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Securities Broker

Securities Broker

Education and Training: College plus training

Salary: Median—$69,200 per year

Employment Outlook: Good

Definition and Nature of the Work

The securities broker is an essential link between a consumer and the world's financial markets. Securities brokers, also called securities, commodities, and financial services sales agents, advise customers who want to make financial investments. Securities brokers arrange for the purchase or sale of stocks, bonds, and other securities on their customers' behalf. Through the maze of investment opportunities that are available, brokers steer customers to those that best suit their needs.

The two most common types of securities are stocks and bonds. Private businesses offer the public part ownership of the business by issuing stocks. People who buy shares of stock are sometimes promised a percentage of the profits, known as dividends, in return for the use of their money. As the value of the company increases, the value of the individual's stock increases. Bonds represent loans made to companies and government agencies. In return for buying bonds, buyers receive a prescribed rate of interest and sometimes a yearly or monthly cash payment. Bonds may be sold in much the same way that stocks are sold.

Investment needs vary with individual customers. A conservative investor whose life savings amount to a small sum may be in the market for a long-term investment that will provide a regular income. The broker may advise this customer to invest in government or corporate bonds or a mutual fund. On the other hand, the broker may direct a wealthy customer to buy stock in a company that is financially uncertain but has great potential.

Brokers may specialize in one type of security, such as mutual funds or government bonds. Some specialize in commodities, a type of security that represents future ownership of such commodities as potatoes, wheat, or coffee. Although many brokers service work with both individuals and corporations, some specialize in only one type of account.

Brokers generally work for discount or full-service brokerage firms that have offices. Brokers place, buy, and sell orders with the home office and report to their customers on the outcome of transactions either in person or on the Internet. Success in their business rests on their knowledge of the field and ability to predict future developments in trading. Investors can also choose to invest with an Internet brokerage, in which customers make investments without the help of a securities broker.

Education and Training Requirements

To become a broker, a person must have a college education. Employers may prefer to hire those who major in economics, finance, or business administration. Most large brokerages have a trainee program, which includes classroom instruction and on-the-job training. Courses include accounting, corporate finance, bonds, financial statements, mutual funds, sales techniques, public speaking, and many other related subjects. A student can also get this training at accredited schools. At the end of the training, individuals must pass a qualifying examination, known as the General Securities Registered Representative Examination, to be licensed or registered representatives of the stock exchange to which they belong. The examination is administered by the National Association of Securities Dealers (NASD), and to take it candidates must be employed in a brokerage firm for four months. Depending on the state, a broker may have to take additional tests and meet additional requirements.

Getting the Job

The best way for interested individuals to find a job in the securities business is to apply directly to a company for which they would like to work. Speaking to people who work in the various aspects of the business may help candidates to decide what kind of sales work they would like to do. Private employment agencies that specialize in placing workers in the field of finance may list openings for beginners. Newspaper classified ads and Internet job sites may also offer job leads.

Advancement Possibilities and Employment Outlook

Advancement for brokers usually takes the form of an increase in the number and size of the accounts they handle. Beginning brokers generally work with the accounts of individual investors. With experience they may be made responsible for very large accounts, such as those of corporations. Some experienced brokers advance to the position of branch office manager. Managers supervise the work of other brokers while handling orders for their own customers. A few brokers become partners in their firms.

According to the U.S. Bureau of Labor Statistics, 281,000 securities, commodities, and financial services sales agents held jobs in 2004. Employment was expected to grow as fast as the average for all occupations through the year 2014. A high rate of turnover in the field also contributes to a number of openings, because many workers who fail to establish a clientele leave the field each year. The securities business depends on the health of the economy as a whole. Therefore, the job market shrinks when money is tight. Although self-service Internet securities firms take business away from brokers, brokers are benefiting from the increase in retirement-aged individuals looking to invest their money.

Working Conditions

Securities brokers work in offices or cubicles that are clean and well lighted. Fluctuations in market activity may produce an atmosphere of tension within the brokerage.

Although established brokers usually work forty hours per week, beginners who are trying to get customers may work much longer hours. Securities brokers often work weekends and evenings to meet with customers.

Where to Go for More Information

National Association of Securities Dealers
1 Liberty Plaza
New York, NY 10006
(212) 858-4000
http://www.nasd.com

New York Stock Exchange
11 Wall St.
New York, NY 10005
(212) 656-3000
http://www.nyse.com

Security Traders Association
420 Lexington Ave., Ste. 2334
New York, NY 10170
(212) 867-7002
http://www.securitytraders.org

Earnings and Benefits

Trainees generally are paid on a salary basis until they meet licensing and registration requirements. Experienced brokers work on a commission or salary-plus-commission basis. According to the Bureau of Labor Statistics, securities, commodities, and financial service sales agents earned a median yearly salary of $69,200 in 2004. The top 25 percent earned more than $131,290 per year. Benefits include pension plans and health insurance. Salaried employees may receive paid holidays and vacations.

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