Securities, Commodities, and Financial Services Sales Agents
Significant Points
A college degree, sales ability, good interpersonal and communication
skills, and a strong desire to succeed are important qualifications.
Securities and commodities sales agents must pass licensing
exams.
Competition for entry-level jobs usually is keen, especially
in larger firms; opportunities should be better in smaller firms.
Turnover is high for beginning agents, who often are unable
to establish a sizable clientele; once established, securities
and commodities sales agents have a very strong attachment to
their occupation because of their high earnings and considerable
investment in training.
Nature of the Work
Most investors, whether they are individuals with a few hundred
dollars to invest or large institutions with millions, use
securities, commodities, and financial services sales agents
when buying or selling stocks, bonds, shares in mutual funds,
insurance annuities, or other financial products. In addition,
many clients seek out these agents for advice on investments,
insurance, tax planning, estate planning, and other financial
matters.
Securities and commodities sales agents, also called brokers,
stockbrokers, registered representatives, account executives,
or financial consultants, perform a variety of tasks, depending
on their specific job duties. When an investor wishes to buy
or sell a security, for example, sales agents may relay the
order through their firm’s computers to the floor of a securities
exchange, such as the New York Stock Exchange. There, securities
and commodities sales agents known as floor brokers
negotiate the price with other floor brokers, make the sale,
and forward the purchase price to the sales agents. If a security
is not traded on an exchange, as in the case of bonds and
over-the-counter stocks, the broker sends the order to the
firm’s trading department. Here, using their own funds or
those of the firm, other securities sales agents, known as
dealers, buy and sell securities directly from other
dealers, with the intention of reselling the security to customers
at a profit. After the transaction has been completed, the
broker notifies the customer of the final price.
Securities and commodities sales agents also provide many
related services for their customers. They may explain stock
market terms and trading practices, offer financial counseling
or advice on the purchase or sale of particular securities,
and design an individual client’s financial portfolio, which
could include securities, life insurance, corporate and municipal
bonds, mutual funds, certificates of deposit, annuities, and
other investments.
Not all customers have the same investment goals. Some individuals
prefer long-term investments, for capital growth or to provide
income over a number of years; others might want to invest
in speculative securities, which they hope will quickly rise
in price. On the basis of each customer’s objectives, securities
and commodities sales agents furnish information about the
advantages and disadvantages of an investment. They also supply
the latest price quotes on any securities, as well as information
on the activities and financial positions of the corporations
issuing the securities.
Most securities and commodities sales agents serve individual
investors; others specialize in institutional investors, such
as banks and pension funds. In institutional investing, sales
agents usually concentrate on a specific financial product,
such as stocks, bonds, options, annuities, or commodity futures.
At other times, they may also handle the sale of new issues,
such as corporate securities issued to finance the expansion
of a plant.
The most important part of a sales representative’s job is
finding clients and building a customer base. Thus, beginning
securities and commodities sales agents spend much of their
time searching for customers—relying heavily on telephone
solicitation. They also may meet clients through business
and social contacts. Agents often join civic organizations
and other social organizations to expand their networks. Many
sales agents find it useful to contact potential clients by
teaching adult education investment courses or by giving lectures
at libraries or social clubs. Brokerage firms may give sales
agents lists of people with whom the firm has done business
in the past. Some agents inherit the clients of agents who
have retired. After an agent is established, referrals from
satisfied clients are an important source of new business.
Financial services sales agents sell a wide variety
of banking and related services. They contact potential customers
to explain their services and to ascertain customers’ banking
and other financial needs. In doing so, they discuss services
such as loans, deposit accounts, lines of credit, sales or
inventory financing, certificates of deposit, cash management,
mutual funds, or investment services. They also may solicit
businesses to participate in consumer credit card programs.
Financial services sales agents who serve all the financial
needs of a single affluent individual or a business often
are called private bankers or relationship managers.
With deregulation of the financial services industry, the
distinctions among sales agents are becoming less clear as
securities firms, banks, and insurance companies venture further
into each other’s products and services. The agents’ jobs
also are becoming more important as competition between the
firms intensifies.
Working Conditions
Most securities and commodities sales agents work in offices
under fairly stressful conditions. They have access to “quote
boards” or computer terminals that continually provide information
on the prices of securities. When sales activity increases,
due perhaps to unanticipated changes in the economy, the pace
can become very hectic.
Established securities and commodities sales agents usually
work a standard 40-hour week. Beginners who are seeking customers
usually work longer hours. New brokers spend a great deal
of time learning the firm’s products and services and studying
for exams in order to qualify to sell other products, such
as insurance and commodities. Most securities and commodities
sales agents accommodate customers by meeting with them in
the evenings or on weekends.
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 advice and information on different securities. Often,
such call centers operate 24 hours a day, requiring agents
to work in shifts.
Financial services sales agents normally work 40 hours a
week in a comfortable, less stressful office environment.
They may spend considerable time outside the office, meeting
with current and prospective clients, attending civic functions,
and participating in trade association meetings. Some financial
services sales agents work exclusively inside banks, providing
service to walk-in customers.
Training, Other Qualifications, and Advancement
Because securities and commodities sales agents must be knowledgeable
about economic conditions and trends, a college education
is important, especially in larger securities firms. In fact,
the overwhelming majority of workers in this occupation are
college graduates. Although employers seldom require specialized
academic training, courses in business administration, economics,
and finance are helpful.
Many employers consider personal qualities and skills more
important than academic training. Employers seek applicants
who have considerable sales ability, good interpersonal and
communication skills, and a strong desire to succeed. Some
employers also make sure that applicants have a good credit
history and a clean record. Self-confidence and an ability
to handle frequent rejections are important ingredients for
success.
Because maturity and the ability to work independently are
important, many employers prefer to hire those who have achieved
success in other jobs. Most firms prefer candidates with sales
experience, particularly those who have worked on commission
in areas such as real estate or insurance. Therefore, most
entrants to this occupation transfer from other jobs. Some
begin working as securities and commodities sales agents following
retirement from other fields.
Securities and commodities sales agents must meet State licensing
requirements, which usually include passing an examination
and, in some cases, furnishing a personal bond. In addition,
sales agents must register as representatives of their firm
with the National Association of Securities Dealers, Inc.
(NASD). Before beginners can qualify as registered representatives,
they must pass the General Securities Registered Representative
Examination (Series 7 exam), administered by the NASD, and
be an employee of a registered firm for at least 4 months.
Most States require a second examination—the Uniform Securities
Agents State Law Examination. This test measures the prospective
representative’s knowledge of the securities business in general,
customer protection requirements, and recordkeeping procedures.
Many take correspondence courses in preparation for the securities
examinations. Within 2 years, brokers are encouraged to take
additional licensing exams in order to sell mutual funds,
insurance, and commodities.
Most employers provide on-the-job training to help securities
and commodities sales agents meet the registration requirements
for certification. In most firms, the training period takes
about 4 months. Trainees in large firms may receive classroom
instruction in securities analysis, effective speaking, and
the finer points of selling; may take courses offered by business
schools and associations; and may undergo a period of on-the-job
training lasting up to 2 years. Many firms like to rotate
their trainees among various departments, to give them a broad
perspective of the securities business. In small firms, sales
agents often receive training in outside institutions and
on the job.
Securities and commodities sales agents must understand the
basic characteristics of the wide variety of financial products
offered by brokerage firms. Brokers periodically take training
through their firms or outside institutions in order to keep
abreast of new financial products and to improve their sales
techniques. Computer training also is important, because the
securities sales business is highly automated. It is mandatory
for all registered securities and commodities sales agents
to attend periodic continuing education classes to maintain
their licenses. Courses consist of computer-based training
in regulatory matters and company training on new products
and services. In addition, more sales agents are taking courses
to become certified financial planners. The Certified Financial
Planner credential issued by the Certified Financial Planner
Board of Standards, requires relevant experience, completion
of education requirements, passing a comprehensive examination,
and adherence to an enforceable code of ethics. The CFP exams
test the candidate’s knowledge of the financial planning process,
insurance and risk management, employee benefits planning,
taxes and retirement planning, and investment and estate planning.
The principal form of advancement for securities and commodities
sales agents is an increase in the number and size of the
accounts they handle. Although beginners usually 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.
Banks and other credit institutions prefer to hire college
graduates for financial services sales jobs. A business administration
degree with a specialization in finance or a liberal arts
degree that includes courses in accounting, economics, and
marketing serves as excellent preparation for this job. Often,
financial services sales agents learn their jobs through on-the-job
training under the supervision of bank officers. However,
those who wish to sell mutual funds and insurance products
may need to undergo formal training and pass some of the same
exams required of securities sales agents.
Employment
Securities, commodities, and financial services sales agents
held about 281,000 jobs in 2004. More than half of jobs were
found in securities, commodity contracts, and other financial
investments and related activities. One in 5 worked in depository
and nondepository credit intermediation, including commercial
banks, savings institutions, and credit unions. Although securities
and commodities sales agents are employed by firms in all
parts of the country, many work for a small number of large
securities and investment banking firms headquartered in New
York City. About 1 out of 8 securities, commodities, and financial
services sales agents were self-employed.
Job Outlook
Employment of securities, commodities, and financial services
sales agents is expected to grow about as fast as average
for all occupations through 2014. As people’s incomes continue
to climb, they will increasingly seek the advice and services
of securities, commodities, and financial services sales agents
to realize their financial goals. Growth in the volume of
stocks traded over the Internet will limit job growth. Nevertheless,
the overall increase in investment is expected to spur employment
growth among these workers, with a majority of transactions
still requiring the advice and services of securities, commodities,
and financial services sales agents.
Baby boomers in their peak savings years will fuel much of
this increase in investment. Saving for retirement has been
made much easier by the government, which continues to offer
a number of tax-favorable pension plans, such as the 401(k)
and the Roth IRA. The participation of more women in the workforce
also means higher household incomes and more women qualifying
for pensions. Many of these pensions are self-directed, meaning
that the recipient has the responsibility for investing the
money. With such large amounts of money to invest, sales agents,
in their role as financial advisors, will be in great demand.
Other factors that will affect the demand for brokers are
the increasing number and complexity of investment products,
as well as the effects of globalization. As the public and
businesses become more sophisticated about investing, they
are venturing into the options and futures markets. Brokers
are needed to buy or sell these products, which are not traded
online. Also, markets for investment are expanding with the
increase in global trading of stocks and bonds. Furthermore,
the New York Stock Exchange has extended its trading hours
to accommodate trading in foreign stocks and compete with
foreign exchanges.
Employment of sales agents is adversely affected by downturns
in the stock market or the economy. Turnover is high for beginning
agents, who often are unable to establish a sizable clientele
even in good times. Once established, securities and commodities
sales agents have a very strong attachment to their occupation
because of their high earnings and considerable investment
in training. Competition usually is keen, especially in larger
companies with more applicants than jobs. Opportunities for
beginning sales agents should be better in smaller firms.
Employment of financial services sales agents in banks will
increase as banks expand their product offerings in order
to compete directly with other investment firms.
Earnings
Median annual earnings of securities, commodities, and financial
services sales agents were $69,200 in May 2004. The middle
half earned between $40,750 and $131,290.
Median annual earnings in the industries employing the largest
numbers of securities, commodities, and financial services
sales agents in 2004 were:
Other financial investment activities
$94,670
Securities and commodity contracts intermediation
and brokerage
85,350
Management of companies and enterprises
67,690
Nondepository credit intermediation
51,820
Depository credit intermediation
44,670
Stockbrokers, who provide personalized service and more guidance
with respect to a client’s investments, usually are paid a
commission based on the amount of stocks, bonds, mutual funds,
insurance, and other products they sell. Earnings from commissions
are likely to be high when there is much buying and selling,
and low when there is a slump in market activity. 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. Securities and commodities sales
agents who can provide their clients with the most thorough
financial services should enjoy the greatest income stability.
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. A small, but increasing,
number of full-service brokers are paid a percentage of the
assets they oversee. This fee often covers a certain number
of trades done for free.
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
usually are paid a salary also; however, bonuses or commissions
from sales are starting to account for a larger share of their
income.
Related Occupations
Other jobs requiring knowledge of finance and an ability
to sell include insurance sales agents, real estate brokers
and sales agents, and financial analysts and personal financial
advisors.
Sources of Additional Information
For general information on the securities industry, contact:
Securities Industry Association, 120 Broadway, New York,
NY 10271.
For information about job opportunities for financial services
sales agents in various States, contact State bankers’ associations
or write directly to a particular bank.
Source: Bureau of Labor
Statistics, U.S. Department of Labor, Occupational
Outlook Handbook, 2006-07 Edition
