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Securities, Commodities, and Financial Services Sales Agents - What They Do

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.

Education & Training Required
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.

Certifications Needed (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 Skills Required (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.

Securities, Commodities, and Financial Services Sales Agents - What They Do - Page 2

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