In the third part of our series highlighting different careers we turn the spotlight on securities.
The securities industry is a broad one covering many areas of specialisation. When considering a career in the securities industry it is very important to understand this from the outset. There is also a higher degree of overlap with other areas of financial services than in the past. Gone are the days when stockbrokers, banks and insurance companies were protected from competitive forces by regulatory barriers. Increasingly, securities personnel are working in other parts of the financial services industry taking with them valuable specialist skills.
Whilst certain specialist ’professions’ remain within the securities industry, securities specialists may make their career with a banking, insurance, fund management or stockbroking institution. This article is intended to focus on the type of jobs and careers involved in the Securities industry.
Clearing, Settlement and Custody
Generally this aspect of securities work is related to the clearing and settlement of deals executed on the world stock and bond markets. Clients of financial institutions buy and sell stocks and shares and these transactions have to be settled on their behalf. Increasingly, in the offshore environment, many of these transactions are related to mutual funds, a huge growth area. Sometimes within fund management companies, the clearing and settlement work will be related to the administration of a particular offshore mutual fund.
Other duties include: -
- Collection and payment of dividends and bond coupons
- Receipt and delivery of security holdings
- Monitoring and administration of corporate events (e.g. rights issues, stock dividends)
- Pricing of securities for client valuations and statements
- Reconciliation of securities holdings with banks, brokers and other financial institutions
- Dealing with queries efficiently and solving settlement problems
This list is by no means exhaustive but it is intended to provide an outline of the core duties that need to be performed by any financial institution in the securities industry. By definition, this type of work involves a high degree of interaction with other people, both from within and outside one’s own organisation. The ability to get on with people and work well in a team is desirable. Much of the work will be automated, so an ability to understand complex situations and use IT systems is also very useful if one wants to progress a career in this area. Supervisory and management positions will suit those who enjoy problem solving, have strong interpersonal skills and are good at managing staff and administering processes. Careers will suit those able to analyse workflows and existing business practices and make suggestions to improve the efficiency of the office. More senior management roles will appeal to persons able to develop a very good understanding of sophisticated computer systems and who are able to lead an organisation in facing new challenges and adapting to the ever-changing environment.
How far one progresses in the clearing, settlement and custody side of the securities industry will ultimately depend on many of the above factors including ambition and a willingness to obtain the necessary professional qualifications. In addition, there remain two further important ingredients for success: a professional attitude and the ability to work hard!
Investment Dealer/Portfolio Manager/Stockbroker
Investing in stocks and shares is a complex business and many clients will appoint a bank or stockbroking firm to manage their portfolios on their behalf. This will either be in a fully discretionary or an advisory capacity. If the portfolio is managed on a fully discretionary basis, the client will sign a mandate authorising the bank to make all investment decisions on the client’s behalf according to pre-agreed investment objectives. By contrast, if the portfolio is managed on an advisory basis, there will tend to be a more frequent and ongoing dialogue with the client before any investment decisions are taken.
Principal duties include:
- Analysing economic and company data
- Participating in investment committee meetings to discuss portfolio strategy and asset allocation
- Monitoring investments (equities, bonds and mutual funds) in the portfolios, making recommendations and implementing changes
- Placing deals with banks, brokers and mutual fund companies
- Preparing performance and portfolio reports
- Supporting front office personnel in meetings with existing and prospective clients on all matters related to investment and portfolio management
Many firms will approach these duties differently and the split of responsibilities will vary from position to position. There can be a high degree of specialisation in portfolio management work, especially in the larger houses. For example, some can spend their entire day doing company analysis and making stock recommendations. It is unusual that the same people will select equities, bonds and mutual funds – normally these roles are split among specialist individuals or specialist teams. Often there are whole teams of people focusing purely on client maintenance and acquisition, enabling the portfolio manager to concentrate exclusively on investment management.
In terms of responsibility, some decisions may be made by the individual whereas others are deferred to groups of individuals or committees. In the offshore world, it has become increasingly common for many decisions to be made by central investment committees in other financial centres such as London or Zurich and the responsibility of the portfolio manager is to ensure that these decisions are implemented locally. The portfolio manager may have some input into these decisions and may attend the investment committee meetings, but is unlikely to have full autonomy. With recent advances in technology, it is now possible for many of these decisions to be taken by ’virtual’ committees, involving communication by e-mail or teleconference.
Work in investment management or stockbroking tends to suit individuals who are self-confident, possess good analytical and research skills, high levels of numeracy and above average levels of PC literacy. Good communication skills are required for roles that involve a high level of interaction with clients or client managers. The ability to work in a team is less important for specialist analytical work, where there is more of a requirement to meet tight deadlines and work accurately under pressure.
A career in investment management tends to suit those individuals who can think strategically and independently and are able to communicate ideas effectively. There is a requirement to be quite robust as the work can be quite stressful and therefore the ability to handle pressure is paramount. Senior management positions in investment management will suit people who are quite ambitious and are prepared to dedicate a high percentage of their time to their job. The more senior jobs will suit those individuals who are comfortable making complex decisions. There is also a need to have good administration skills in order to make sure that the investment decision process is carried out as efficiently as possible and that all decisions are communicated clearly to clients and client managers.
Qualifications
Increasingly professional qualifications are becoming necessary to fulfil most types of work in the securities industry. The Securities Institute in London has been successful in establishing a range of qualifications suitable for all levels of work in the Industry. The examinations are devised and monitored by practitioners drawn from across the investment industry thereby ensuring the examination papers reflect and are relevant to the rapid changes to the increasingly global securities and investment industry. The exams are aimed to meet the training and competence requirements for the Industry as set out by the Financial Services Authority (FSA), the sole regulator of the UK financial services industry. The exams are generally accepted as the benchmark qualifications for the securities industry in Guernsey, Jersey and the Isle of Man.An outline of the leading Securities Institute examinations programmes is given below.
For further details, you may find it useful to consult the Securities Institute website www.securities-institute.co.uk
Securities Institute Diploma (leading to Membership and Fellowship of the Institute) - the Institute’s senior professional examination programme, showing a professional’s mastery of particular aspects of the financial services industry.
Securities Institute Certificates for Approved Persons (previously the Registered Persons Examinations) is a series of examinations designed to satisfy the FSA examination requirements for registration as an Approved Person.
Investment Advice Certificate (IAC™) - an FSA approved regulatory benchmark examination, for individuals who give advice to the public on packaged products, investment and financial planning.
Investment Administration Qualification (IAQ™) - equips settlement, administration and operations staff with a detailed overview of the nature of the financial services industry and its regulation, as well as their particular field of business. It is recognised by the FSA as an approved examination.
Ultimately there is a qualification for every level of work in the securities industry. The Securities Institute qualifications are there to support individuals in their career development plans and attainment of the exams can significantly enhance promotion prospects.
Conclusion
The securities industry is a very diverse one and a number of career options are available depending on the chosen speciality route taken. As the securities industry is constantly changing and evolving, the key is to be flexible and adaptable. Qualifications are the starting point for many in their careers and the attainment of relevant qualifications will undoubtedly send out the right signals to employers where an individual is looking for promotion opportunities. Ultimately everyone has to work hard at keeping abreast of changes in the Industry and adapting to the constantly changing workplace.