Brokers find high-pressure job has its compensations

Wendy Ng

Handsome commissions will come to those who survive industry consolidation

There were more than 800 securities brokerage firms in Hong Kong before the Asian financial crisis. Since then, the weakening financial market has accelerated the industry's consolidation.

Now about 400 securities firms operate in the market.

The front-line sales and operations people in brokerage firms are securities brokers, who are responsible for executing investment orders from their clients, whether they are institutional investors, corporations or individuals. The brokers need to maintain a stable client portfolio as well as expand their client base.

'They have to really understand clients' financial backgrounds, investment objectives and personal preferences, so as to provide the relevant research information and timely market trends and needs for the clients to make investment decisions,' says Peter Wong Yat-hang, chief financial officer of Tai Fook Securities, a leading securities firm.

From April, all practising brokers have been required to enrol and pass a professional examination at the Hong Kong Securities Institute to get formal recognition.

Practising professionals have to complete a combination of two or three papers for any type of regulated activity they wish to conduct.

Besides the core papers in 'Fundamentals of Securities and Futures Regulation' and 'Financial Markets', the professionals are required to complete one specialised paper that focuses on the regulatory and technical aspects of securities, derivatives, leveraged foreign exchange, corporate finance and asset management.

Mr Wong says: 'We expect that the industry will go through more rounds of consolidation for the coming two years. After the process, the number of securities firms will probably fall to fewer than 100.'

The stressful and pressurised work environment that brokers face is compensated by a handsome commission system.

'A performing broker can earn over $100,000 per month; we have 50 per cent of our brokers earning such an amount,' says Mr Wong, adding that the outstanding brokers are often the ones who are outgoing and sociable; they need to have a substantial social network to expand their clientele.

'More than 70 per cent of clients are referred by existing clients. Therefore, it is essential to find the right key clients.'

Securities firms position themselves as specialised boutiques, unlike other financial institutions.

'Our professionals really know [securities] well. We have a dedicated research team to support the front-line brokers. In addition, we offer a real one-to-one service to our clients,' Mr Wong says.

Securities brokers must also have a keen interest in financial markets as well as an eye for detail, he says.

'It is not that easy to execute clients' orders in a speedy and accurate manner.'

Integrity is also imperative in the profession. 'You need to build up clients' confidence and trust in you,' says Mr Wong.

Brokers must also stay abreast with advances in technology that affect their work.

More clients are using online trading, so brokers should be able to assist their clients with the e-business platform.

Most of all, solid industry and market knowledge is essential.