Securities and Financial Services Sales Representatives

• Nature of the Work

  Most investors, whether they are individuals with a few hundred dollars to invest or large institutions with millions, use securities sales representatives when buying or selling stocks, bonds, shares in mutual funds, insurance annuities, or other financial products. Securities sales representatives often are called stock brokers, registered representatives, or account executives.

  When an investor wishes to buy or sell securities, sales representatives may relay the order through their firms' offices to the floor of a securities exchange, such as the New York Stock Exchange. There, securities sales representatives known as brokers' floor representatives buy and sell securities. If a security is not traded on an exchange, the sales representative sends the order to the firm's trading department, where a security trader trades it directly with a dealer in an over-the-counter market, such as the NASDAQ computerized trading system. After the transaction has been completed, the sales representative notifies the customer of the final price.

  Securities sales representatives also provide many related services for their customers. Depending on a customer's knowledge of the market, they may explain the meaning of stock market terms and trading practices; offer financial counseling; devise an individual financial portfolio for the client including securities, life insurance, corporate and municipal bonds, mutual funds, certificates of deposit, annuities, and other investments; and offer advice on the purchase or sale of particular securities.

  Not all customers have the same investment goals. Some individuals may prefer long-term investments designed either for capital growth or to provide income over the years; others might want to invest in speculative securities that they hope will rise in price quickly. Securities sales representatives furnish information about the advantages and disadvantages of an investment based on each person's objectives. They also supply the latest price quotations on any security in which the investor is interested, as well as information on the activities and financial positions of the corporations issuing these securities.

  Most securities sales representatives serve individual investors, but others specialize in institutional investors. In institutional investing, most sales representatives concentrate on a specific financial product such as stocks, bonds, options, annuities, or commodity futures. Some handle the sale of new issues, such as corporate securities issued to finance plant expansion.

  The most important part of a sales representative's job is finding clients and building a customer base. Thus, beginning securities sales representatives spend much of their time searching for customers-relying heavily on telephone solicitation. They may meet some clients through business and social contacts. Many sales representatives find it useful to get additional exposure by teaching adult education investment courses or by giving lectures at libraries or social clubs. Brokerage firms may give sales representatives lists of people with whom the firm has done business with in the past. Sometimes sales representatives may inherit the clients of representatives who have retired.

  Financial services sales representatives sell banking and related services. They contact potential customers to explain their services and to ascertain the customer's banking and other financial needs. They may discuss services such as deposit accounts, lines of credit, sales or inventory financing, certificates of deposit, cash management, or investment services. They may solicit businesses to participate in consumer credit card programs. At most small and medium-size banks, branch managers and commercial loan officers are responsible for marketing the bank's financial services. As banks offer more and increasingly complex financial services-for example, securities brokerage and financial planning-the job of the financial services sales representative is assuming greater importance.

  Financial planners develop and implement financial plans for individuals and businesses using their knowledge of tax and investment strategies, securities, insurance, pension plans, and real estate. They interview clients to determine their assets, liabilities, cash flow, insurance coverage, tax status, and financial objectives. Then they analyze all this information and develop a financial plan tailored to the clients' needs.

• Working Conditions

  Securities sales representatives usually work in offices where there is much activity. 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 may become very hectic.

  Established securities sales representatives usually work the same hours as others in the business community. Beginners who are seeking customers may work much longer hours, however. Most securities sales representatives accommodate customers by meeting with them in the evenings or on weekends.

  Financial services sales representatives normally work in a comfortable, less stressful office environment. They generally work 40 hours a week. They may spend considerable time outside the office meeting with present and prospective clients, attending civic functions, and participating in trade association meetings. Some financial services sales representatives work exclusively inside banks, providing service to "walk-in" customers.

• Employment

  Securities and financial services sales representatives held almost 246,000 jobs in 1994. In addition, a substantial number of people in other occupations sold securities. These include partners and branch office managers in securities firms as well as insurance agents and brokers offering securities to their customers.

  Securities sales representatives are employed by brokerage and investment firms in all parts of the country. Many of these firms are very small. Most sales representatives, however, work for a small number of large firms with main offices in large cities, especially New York.

  Financial services sales representatives are employed by banks, savings and loan associations, and other credit institutions.

• Training, Other Qualifications, and Advancement

  Because securities sales representatives must be well informed about economic conditions and trends, a college education is increasingly important, especially in the 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 sales ability and good communication skills, are well groomed, and have a strong desire to succeed. Self-confidence and an ability to handle frequent rejections also are important ingredients for success.

  Because maturity and the ability to work independently also are important, many employers prefer to hire those who have achieved success in other jobs. Some 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 sales representatives following retirement from other fields.

  Securities sales representatives must meet State licensing requirements, which generally include passing an examination and, in some cases, furnishing a personal bond. In addition, sales representatives must register as representatives of their firm according to regulations of the securities exchanges where they do business or the National Association of Securities Dealers, Inc. (NASD). Before beginners can qualify as registered representatives, they must pass the General Securities Registered Representative Examination, 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. These tests measure the prospective representative's knowledge of the securities business, customer protection requirements, and recordkeeping procedures. Many take correspondence courses in preparation for the securities examinations.

  Most employers provide on-the-job training to help securities sales representatives meet the requirements for registration. In most firms, the training period generally takes about 4 months. Trainees in large firms may receive classroom instruction in securities analysis, effective speaking, and the finer points of selling; take courses offered by business schools and associations; and undergo a period of on-the-job training lasting up to 2 years. Many firms like to rotate their trainees among various departments in the firm to give them a broader perspective of the securities business. In small firms, sales representatives generally receive training in outside institutions and on the job.

  Securities sales representatives must understand the basic characteristics of a wide variety of financial products offered by brokerage firms. Representatives periodically take training, through their firms or outside institutions, to keep abreast of new financial products as they are introduced on the market and to improve their sales techniques. Training in the use of computers is important, as the securities sales business is highly automated.

  The principal form of advancement for securities sales representatives is an increase in the number and size of the accounts they handle. Although beginners usually service the accounts of individual investors, eventually they may handle very large institutional accounts such as those of banks and pension funds. Some experienced sales representatives become branch office managers and supervise other sales representatives while continuing to provide services for their own customers. A few representatives 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 including courses in accounting, economics, and marketing serves as excellent preparation for this job.

  Financial services sales representatives learn through on-the-job training under the supervision of bank officers. Outstanding performance can lead to promotion to managerial positions.

• Job Outlook

  Employment of securities and financial sales representatives is expected to grow much faster than the average for all occupations through the year 2005 as economic growth, rising personal incomes, and greater inherited wealth increase the funds available for investment. However, employment of financial services sales representatives is expected to grow somewhat slower than securities sales representatives as more and more people are expected to do their banking from home via their personal computer.

  More individual investors are expected to purchase common stocks, mutual funds, and other financial products after seeking advice from securities sales representatives regarding the increasing array of investment alternatives. Deregulation has enabled brokerage firms to sell certificates of deposit, offer checking and deposit services through cash management accounts, and sell insurance products such as annuities and life insurance. Growth in the number and size of institutional investors will be strong as more people enroll in pension plans, set up individual retirement accounts, establish trust funds, and contribute to the endowment funds of colleges and other nonprofit institutions. More representatives also will be needed to sell securities issued by new and expanding corporations, by State and local governments financing public improvements, and by foreign governments, whose securities have become attractive to U.S. investors as international trade expands.

  Investors increasingly rely on the growing number of financial planners to assist them in selecting the proper options among a wide variety of financial alternatives. In addition, demand should increase as banks and credit institutions expand the range of financial services they offer and issue more loans for personal and commercial use.

  Due to the highly competitive nature of securities sales work, many beginners leave the field because they are unable to establish a sufficient clientele. Once established, however, securities and financial services sales representatives have a very strong attachment to their occupation because of high earnings and the considerable investment in training.

  The demand for securities sales representatives fluctuates as the economy expands and contracts. Thus, in an economic downturn, the number of persons seeking jobs usually exceeds the number of openings-sometimes by a great deal. Even during periods of rapid economic expansion, however, competition for securities sales training positions-particularly in larger firms-is keen because of potentially high earnings.

  Job opportunities should be best for mature individuals with successful work experience. Opportunities for inexperienced sales representatives should be best in smaller firms.

• Earnings

  In 1994, median annual earnings of securities and financial services sales representatives were $37,300; the middle 50 percent earned between $24,800 and $70,800. Ten percent earned less than $17,600 and 10 percent earned more than $120,700. On average, financial services sales representatives earn considerably less than securities sales representatives.

  Trainees usually are paid a salary until they meet licensing and registration requirements. After candidates are licensed and registered, their earnings depend on commissions from the sale or purchase of stocks and bonds, life insurance, or other securities for customers. Commission earnings are likely to be high when there is much buying and selling and lower when there is a slump in market activity. Most firms provide sales representatives with a steady income by paying a "draw against commission"-that is, a minimum salary based on the commissions which they can be expected to earn. Securities sales representatives who can provide their clients with the most complete financial services should enjoy the greatest income stability.

  Financial services sales representatives usually are paid a salary; some receive a bonus if they meet certain established goals.

• Related Occupations

  Similar sales jobs requiring specialized knowledge include insurance agents and real estate agents.

• Sources of Additional Information

  Information about job opportunities as a securities sales representative may be obtained from the personnel departments of individual securities firms.

  For information about job opportunities for financial services sales representatives in various States, contact State bankers' associations or write directly to a particular bank to inquire about job openings.

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