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
Securities, commodities, and financial services sales agents held about 466,300 jobs in 2020. The largest employers of securities, commodities, and financial services sales agents were as follows:
- Credit intermediation and related activities - 49%
- Securities, commodity contracts, and other financial investments and related activities - 38%
- Self-employed workers - 4%
- Management of companies and enterprises - 3%
Most securities, commodities, and financial services sales agents work many hours under stressful conditions. The pace of work is fast, and managers are usually demanding of their workers, because both commissions and advancements are tied to sales.
Investment bankers travel extensively because they frequently work with companies in other countries.
Because computers can conduct trades faster than people can, electronic trading is quickly replacing verbal auction-style trades on exchange floors. The environment of the stock exchange is changing as a result, with more traders carrying out orders behind a desk and fewer working on the exchange floor.
Because most of the major investment banks are in New York City, employment of securities, commodities, and financial services sales agents is concentrated in that metropolitan area.
Work Schedules
Securities, commodities, and financial services sales agents usually work full time and some work more than 40 hours per week. In addition, they may work evenings and weekends because many of their clients work during the day.
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
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
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.
How to Advance
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.
Job Outlook
Employment of securities, commodities, and financial services sales agents is projected to grow 4 percent from 2020 to 2030, slower than the average for all occupations.
Despite limited employment growth, about 42,500 openings for securities, commodities, and financial services sales agents are projected each year, on average, over the decade. Most of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.
Employment
Services that investment bankers provide, such as helping with initial public offerings and mergers and acquisitions, will continue to be in demand as the economy grows. The United States remains an international financial center, meaning that the economic growth of countries around the world will contribute to employment growth in the American financial industry. An aging population and the decline of traditional pensions may boost demand for these workers, as individuals approaching retirement seek brokers to facilitate securities purchases.
However, continuing consolidation in the financial services industry is projected to slow employment growth for these workers over the next decade. In addition, automated trading systems have reduced demand for securities traders. Because simpler stock purchases can be made online without a broker, financial firms will focus on hiring sales agents with specialized areas of expertise and strong customer-service skills.
Financial regulation, including restrictions on proprietary trading, has shifted employment among traders from investment banks to hedge funds; however, this shift should not affect overall employment growth for the occupation.
Earnings
The median annual wage for securities, commodities, and financial services sales agents was $62,910 in May 2021. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $37,970, and the highest 10 percent earned more than $205,440.
In May 2021, the median annual wages for securities, commodities, and financial services sales agents in the top industries in which they worked were as follows:
- Securities, commodity contracts, and other financial investments and related activities - $98,030
- Management of companies and enterprises - $80,200
- Credit intermediation and related activities - $49,560
Many securities and commodities brokers earn a commission based on the monetary value of the products they sell. Most firms pay brokers a minimum salary in addition to commissions.
Trainee brokers usually earn 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 generally earn a base salary with the opportunity to earn a substantial bonus. At higher levels, bonuses far exceed base salary.
Securities, commodities, and financial services sales agents usually work full time and some work more than 40 hours per week. In addition, they may work evenings and weekends because many of their clients work during the day.
