 Securities
 Industry
Overview
The securities, commodities, and other investments industry is made up
of a variety of firms and organizations that bring together buyers and
sellers of securities and commodities, manage investments, and offer
financial advice. The industry has undergone substantial change because
of improvements in technology, deregulation of financial services,
regulatory changes, the globalization of the marketplace, and
demographics. The Internet, along with high-speed computer systems, has
dramatically altered the way in which securities and commodities are
bought and sold, almost completely automating the transaction process.
At the same time, the number of financial services being offered is
rising as firms look for new ways to attract the business of an
increasingly wealthy and investment-savvy public.
 The
Securities and Exchange Commission (SEC) and major stock exchanges have
instituted accounting and corporate reforms to increase public
confidence in investment markets. These new rules address
conflict-of-interest issues raised by Federal, State, and industry
investigations into overly optimistic research reports--written by
analysts during the stock boom of the late 1990s--on companies that later
failed or whose stock declined dramatically in value, costing investors
billions of dollars. Furthermore, the securities industry adopted
measures to help ensure that research reports are written independently.
They also require that analysts disclose details of their compensation
that would make investors aware of any possible conflicts of interest.
These measures also prohibit stock analysts from attending investment
meetings at which investment bankers try to obtain lucrative stock and
bond deals.
Also, the SEC now
requires corporate chief executive officers (CEOs) to certify the
reliability of their companies' financial reports. In addition, the New
York Stock Exchange (NYSE) has implemented new rules to separate
investment banking from company research.
One of the most important functions of the industry is to facilitate the
trading of securities and commodities by bringing together buyers and
sellers. Brokerage firms typically provide this function. In these
firms, investors place their buy and sell orders for a particular
security or commodity by telephone, online by computer, or through a
broker. The firm fills the order in one of three ways. If the stock or
commodity is sold on an exchange, such as the NYSE or the Chicago
Mercantile Exchange (CME), the firm will send the order electronically
to the company's floor broker at the exchange. The floor broker will
then post the order and execute the trade by finding a seller or buyer
who offers the best price for the client.
Alternatively, if a
security is sold through a dealer network, such as Nasdaq, the broker
can access a computer network that lists the prices for which dealers in
that particular security are willing to buy or sell it. If a price that
the client agrees with is found, then a purchase or sale is made. Large
investors and brokerage firms also can buy and sell securities and
commodities on "electronic communications networks," or ECNs--powerful
computers that automatically list, match, and execute trades,
eliminating the sales agent. ECNs commonly are used for stocks that
trade frequently and in large numbers.
 Brokerage
firms generally are classified as full-service, discount, or online
organizations. Investors who do not have time to research investments on
their own will likely rely on a full-service broker to help them
construct an investment portfolio, manage their investments, or make
recommendations regarding which investments to buy. Full-service brokers
have access to a wide range of reports and analyses from the company's
large staff of financial analysts. These analysts research companies and
recommend investments to people with different financial needs. Most
brokerage firms now have call centers staffed with both licensed sales
agents and customer service representatives who take orders and answer
questions at all hours of the day.
Brokerage firms also
provide investment banking services; that is, they act as intermediaries
between those companies or governments which would like to raise money
and those with money or capital to invest. Investment banking usually
involves the firm buying initial stock or bond offerings from private
companies or from Federal, State, and local governments and, in turn,
selling them to investors for a potential profit. This service can be
risky, especially when it involves a new company selling stock to the
public for the first time. Investment bankers must try to determine the
value of the company on the basis of a number of factors, including
projected growth and sales, and decide what price investors are willing
to pay for the new stock. Investment bankers also advise businesses on
merger and acquisition strategies and may arrange for the transfer of
ownership.
Companies that
specialize in providing investment advice, portfolio management, and
trust, fiduciary, and custody activities also are included in this
industry. These companies range from very large mutual fund management
companies to self-employed personal financial advisors or financial
planners. Also included are managers of pension funds, commodity pools,
trust funds, and other investment accounts. Portfolio or asset
management companies direct the investment decisions for investors who
have chosen to pool their assets in order to have them professionally
managed. Many brokerage firms also provide these services. Personal
financial advisors can manage investments for individuals as well, but
their main objective is to be able to provide advice on a wide range of
financial matters .
 A
relatively small number of professionals in the industry work in the
exchanges, where the actual trading of securities and commodities takes
place. Computers and their applications have made brokers in the
exchanges much more productive and capable of handling the increasing
volume of trades.
Firms in this industry
offer a number of other services. Many offer cash management accounts
that allow account holders to deposit money into a money market fund
against which they can write checks, take out margin loans, or use a
debit card. Some brokerage firms offer mortgages and other types of
loans and lines of credit. They also may offer trust services and help
businesses set up benefit plans for their employees. Finally, firms in
the industry may sell annuities and other life insurance products.
The securities,
commodities, and other investments industry has invested heavily in
technology, allowing firms to handle larger volumes of trades with fewer
people. The growth of online trading in particular has produced a number
of online trading firms. In order to compete, many full-service
brokerage firms offer online trading to their customers. This explosion
in technology is changing the nature of many of the jobs and the mix of
people employed by securities firms. Some companies are more likely to
resemble information technology companies than securities firms, with
most of the employees working in computer-related occupations. Across
the industry, computer professionals are accounting for a greater
proportion of the workforce. Moreover, with so much business now being
conducted online and through call centers, traditional sales agents are
spending less time processing orders and more time seeking out new
clients and offering detailed advice.
Employment in each of
the segments of the securities, commodities, and other investments
industry is directly affected by the activity of the stock market and
futures market and the savings and investment goals of individuals.
Because these factors are determined largely by the strength of the
economy, the industry prospers during good economic times, but is much
more adversely affected by downturns than are many other industries.
Employment
 The
securities, commodities, and other investments industry employed 767,000
wage and salary workers in 2004. With their extensive networks of retail
sales representatives located in branch offices throughout the country,
the large nationally known brokerage companies operate the majority of
establishments in this industry.
About three-fourths of
the establishments in the industry employ fewer than 5 workers. However,
many of the industry's jobs are in the headquarters of these firms--where
most executives and administrative support personnel are employed--many
of which are located in the New York City area. Many people also work
for mutual fund management companies and smaller regional brokerage
firms. As a consequence of deregulation, banks have been have become a
factor in this industry, either acquiring securities firms or adding
securities and commodities business to their list of services. Personal
financial advisors work for financial planning firms many of them small
in size or themselves A relatively small number of employees work at
securities or commodities exchanges--primarily the NYSE, the Chicago
Board of Trade, the CME, and a number of regional exchanges.
Working
Environment
 Most
people in this industry work in comfortable offices; however, long
hours, including evenings and weekends, are common. About 24 percent of
employees worked 50 or more hours per week in 2004. Even when not
working, professionals in the industry must keep abreast of events that
may affect the markets in which they specialize. Opportunities for
part-time work are limited--only about 8 percent worked part time,
compared to 16 percent of workers in all industries combined. In 2003,
the incidence of work-related injury and illness was only 0.5 cases per
100 full-time workers, much lower than the 5.0 cases per 100 workers for
the entire private sector. Working conditions vary by occupation.
Securities sales
agents who deal mostly with individual investors and small businesses
often work in branch offices of regional or national brokerage firms or
for a small brokerage or financial planning firm. New sales agents work
long hours, mostly soliciting customers. During the day they are on the
phone continually with prospective customers, while at night they may
attempt to generate new business by giving classes or seminars or by
attending community functions. New sales agents also spend many hours
studying to pass a variety of tests that will qualify them to sell other
investment products, such as commodities or insurance. Although
established agents work more regular hours, all agents meet with clients
in the evenings and on weekends, as needed.
 Sales
agents who actually perform the buying and selling of securities and
commodities may have one of the most hectic jobs of any profession.
Often called traders, market makers, dealers, or floor brokers, they
work on the floors of exchanges or at a computer that is linked to other
traders. They not only take orders from clients and try to get the best
price for them, but also must constantly keep an eye on market activity
and stay in touch with other traders and brokers to know what prices are
being offered.
Increasingly, sales
agents for many of the brokerage and mutual fund companies work in call
centers, opening accounts for individuals, entering trades, and
providing advice over the phone on different investment products.
Although many simply respond to inquiries and do not actively solicit
customers, others may be required to contact potential clients. Call
centers also employ a large number of customer service representatives,
who answer questions for current clients about their accounts and make
any needed changes or transfers. All workers in call centers must
maintain a professional and courteous attitude, work well under
pressure, and be able to speak for long periods of time. Many call
centers operate 24 hours a day, 7 days a week, and employees may be
required to work evenings and weekends.
 Jobs
in investment banking, including those of financial managers, analysts,
or assistants, generally require the longest hours--often 70 to 80 hours
per week--in addition to extensive travel. In this area, there is a great
deal of pressure to meet deadlines and acquire new business.
Researchers, financial analysts, and investment managers working for
brokerage and mutual fund firms also work long hours, researching and
evaluating companies and their markets. Frequent travel to visit
companies is common.
Personal financial
advisors work in offices or out of their homes. Most work regular
business hours, but many accommodate clients by visiting them at their
homes in the evenings or on weekends. Office and administrative support
workers usually work a 40-hour week, but overtime may be necessary
during times of heavy trading.
Industry
Forecast
 Wage
and salary employment in securities, commodities, and other investments
is projected to rise 16 percent from 2004 to 2014, compared to the 14
percent increase expected for wage and salary employment across all
industries. Employment growth will be driven primarily by increasing
levels of investment in securities and commodities in the global
marketplace, as well as the growing need for investment advice. In
addition to the many new job openings stemming from this growth, a large
number of openings will arise as people retire or leave the industry for
other reasons.
Baby boomers are in
the middle of their peak saving years, and many are putting money into a
number of tax-favorable retirement plans, such as 401(k) programs and
Roth IRAs. These plans have been one of the major causes of inflows of
money into the stock market and into mutual funds, and this trend
towards saving for retirement is expected to continue.
Another factor
contributing to projected employment growth is the "globalization" of
securities and commodities markets--the extension of traditional exchange
and trading boundaries into new markets in foreign countries. This
extension, in turn, has provided an expanding array of investment
opportunities and access to markets in which new financial products are
now available to domestic investors. These new products and markets
encourage trading and prompt firms to hire more workers.
 Also,
although online trading will grow and reduce the need for direct contact
with an actual broker, the number of securities sales agents is still
expected to increase, as many people remain willing to pay for the
advice that a full-service representative can offer. Competition for
securities sales agent jobs, though, is expected to be keen, because the
potentially high earnings attracts a large number of qualified
applicants. Job opportunities for sales agents should be best for mature
individuals with successful work experience.
Employment of personal
financial advisors is expected to increase rapidly. As the number of
self-directed retirement plans grows, and as the number and complexity
of investments rises, individuals will require more help to manage their
money. Financial advisors who have either the CFP (R) or ChFC
designation are expected to have the best opportunities.
Financial analysts
will be needed in the investment banking field, where they help
companies raise money and where they work on corporate mergers and
acquisitions. However, growth in demand for financial analysts to do
company research will be constrained by the implementation of reforms
calling for investment firms to subsidize independent research, and to
separate research from investment banking. To help to contain the costs
of reform, firms have eliminated some research jobs. Competition for
entry-level analyst positions in investment banking typically is
intense; because of the potentially high earnings, the number of
applicants usually far exceeds the number of vacancies.
 Due
to advances in telecommunications and computer technology, the
securities, commodities, and other investments industry has become
highly automated. On the one hand, this automation is expected to cause
rapid growth in employment of computer specialists. On the other hand,
automation has resulted in computerized recordkeeping of transactions,
more productive office and administrative support staffs, and enhanced
communications with foreign firms. Accordingly, employment of brokerage
clerks will decline, and employment of bookkeeping, accounting, and
auditing clerks is projected to grow more slowly than the industry as a
whole.
Related
Degree Fields
Professional
Associations/Other Resources
Note: Some resources in this section are provided by the US Department
of Labor, Bureau of Labor Statistics.
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