In brief, stockbrokers look after their institutional, corporate or private clients' investment portfolios. When providing investment services for private clients, they are known as private client stockbrokers, investment managers or wealth managers. Stockbrokers also work within financial institutions such as stockbroking and investment management companies.
Being profit-oriented on their clients' behalf, the stockbroker must buy and sell shares to generate the maximum return for their money. This means that their central aim is to buy securities, money and varied financial products for low prices and sell for higher prices.
Some stockbrokers completely manage their clients' investments and make decisions on their behalf, whereas others may act on their clients' instructions. Stockbrokers work as part of a team alongside investment analysts, who carry out penetrative research into how companies in the marketplace are performing. The clients' portfolios of investments are reviewed on a regular basis to monitor performance against these reports. Regularly produced updates illustrate movements and highlight changes that could improve performance.
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On an ongoing basis, the stockbroker is managing and reviewing clients' portfolios, and – in larger firms – underwriting new stock issues. On a day-to-day level, work activities may look similar to the following. Decisions can't be made without market knowledge, so the stockbroker researches information about domestic or foreign equities, securities and government stocks. Armed with this information, he/she then advises their clients, either in person, by phone or email, or by letter. With permission to proceed, the stockbroker then buys or sells on the stock exchange.
Much of the trading takes place by telephone and via the Internet. As this sector is driven by the need for rapid, up-to-date decisions based on globally available information, most processes are conducted via leading edge technology.
Trading is usually done in large open-plan offices, with banks of computer screens and telephones. Hours are long and irregular. London is one of the leading investment centres in the UK and most jobs are based there. However, there are also jobs in Manchester, Glasgow, Birmingham, Edinburgh and Leeds. Overseas work is possible.
Would This Career Suit You?
This career is not for the faint-hearted or indecisive. Having a mathematical mind is not enough! It's important to be able to function as a team member, but you also need to be able to think independently and analytically. Speed is of the essence: you must be able to cope with a large volume of incoming information at any one time, working swiftly without losing any accuracy. A political or economic event can suddenly move a market, leading to frenetic trading without notice. Unnecessary mistakes can cost thousands of pounds or dollars – or more. It goes without saying that the ability to cope with pressure is critical. Willingness to work long hours at short notice to ensure the job is done is essential.
Dealing effectively with clients takes a particular kind of personality. A stockbroker needs to nurture his or her clients by keeping them in touch with what's happening in the market. Keeping them both well-informed and confident in their broker's abilities is particularly important now that so many online opportunities have opened up, making it easier for clients to transfer their business elsewhere.
Many investment companies are willing to train the right candidates, if they have no prior experience. Sometimes they'll take on people with a small amount of relevant commercial experience coupled with knowledge of the industry. A degree-level of education is often preferred, particularly in economics, law or accountancy. Other entrants also have postgraduate qualifications such as an MSc or MBA. Most stockbrokers are under 40. Personality wise, they're usually driven, goal-oriented individuals with a 'winning' attitude. Enthusiasm and motivation are key to success in trading.
Salary and Prospects
Finally, stockbrokers should have a clean record with a good credit history. In some cases, brokers may be expected to furnish a personal bond. In return, salaries range from £25,000 for a graduate trainee to £100,000 or more. Bonuses can be very large. Promotion depends on performance. After trading, stockbrokers can move into account management, or become fund managers or independent consultants to banks and investment firms.
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