agent

Each day, hundreds of billions of dollars change hands on the major United States securities exchanges. This money is used to invest in securities, such as stocks, bonds, or mutual funds, which are bought and sold by large institutional investors, mutual funds, pension plans, and the general public. Most securities trades are arranged through securities, commodities, and financial services sales agents, whether they are between individuals with a few hundred dollars or large institutions with hundreds of millions of dollars. The duties of sales agents vary greatly depending on their specialty.

The most common type of securities sales agent is called a broker or stock broker. Stock brokers advise everyday people, or retail investors, on appropriate investments based on their needs and financial ability. Once the client and broker agree on the best investment, the broker electronically sends the order to the floor of the securities exchange to complete the transaction. After the transaction is finalized, the broker charges a commission for the service.

The most important part of a broker’s job is finding clients and building a customer base. Thus, beginning securities and commodities sales agents spend much of their time searching for clients, often relying heavily on telephone solicitation, or “cold calling,” from a list of potential clients. Some agents network by joining civic organizations or social groups, while others may rely on referrals from satisfied customers.

Investment bankers are sales agents who connect businesses that need money to finance their operations or expansion plans with investors who are interested in providing that funding in exchange for debt (in the form of bonds) or equity (in the form of stock). This process is called underwriting, and it is the main function of the investment bank. Investment bankers have to sell twice: first, they sell their advisory services to help companies issue new stock or bonds, and second, they sell the securities issued to investors.

Perhaps the most important advisory service provided by investment banks is to help companies new to the public investment arena issue stock for the first time. This process, known as an initial public offering, or IPO, can take a great deal of effort because private companies must meet stringent financial requirements to become publicly owned companies. Corporate finance departments also help private companies sell stock to institutional investors or wealthy individuals. They also advise companies that are interested in funding their operations by taking on debt—often issued in the form of bonds. Unlike a stock, which entitles its holder to partial ownership of a company, a bond entitles its holder to be repaid with a pre-determined rate of interest.

Another important advisory service is provided by the mergers and acquisitions department. Investment bankers in this area advise companies that are interested in being acquired, or interested in merging with or purchasing other companies. Once a potential seller or buyer is found, bankers advise their client on how to execute the agreement. Generally both buyers and sellers have investment banks working for them to make sure that the transaction goes smoothly.

Investment banking sales agents and traders sell stocks and bonds to investors. Instead of selling their services to companies for fees, salespeople and traders sell securities to customers for commissions. These sales agents generally contact customers and their agents to discuss new stock and bond issues. When an investor decides to make a purchase, the order goes to the trading floor. Traders execute buy and sell orders from clients and make trades on behalf of the bank itself. Because markets fluctuate so much, trading is a split-second decision-making process. If a trader cannot secure the promised price on an exchange, millions of dollars could potentially be lost. On the other hand, if a trader finds a better deal, the bank could make millions more.

A small but powerful group of sales agents work directly on the floor of a stock or commodities exchange. When a firm or investor wishes to buy or sell a security or commodity, sales agents relay the order through their firm’s computers to the floor of the exchange. There,floor brokers negotiate the price with other floor brokers, make the sale, and forward the purchase price to the sales agents. In addition to floor brokers, who work for individual securities dealers, there are also independent brokers. These are similar to floor brokers, except that they are not buyers for specific firms. Instead, they can buy and sell stocks for their own accounts, or corporate accounts that they manage, or they can sell their services to floor brokers who are too busy to execute all of the trades they are responsible for making.Specialists or market makers also work directly on the exchange floor, and there is generally one for each security or commodity being traded. They facilitate the trading process by quoting prices and by buying or selling shares when there are too many or too few available.

Financial services sales agents consult on a wide variety of banking, securities, insurance, and other related services to individuals and businesses, often catering the services to meet the client’s financial needs. They contact potential customers to explain their services which may include checking accounts, loans, certificate of deposits, individual retirement accounts, credit cards, and estate and retirement planning.

Work environment. Most securities and commodities sales agents work in offices under somewhat stressful conditions. The pace of work is fast, and managers tend to be very demanding of their workers since both commissions and advancement are tied to sales.

Stock brokers and investment advisors usually work more than 40 hours a week, including evenings and weekends, as many of their clients work during the day. A growing number of securities sales agents, employed mostly by discount or online brokerage firms, work in call-center environments. In these centers, hundreds of agents spend much of the day on the telephone taking orders from clients or offering assistance and information on their accounts. Often, such call centers operate 24 hours a day, requiring agents to work in shifts.

Investment bankers in corporate finance or mergers and acquisitions typically work long hours and endure extreme stress, especially at the junior levels. Because banks work with companies all over the world, extensive travel is often part of the job, as is evening and weekend work. With some experience, the workload becomes more manageable, but since higher-level workers generally have more contact with clients, they also tend to travel more.

Sales and trading departments typically work more than 40 hours a week, but not nearly as much as their counterparts in investment banking. They also travel less, usually for conferences or training. On the other hand, their jobs are incredibly stressful. For sales agents, every minute of the day that is wasted means they might have made another sale. Since both commissions and advancement are tied to sales, this can be very stressful. Traders have perhaps the most stressful jobs of all, as split second decisions can lead to millions of dollars being won or lost. Trading floors are very busy and often very loud. Exchange workers, much like traders, have highly stressful jobs because the bulk of their work takes place on the floor of the exchanges. However, exchange traders and workers typically work shorter hours than many other agents since most of their work is done while the market is open.

Financial services sales agents normally work 40 hours a week in a comfortable office environment. They may spend considerable time outside the office, meeting with current and prospective clients, and attending civic functions. Some financial services sales agents work exclusively inside banks, providing service to walk-in customers.

Training, Other Qualifications, and Advancement

Most positions require a bachelor’s degree in business, finance, accounting, or economics. An MBA or professional certification is helpful for advancement.

Education and training. A bachelor’s degree in business, finance, accounting, or economics is important for securities and commodities sales agents, especially in larger firms. Many firms hire summer interns before their last year of college and those who are most successful are offered full-time jobs after they graduate.

Numerous agents eventually get a master’s degree in business administration (MBA), which is often a requirement for high-level positions in the securities industry. Because the MBA is a professional degree designed to expose students to real-world business practices, it is considered to be a major asset for jobseekers. Employers often reward MBA holders with higher-level positions, better compensation, and even large signing bonuses.

Most employers provide intensive on-the-job training, teaching employees the specifics of the firm, such as the products and services offered. Trainees in large firms may receive classroom instruction in securities analysis, effective speaking, and the finer points of selling. Firms often rotate their trainees among various departments, to give them a broad perspective of the securities business. In small firms, sales agents often receive training at outside institutions and on the job.

Securities and commodities sales agents must keep up with new products and services and other developments. Because of this, brokers regularly attend conferences and training seminars.

Licensure. Brokers and investment advisors must register as representatives of their firm with the Financial Industry Regulatory Authority (FINRA). Before beginners can qualify as registered representatives, they must be an employee of a registered firm for at least 4 months and pass the General Securities Registered Representative Examination—known as the Series 7 Exam—administered by FINRA. The exam takes 6 hours and contains 250 multiple-choice questions; a passing score is above 70 percent.

Most States require a second examination—the Uniform Securities Agents State Law Examination (Series 63 or 66). This test measures a candidate’s knowledge of the securities business in general, customer protection requirements, and recordkeeping procedures. Most firms offer training to help their employees pass these exams.

There are many other licenses available, each of which gives the holder the right to sell different investment products and services. Traders and some other sales representatives also need licenses, although these vary greatly by firm and specialization. Financial services sales agents may also need to be licensed, especially if they sell securities or insurance.

Registered representatives must attend continuing education classes to maintain their licenses. Courses consist of computer-based training in regulatory matters and company training on new products and services.

Other qualifications. Many employers consider personal qualities and skills more important than academic training. Employers seek applicants who have excellent interpersonal and communication skills, a strong work ethic, the ability to work in a team environment, and a desire to succeed. The ability to understand and analyze numbers is also important. Because securities, commodities, and financial services sales agents are entrusted with large sums of money and personal information, employers also make sure that applicants have a good credit history and a clean record. Self-confidence and the ability to handle frequent rejection are important ingredients for success.

Most firms prefer candidates with sales experience, particularly those who have worked on commission in areas such as real estate or insurance. Other firms prefer to hire workers right out of college, with the intention of molding them to their corporate image.

Certification and advancement. Although not always required, certifications enhance professional standing and are recommended by employers. Brokers, investment advisors, and financial services sales agents can earn the Chartered Financial Analyst (CFA) designation, sponsored by the CFA Institute. To qualify for this designation, applicants need a bachelor’s degree, four years of related work experience, and must pass three exams which requires several hundred hours of self-study. Exams cover subjects in accounting, economics, securities analysis, financial markets and instruments, corporate finance, asset valuation, and portfolio management, and applicants can take the exams while they are obtaining the required work experience.

Brokers, investment advisors, and financial services sales agents usually advance by accumulating a greater number of accounts. Although beginners often service the accounts of individual investors, they may eventually handle very large institutional accounts, such as those of banks and pension funds. After taking a series of tests, some brokers become portfolio managers and have greater authority to make investment decisions regarding an account. Some experienced sales agents become branch office managers and supervise other sales agents while continuing to provide services for their own customers. A few agents advance to top management positions or become partners in their firms.

Investment bankers who enter the occupation directly after college generally start as analysts. At this level, employees receive intensive training and have little contact with clients as they spend most of their time producing “pitchbooks“—information booklets used to sell products. After 2 to 3 years, top analysts may be promoted to an associate position or asked to leave. Recent graduates from MBA programs can start as associates, which is similar to the analyst position, but with more responsibilities, such as leading a group of analysts and having contact with clients. After 2 to 3 years, associates are promoted or terminated. Successful associates can become vice presidents, and vice presidents may advance to become directors, sometimes called executive directors.

Employment as an Investment Sales Agent

Securities, commodities, and financial services sales agents held about 317,200 jobs in 2008. About 49 percent of jobs were in the securities, commodity contracts, and other financial investments and related activities industry. About 15 percent of all workers were self-employed.

Because of their close relationship to stock exchanges and large banking operations, most of the major investment banks in the United States are based in New York metropolitan area. Smaller investment banks can be found in many major American cities and some major investment banks have operations in other cities, although most of their business remains in New York.

Job Outlook

Employment is projected to about as fast as the average. Keen competition is expected as the number of applicants will continue to far exceed the number of job openings in this high-paying occupation.

Employment change. Employment of securities, commodities, and financial services sales agents is expected to grow 9 percent during the 2008-18 decade, about as fast as the average for all occupations. Consolidation of the financial industry, mainly stemming from recent global financial problems, will be the largest inhibitor of employment growth. Increased levels of industry consolidation often result in duplicated tasks among workers, a scenario that is expected to result in layoffs of many broker, sales, and investment banking positions. Additionally, the deregulation of financial markets in past decades has broken down the barriers between investment activities and banking, resulting in competition between traditional banks and securities companies on all levels. However, many of the major investment banks are now owned by large banks and most major banks also have brokerages, which allow their customers to quickly and easily transfer money between their personal banking and investment accounts. The ability of customers to access accounts online, as well as manage their personal investments through the Internet, will result in fewer brokers as well.

Job prospects. Competition for jobs will continue to be keen with more applicants than available openings. Additionally, the recent financial crisis has resulted in mass consolidation in the financial industry, a scenario that will likely result in fewer positions as companies attempt to streamline operations by eliminating duplicate tasks.

Entry-level sales agents, particularly those with previous sales experience, should face better prospects in smaller firms, as opposed to larger firms, where many positions have recently been eliminated. Investment banking is especially known for its competitive hiring process and candidates will face particularly keen competition for the relatively few openings. Having a degree from a prestigious undergraduate institution is very helpful, as are excellent grades in finance, economics, accounting, and business courses. Certifications and graduate degrees, such as a CFA certification or a master’s degree in business or finance, can also significantly improve an applicant’s prospects. Competition is even greater for positions working in exchanges.

Employment in the securities industry is closely connected with market conditions and the state of the overall economy and is highly volatile during recessionary periods. Turnover is high for newcomers, who face difficult prospects no matter when they join the industry. Once established, however, securities and commodities sales agents have a very strong attachment to their profession because of their high earnings and considerable investment in training.

Projections Data

Projections data from the National Employment Matrix

Occupational Title	SOC Code	Employment, 2008	Projected Employment, 2018	Change, 2008-18
				Number	Percent
Securities, commodities, and financial services sales agents	41-3031	317,200	346,700	29,600	9
NOTE: Data in this table are rounded.

Earnings for Investment Sales Agents

The median annual wage-and-salary wages of securities, commodities, and financial services sales agents were $68,680 in May 2008. The middle half earned between $40,480 and $122,270.

Median annual wages in the industries employing the largest numbers of securities, commodities, and financial services sales agents were:

Because this is a sales occupation, many workers are paid a commission based on the amount of stocks, bonds, mutual funds, insurance, and other products they sell. Most firms provide sales agents with a steady income by paying a “draw against commission”—a minimum salary based on commissions they can be expected to earn. Trainee brokers usually are paid a salary until they develop a client base. The salary gradually decreases in favor of commissions as the broker gains clients.

Investment bankers in corporate finance and mergers and acquisitions are generally paid a base salary with the opportunity to earn a substantial bonus. At the higher levels, bonuses far exceed base salary. This arrangement works similarly to commissions but gives banks greater flexibility to reward members of the team who were more effective. Since investment bankers in sales and trading departments work alone, they generally work on commissions.

Brokers who work for discount brokerage firms that promote the use of telephone and online trading services usually are paid a salary, sometimes boosted by bonuses that reflect the profitability of the office. Financial services sales agents are also paid a salary, although bonuses or commissions from sales are starting to account for a larger share of their income.

Benefits in the securities industry are generally very good. They commonly include healthcare, retirement, and life insurance. Securities firms may also give discounts to employees on financial services that they sell to customers. Other benefits may include paid lunches with clients, paid dinners for employees who work late, and often extensive travel opportunities.