Bonds are financial instruments companies and governments use as a way to finance projects and activities. Bonds are debt investments -- the investor is in effect loaning money to an entity for a period of time at a fixed interest rate. Bond brokers make these bond trades, buy and sell transactions, or make recommendations on behalf of different types of investors. Bond brokers make their money on commission. The work can be rewarding, but there is a great deal of competition and pressure. To understand how to become a successful bond broker, we spoke to Steven Feldstein of Steve Feldstein & Associates of New Jersey, a registered investment adviser and expert in both bonds and equities.
eHow: What traits should someone have to become a bond broker?
Feldstein The first thing you need is the fire in the belly that says you are going to go out and change the world. Finance must be a passion, and your mind should always be looking for more information, for ways to connect the dots to determine cause and effect, to determine how you can do a better job for your clients. Which brings me to listening skills, to listen to your client to understand their goals, their risk tolerance and to not betray either. The most important trait: integrity. Whether selling underwear or bonds, absolute integrity is absolutely essential. Never compromise.
eHow: What kind of a background should someone have to become a bond broker?
Feldstein You will need a deep background in finance and economics, not just the names of things and how they work, separately, together and with taxes -- what is the net return after taxes. Gain the macro view. You must be strong in mathematics.
eHow: Where should I begin on the road to becoming a bond broker?
Feldstein It will take years to become a competent bond broker. One of the best ways is to look to the large banks' training programs. Immerse yourself in the world of bonds. Find a mentor, a "rabbi," who will help you to sort things out, give you the insights that change facts into knowledge, who will change academic learning into practical street smarts. The best way to learn is by having the courage to try, to fail. Failure is the best good teacher. The hardest part is to understand clients' horizons, liquidity, tax, credit quality needs, etc.. It takes years of on-the-job training to learn how to communicate.
eHow: What licensing is required?
Feldstein To be a broker and have the right to engage in the purchase and sale of bonds, you must pass the General Securities Representative Exam, which is also called the "Series 7" exam. But to be eligible to take the test you must be sponsored -- you must be an intern or otherwise employed by a brokerage firm.
The Series 7 exam is offered by the Financial Industry Regulatory Authority and is a 260-question exam. It is 6 hours long, is divided into two sections and has a passing minimum of 70 percent correct answers. The exam is given at many testing centers throughout the U.S.. Your state may require an additional exam, such as the the Uniform Securities Agent State Law Examination, or Series 63, which deals with the financial securities laws and regulations of that state. If you want to become a principal in a bond brokerage, such as opening up your own shop, you will need to take the Series 24 exam, also given by FINRA. Depending on your business focus, there may be other exams required.
eHow: How can I excel at being a bond broker?
Feldstein I was given some good advice -- that you essentially remain the same person except for the people you meet and the books you read. Read voraciously. Make sure you meet the people who are the best and learn why they are the best. Read the prevailing financial economic theories and challenge them. I always feel that I'm just scratching the surface of knowledge. You must keep learning or be doomed to mediocrity. Become a student of history. Bond behavior is cyclical with the economy. Understand these patterns and the likelihood of selected outcomes and how these affect the bond market. Then, go out and get your first client and promise yourself that you will always deliver more than you promise. Never quit. You can change someone’s life. Your goal throughout is to build a successful process. And then, if you have the entrepreneurial spirit, to launch, to be free and independent, to make your own decisions, to do what's right for your client. I don't think there's any other way to really succeed. Commit to make a difference in the world. Never compromise integrity. Be proud.
Then your Monday mornings will be better than Christmas.
About Steven Feldstein
Mr. Feldstein is the founder of Steven Feldstein & Associates. He is a certified financial planner and chartered financial consultant. Mr. Steven is a registered investment adviser, and chartered life underwriter. He is also a qualifying and life Member of the Million Dollar Round Table, and International Association for Financial Planning. Mr. Feldstein is a registered representative of clearing services of America, and Insurance Specializations since 1974.
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