“ A broker is someone who buys and sells shares and other securities through market makers or Agency Only Firms. „
The last year or so has seen those of us working in certain financial areas taking a huge amount of criticism.......after all, we are all paid six figure salaries, get bonuses that can buy us holiday homes and fast cars, and have pension funds that would support a small country......don't we?
Well, I am a stockbroker, and have been for many many years.......and the "job title" may not be all you think it may be! That said, it is a job I love, and I hope that this review will give people thinking of entering the profession a bit of an insight into the realities of it.......
**What do I do?**
I am a private client stockbroker. I manage people's portfolios, ranging from small £10,000 portfolios, up to multi million pound portfolios. I advise clients on what to invest their money in, and for "discretionary" clients, I simply invest for them, and account to them for it afterwards.
Once I have instructions from my client, or I have decided what I want to do, I pass my order to a dealer who then rings the market maker and does the deal, or who puts the deal through electronically on the screen. Dealing is exciting, and it is an excellent starting point, learning the ins and outs of the market, getting a real feel for the stocks and shares that make up the various indices, acting immediately to get the best prices, and building confidence. Dealing is not, however, the only thing a stockbroker does, although it is often all that you see on the news, and therefore the image that people have.
The private client stockbroker is taking responsibility for someone's life savings, for their trust funds, for their pension funds. We have to decide what investments are going to provide the necessary income and growth for each particular client, all of whom have different requirements, different expectations, and different levels of risk. Investing a little old lady's life savings to fund her nursing home fees is quite a responsibility.......yet at the same time you will be investing for a client who wants a bit of "spice" and is looking to play the market for a bit of fun.
The market is a risky place - it can move 20% up or down in a matter of days. Individual stocks can move significantly each day. Even the big, "blue chip" companies bounce around like nobodies business, and it is no fun investing money in the morning, and going home in the evening seeing it down 10% already.......
**Do I need to take exams**
Yes, Yes, and Yes.......there are several. Stockbroking is a heavily regulated industry - and so it should be! To become registered, you will need to undertake exams in regulation and securities - these are multiple choice and hundreds of people sit them every week. If you are educated to degree level or very good "A level" standard, you should not find these too difficult, if you study the workbooks, and do plenty of practice tests, but they are often worded to catch you out - with double negatives etc. You cannot deal, or give advice until you have these exams. The industry knows them as "Reggie Reps" because obtaining them allows you to become a "registered representative"......and they are the most important exams as without them you can't work.
You then move on to the Diploma exams for the securities institute. For those familiar with the national levels, the SI Diplomas are ranked at level 7.....putting this into perspective, GCSE A*-C is level 2, A levels are level 3......so you can see that these are pretty hard exams, and many many people fail. There is a range of subjects depending on which area of finance you are working in, eg private client management, bond management, etc and although they are stand alone exams, you are aiming for three of them so that you can get yourself the full diploma.
These are NOT multiple choice - they are hard exams involving some shorter answer questions, and some essay questions. A very very good maths brain is needed as some of them have the longest equations in the world! These exams are sat every six months - in June and November/December. As I say, failing is common, so be prepared to re-sit.....
Assuming you pass one paper, you can become a Member of the Securities Institute (MSI). This is an industry recognised designation, and it really has to be the minimum you are working towards. Once you have all three papers, and the necessary number of years experience, you can apply to be a Fellow. There are few of these, relatively, and it really is the senior ranking. This is where I am.......and boy have I deserved it! Many job adverts will specify if they are looking for an FSI because they know they are getting applicants who are experienced and incredibly well qualified.
Be prepared to study, and to study hard - it is not the sort of thing you can "wing" with just a bit of revision and a flick through the manual on the train going to the exam......
For more information and to see examples of some of the multiple choice questions, go to www.sii.org.uk where you will find lots of information about how the exams are set.
**How did I get into Stockbroking?**
Well, I qualified in tax law (yawn yawn).....not via the usual university route, so I don't have a degree, but by part time studying whilst at work. I have good A levels but didn't continue into formal higher education. After a few years of tax law, a stockbroker joined our law firm. At the same time, the partner that I worked with left, took most of our tax files with him, and I was looking at having to change department and retrain. I was lucky enough to be given a free choice of where I went, and I chose to go to the stockbroker......
It certainly wasn't what I set out to do - I just fell into it, and was in the right place at the right time.
**How do you get into it now**
Well, competition is fierce for places, as with the very volatile financial markets, firms have been faced with having to make redundancies a number of times over the past ten years. That means that entry level jobs are fiercely fought over and firms can demand higher qualifications before they will even look at your CV. For example, the firm that I work for currently ask for a minimum of a 2:1 in economics, business or maths for a trainee position. That means that if I were starting out now, I couldn't become a trainee because I never went to uni.....
Of course, the "old boy" network still works as well, so you will find some jobs go to the sons of those who went to the same school as the boss.......unfair, frustrating, but the way it still is to a certain extent.
**how do I find a job?**
Newspapers occasionally have ads for trainees, or experienced stockbroking staff, specialist recruitment agencies are worth getting in touch with, and of course there is touting your CV to financial firms left right and centre, over and over again, in the hope that they take you seriously.
Sadly, many CVs are sent in from people who think that they can wear red braces, and a pin stripe suit, and earn a million pounds a year by the time they are 21.........they only see the industry as a "get rich quick" thing, and have no idea or aptitude, so their CV is put in the shredder quicker than you can say "bull market". If you are serious about this, make it known that you are serious. Make it known that you are determined to succeed despite 100 knockbacks.....
**Is it stressfull?**
YES!! You will have seen on the news, the pictures of the guys in London with their heads in their hands as the market plummets and they can do nothing about it. You have just made a decision, and within minutes it turns out to be the wrong one.....you try and put it right, by doing something else.....does it work? Maybe, maybe not - you are "playing" with huge amounts of money here - money that doesn't even belong to you.....you have to answer to your clients......yes, that is stressful.
The UK market is open 8am to 4.30pm.......but you are at your desk before then, and long after.......you are tired, you have kept going on a diet of caffeine, and you have not had chance for lunch. Remember Gordon Gecko in "Wall Street" saying "Lunch is for wimps"....no, lunch is for people who get time to eat it.......that is a rarity!!
But it doesn't all end there - the US market is open until 9.30pm.....so once you get home, you find you can't switch off, because whatever Wall St does will set the scene for London the next day......Bloomberg comes on, teletext is flicked through, and you are trying to work out the consequences of the latest American job cuts.....The news has an impact - so when you hear of an air strike somewhere, you are trying to work out how that will affect the oil price, how that will affect individual company prices......switching off to go to sleep is quite difficult! Yes, it is stressful.
The markets don't stop just because you are sick, or on holiday......you need to keep up to date with it - keep Bloomberg on while you are on your sick bed, because you know that you will be making decisions based on what is happening NOW, and that has no respect for sickness or days off......on holiday you will be searching for an English speaking newspaper so you can get the prices, or an internet cafe so you can log into your market screen and get live price movements.......no rest, whatsoever!
So, it is a stressful job, it is a demanding job, but of course, what you all want to know is....
**How much wonga will I earn?**
Of course, you all see the news of big bonuses, and city salaries, and of couse some people earn huge amounts of money - these, however, are the people who are taking the biggest amounts of risk......and winning. Like every industry, the best will earn the most money. Experience brings seniority, and seniority brings higher wages. You wouldn't expect a headteacher to earn the same as a regular teacher, or a doctor to earn the same as a nurse.......and the same applies in finance.
For every high earner driving a porsche and buying a second home in the Dordogne, there are dozens earning "regular" salaries. I won't pretend that I have a low paid job, but it is far far far removed from the image on the TV. I work in a provincial firm - so I get paid provincial wages. I get a good wage for my area, but I drive a Vauxhall Zafira.......enough said!
And starting salaries for entry level/newly qualified staff may not be much more than £12000 - you have to prove yourself, you have to show you are hungry for the job, you have to show you are determined to succeed. But £12000 for a graduate post is not fantastic - you won't be buying your porsche within the first six months......you have been warned!
Obviously, salaries vary, according to geographics, the state of the economy, etc etc etc.
So......do I enjoy what I do? Yes, I do. After many years in the industry, I took a much needed break from it - I spent two years doing something completely different (reflexology - read my review on training to be a reflexologist!) but I was drawn back into it, and haven't looked back since.
I have a permanent headache, I don't sleep particularly well because I can't switch off, I work long hours when I would rather be home enjoying a rare summer evening, and I am still saving for the luxury chalet in the Alps for a weekend getaway......but I wouldn't want to hand my job over to anyone else!
Every day is different - every hour is different. You never know what is going to happen next and things can change in the blink of an eye, keeping you on your toes, and always meaning that you continually learn, and adapt. You will never be bored if you are a stockbroker. If you ARE bored, you are doing something very, very wrong!
The best tip I can offer anyone (anyone who is still awake at this point!) is to look at www.sii.org uk - it really is the ONLY starting point if you are serious about entering this industry.