MAKING A CAREER IN CAPITAL MARKETS

Pursuing a career in finance would probably land you in a bank, where you will work for the rest of your career – is that right?  Well, it could be, but not always! With a finance background, there are so many other options that you can pursue, that you won’t ever feel like you’re stuck. There are limitless challenging as well as rewarding careers for men and women alike. One such career option is Capital Markets.

Capital Markets

Capital Markets

What are Capital Markets?

Capital Markets are used for the sale and purchase of equity and debt instruments. These markets control the investments and savings between the suppliers of capital. Suppliers of capital may include investors who operate in retail and institutional investments. Moreover, it may also include users of capital such as businesses, government and individuals. Capital Markets are important for the function of a healthy, prospering economy as capital is an important feature for the generation of economic output. Capital Markets usually include primary markets and secondary markets. Primary markets are where new stock and bond issues are sold to different investors, while secondary markets deal in the trade of existing securities.

Capital Markets are usually involved in the issuing of instruments. These instruments include stocks and bonds for different lengths of time such as medium term and long term. For this reason, Capital Markets are distinguished from money markets, which may refer to financial instruments with maturities that do not exceed one year.

There are several participants in Capital Markets. These include individual investors, institutional investors such as the following:

  1. Pension funds and mutual funds
  2. Municipalities and governments
  3. Companies and organizations
  4. Banks and financial institutions

Individuals who supply capital are usually interested in gaining the maximum possible return at the minimum risk. On the other hand, users of capital want to increase capital at the minimum possible cost.

Career in Capital Markets

Crafting a career in finance, especially Capital Markets, can be quite rewarding and lucrative. Capital Markets placement for professionals can take three broad forms:

  1. Investors:

Investors are those individuals or companies who want to allocate capital and funds in order to realize their profits at a later date. They wish for financial return from this investment of theirs, in the future.  Different types of investments include equity investment, debt security investment, real estate investment, currency investment, commodity investment, derivatives etc. An investor who owns stocks may be known as a shareholder. There are two main types of investors. These include:

  1. Retail investors:

Retail investors may be individuals who gamble in games of chance, individual investors, art and valuable collectors, angel investors and sweat equity investors.

  1. Institutional investors:

Institutional investors are individuals who may fall into the category of venture capitalists, businesses that make investments, investment trusts, mutual funds, hedge funds or any other funds and sovereign wealth funds.

  1. Issuers:

An issuer is someone who builds up, registers and sells securities for financing its company operations. Issuers may be foreign or domestic government bodies, investment trusts or corporations. It is the legal responsibility of the issuer to fulfill the obligations of the issue and to report the financial conditions, development of material and any other operational activities required by the regulatory bodies. Usually, the types of securities that are issued include common and preferred stocks, bonds, notes debentures, bills and derivatives.

  1. Investment dealers:

Investment dealers, also known as security agents are involved in the sale and purchase of bonds, stocks, mutual funds, treasury bills and other securities for several establishments, including insurance firms, banks, individual investors, pension fund managers and trust companies. Other than this sale and purchase of securities, investment dealers also make markets in securities, provide investment services to different investors and underwrite securities. Investment dealers may also be referred to as broker dealers as they usually as brokers as well. These broker dealers operate in large as well as small corporations.

How to break into the Capital Market Industry?

Capital Markets is believed to be a branch of finance. Anyone who is interested in the discipline and filed of finance can opt to specialize in this field. However, there are some basic skills and qualifications that are needed in order to make “it” into this industry. These are discussed as follows:

  1. Qualifications and skills required:

Corporate finance and capital markets are two branches of investment banking that go side by side. However, both require different skills sets and qualifications. Before that, individuals who wish to opt for this career line must possess some basic traits which will help break into the industry. These include:

  1. Ability to learn quickly
  2. A pleasant and social personality
  3. Charismatic vibes so as to attract clients

Remember, these traits can also be acquired and do not necessarily have to be learned. Whoever said finance and investment banking is boring does not know that these professionals have high social value and need to be ready to show their extrovert side in order to gain business.

Moving on, when talking about Capital Markets specifically, a professional must have the following traits:

  1. He or she must be adept at analytics and processing complex information
  2. Must be comfortable with multi tasking
  3. Must be able to handle stress, and working in a pressurized environment

As far as the qualifications are concerned, in order to become a Capital Markets professional, it is necessary to at least acquire a graduate degree in the relevant field i.e. finance. Other than that, there are a number of professional qualification examinations that one needs to take in order to qualify as a certified Capital Markets professional and Capital Market consulting jobs. Some of these include the following:

  • The General Securities Qualification Certificate (CME-1)
  • The Compliance & AML/CTF (CME-2).
  • The Broker-Dealer Qualification Certificate (CME-3)
  • Certified Public Accountant (CPA)
  • Certified Financial Analyst (CFA)

Jobs in the Capital Markets require thorough financial modeling, valuation and analysis of taxation and accounting aspects. Hence, it is important to be adept at mathematics and numbers in general. Moreover, an added quality is attention to detail that will ensure precision in the professional’s work.

Branching out: Career options within Capital Markets

 

Security Markets

Security Markets

  • Security Markets and dealers

Capital Markets itself is a diverse filed with numerous opportunities for professionals to enter and make a career out of. One such field is securities. In finance, the primary market is a part of Capital Markets. Primary markets deal with the issuance of new securities. Many government and public institutions, along with companies and organizations can get access to funding through the sale of new stocks or bond issues. This action is undertaken by an association of securities dealers.

A securities dealer is someone who is part of the business and is involved in the sale and purchase of securities for their own account. Securities dealers usually do this through a broker. A dealer who has a job in the securities market is known for the fact that he or she is the main individual who is involved in the trade. On the other hand, a broker acts as an agent who is carrying out the activity on behalf of his or her clients. Another distinct trait of a dealer is that he or she buys and sells securities on a regular basis as business as usual.

  • Financial Advisors

Another career option for finance professionals, whether they specialize in Capital Markets is that of financial advisory. What is a financial advisor? A financial advisor is a person who provides financial advice or direction to clients for a price. Financial advisors are able to offer a multiple array of services for their clients such as management of their investments, preparation of income tax and estate planning. In order to conduct business and land a certified financial planner job, they must be certified according to the Series 65 license.

The term “financial advisors” may be taken as a generic term as well as there are several different types of finance professionals who fall into this category. Some of these include:

  1. Stockbrokers
  2. Insurance agents
  3. Tax  preparers
  4. Investment managers
  5. Financial planners
  6. Bankers
  7. Estate planners

Now, the question is how to become a financial advisor with such a diverse range of opportunities and tough competition in the field. Becoming a financial advisor is a taxing job and requires a few years of rigorous hard work and commitment. Since financial advisors are required to assist people in their money matters, they have a lot of responsibility on their shoulders. These professionals assess their client’s financial position, understand their objectives and then make the best possible recommendation to maximize profits and returns. In order to give these expert recommendations, a minimum qualification of bachelor’s is necessary. Ideally, this bachelor’s degree must be attained with a specialization in business administration or finance. Other than that, adequate and relevant licensing is also required for individuals who are involved in buying and selling of stocks, securities and bonds.

Some of the main steps necessary to fulfill in order to become a financial advisor are as follows:

  1. Obtain a bachelor’s degree in business administration or finance
  2. Obtain a professional license and become registered
  3. Obtain relevant work experience
  4. Opt for a professional certification
  5. Consider an advanced degree in the relevant field

Further reading:

  • The top 3 skills needed to succeed in investment banking at http://www.girlbanker.com/blog/the-top-3-skills-needed-to-succeed-in-investment-banking
  • Types of Investors at https://en.wikipedia.org/wiki/Investor#Types_of_investors
  • Capital Markets at http://www.investopedia.com/terms/c/capitalmarkets.asp
  • How to Become a Financial Advisor at http://study.com/how_to_become_a_financial_advisor.html