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Mutual Fund Broker


Description

In order to buy and sell mutual funds, you might need a mutual fund broker to help you with the transaction. Granted, but what does a mutual fund broker do and what exactly is a mutual fund? Mutual funds are corporations that pool large sums of money (millions and billions of dollars), contributed from millions of individual investors who wish to save or make money. Mutual funds are managed by an individual or a team of professional money managers who invest the pool of money into stocks, bonds, or other securities. Each investor owns shares or holdings in this company. The combined holdings and investments of a mutual fund are called the fund's portfolio.

A mutual fund broker is a licensed salesperson and sometimes financial advisor who works for a financial brokerage house and carries out all financial transactions. The broker acts as the link between the investor and the stock exchange. When an investor wants to buy or sell a mutual fund, the broker relays the order through their financial firm's computers to the floor of a securities exchange, such as the New York Stock Exchange (NYSE). There, floor brokers negotiate the price with other floor brokers, make the sale, and forward the purchase price to the stock broker.

There are five basic types of mutual funds on the market: money market funds, bond funds, income funds, balanced funds and stock funds. Each of these funds focuses on investing money in different sectors of the market but all serve an important purpose. Mutual fund brokers also work as financial planners, analyzing portfolios, suggesting and buying stocks and providing a whole range of other services. Mutual fund brokers usually charge commissions for their service, from one to three percent of the money invested.

An important aspect of the occupation is finding prospective clients and building a customer base. Many mutual fund brokers contact potential clients by cold calling or they meet new clients through business and social contacts. More established brokers might generate new business through referrals. Some write a column for a newspaper, or appear on television or radio shows to offer their mutual fund suggestions.

Being a mutual fund broker can be extremely stressful and emotional. Since the nature of the business is investing other people's money, brokers must take full responsibility should something go wrong. If you lose someone's earnings, you must be willing and able to take the heat and search for alternatives to improve the situation. Most mutual fund brokers are quite conservative in their investing and thoroughly research stocks before buying them. Mutual fund brokers must keep up with the latest market information and trends and constantly research new ideas and companies.

Keeping the clients in mind, brokers must honestly consider their needs and situations before your own, in order to properly advise them on investment opportunities. Further, brokers must then suggest new investment ideas to the client so that a client will entrust their money with the broker in the future. This strong commitment to the client and the job can sometimes conflict with one's personal life because brokers have to be dedicated and on call for their clients.
 
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  Interests and Skills  
A mutual fund broker needs to have superior skill in interpreting, analyzing and researching information. They thrive on risks and competition and excel in sales. Good listening and communication skills also make a great broker. A large part of the job deals with communicating with clients, in person and on the phone, and making new contacts. Therefore, brokers must respect client confidentiality and be culturally and emotionally sensitive. Mutual fund brokers have the ability to understand complicated financial systems, keep up-to-date on financial matters and consider new approaches to problem solving. They must be confident in their financial knowledge and consulting as well as enjoy taking a methodical yet creative approach to research.

Mutual fund brokers must be able to deal with rejection and handle an increasingly stressful working environment. They can assess a hectic situation, take a deep breath and thrive on the pressure of any situation. Finally, they love working with numbers and are experts in the stock market.
 

  Typical Tasks  
  • Buy and sell stocks, bonds and mutual funds for individual investors, pension fund managers or companies such as banks, trust companies and insurance firms
  • Provide investment information and advice to clients
  • Review financial periodicals, stock and bond reports, business publications and other material to identify potential investments for clients
  • Monitor clients' investment portfolios and ensure that investment transactions are carried out according to industry regulations
  • Discuss investment objectives with clients and make recommendations accordingly (e.g. low risk securities only, or a balance of high and moderate risk securities with long term growth potential)
  • Maintain strict confidentiality regarding client information
  • Seek out new clients by identifying and calling on potential clients.
  • Mutual fund brokers either work alone or with other financial planners, in fully equipped offices or out of their homes. Many mutual fund brokers travel frequently to meetings at clients' homes or businesses and to conferences. They generally tend to work long hours due to the amount of research and planning put into each client's account. This is a fiercely competitive business with constant pressure to buy and sell mutual funds. They may also work evenings and weekends as meetings may take place at night or on a Saturday or Sunday.

  Workplaces, Employers and Industries  
  • Mutual fund brokers are mainly employed by private financial related institutions. Some work for smaller financial planning businesses, few are self-employed, while others are employed on a full-time basis or contract their services to larger firms and organizations such as stock brokerage firms, trust companies, stock and commodity exchanges, banks and other lending institutions, investment companies, mutual fund companies, and private financial planning companies. Accordingly, self-employed brokers contract their services out to individual investors.

  Long Term Career Potential  
Some of the larger investment firms hire summer students, which is an excellent entry-level position to learn from. Firms also recruit students on campus across the country during the spring. New employees generally start in entry-level discount broker positions and then with more experience and a better "feel" for the market, they move up and become full stock brokers. Once comfortable in that area, many specialize in mutual funds and become strictly mutual fund brokers. Advancement in this field depends almost entirely on the individual's initiative, success and ability.

Successful mutual fund brokers usually come equipped with years of experience, often in other sectors of business. Generally, they are not young and fresh out of university as people tend to entrust their money with older, more experienced investors. Also, it takes years to build up a wealth of clients therefore this career takes many years to achieve fully. Experienced mutual fund brokers may decide to specialize in a particular aspect of investment, such as fixed-income securities, small or large cap stocks and international or hedge funds. Brokers can also move into supervisory or senior management positions in larger companies or professional associations. More established mutual fund brokers might even be written about in financial journals if they choose profitable mutual funds and make a name for themselves in the financial community.
 

  Educational Paths  
Mutual fund brokers require a college or university degree with a concentration in finance or business-related discipline. Courses in computers and information technology are also important in the mutual fund field. Most brokers have a Master of Business Administration (MBA) a new educational standard these days. A Chartered Financial Analyst (CFA) degree is also important at many firms.

New mutual fund brokers often spend their first couple of years developing a client base. This takes a lot of hard work, determination in the face of rejection, and persistence. It is often best to have experience in sales before getting started as a mutual fund broker. Professionals suggest learning as much as possible about the stock market and getting a summer job at a firm that invests in mutual funds.
 

Sources:
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, http://www.bls.gov/ooh/
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Statistics, 2002, http://www.bls.gov/oes/2002/oes_nat.htm

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