Wall Street is an exciting place to be, and sales and trading (S&T), is one of the most exciting areas. It’s an extremely competitive business—at times it’s downright ruthless. If you’re a market junkie and bought your first stock when you were in third grade, then trading is definitely the place for you. If prior to considering a career change to S&T, you made a career selling ice to the Inuit, then institutional or private client sales on Wall Street might be the right place for you. And even if you were a consultant, or studied art or science in school, sales and trading might still be for you. And with the trend toward automated trading (some of which is done by using complex algorithms), it’s even better if you have a degree in computational finance, software engineering, or another tech field.
So, what is sales and trading? Many sales workers and traders work on the “sell-side,” which refers to Wall Street investment banks that sell stocks, bonds, and other securities to the “buy-side.” The buy side refers to the investment management firms, pension funds, hedge funds, and trusts that buy stocks, bonds, and other securities from the “sell side.” Outside the investment banking industry, traders work for hedge funds, brokerage firms, commercial banks, insurance companies, asset management firms, and mutual fund companies.
The most important function of a sales and trading department at an investment bank is, of course, to make money. An investment bank collects significant fees every time its sales and trading professionals execute a deal for clients. Traders and salespeople add incrementally to the bottom line through daily profit and loss and commissions, and raise the profile of the firm in the marketplace.
Opportunities for sales and trading professionals are available throughout the United States, but are best in New York City, where many investment banks, hedge funds, and other financial firms are located. Major investment banks include Goldman Sachs, The Blackstone Group, Centerview Partners, Evercore, Credit Suisse, and Morgan Stanley. Leading hedge fund firms include Bridgewater Associates, AQR Capital Management, Man Group, Renaissance Technologies, Two Sigma, Millennium Management, Elliott Management, Baupost Group, BlackRock, and Winton Capital Management.
For years, an MBA was strongly preferred for those seeking trading positions. The increasing popularity of automated trading has changed the required skill set and educational background for traders. As an alternative to an MBA, employers are seeking traders with degrees in financial engineering, quantitative finance, software development, and related fields. Sales professionals need at least a bachelor’s degree in business, marketing, sales, quantitative finance, finance, accounting, or economics from a top-tier college.
Increasing regulation, calm financial markets (which are bad for trading and profit generation), and the increasing uses of automated trading and artificial intelligence have caused steep declines in the number of sales and trading professionals. In fact, more than 10,000 sales and trading positions were cut at the 10 largest investment banks from 2010 to 2015, according to the consulting firm Coalition Ltd. Despite this decline, there is still demand for traders who work with products that cannot easily be traded—such as illiquid products and bespoke over-the-counter financial products. Additionally, traders are needed to monitor automated trading systems to ensure that trading is conducted properly. There also will be strong demand for traders who can develop automated trading platforms (especially those that use artificial intelligence). Opportunities for sales professionals will be better because there will always be a need for sales workers to explain financial products and trading strategies to investors.
Sales and trading professionals earn high salaries—although they do not earn as much as they did before the Great Recession. Average compensation for equities sales, trading, and research professionals at the 12 largest global investment banks in the world totaled $500,000 (salary and bonus) in 2017, according to Coalition Ltd.
- Exciting work environment. The trading floor is fast-paced, and sales workers get the chance to interact with a wide range of clients.
- Good hours for traders. Unlike some of their investment banking and hedge fund colleagues, traders have more reasonable hours. They arrive to work prior to market open (6 a.m. to 7 a.m.), and then can leave when their particular market closes in the late afternoon. They do not have to work on weekends.
- Good pay. Associates in equity cash sales and trading careers can make $200,000 to $250,000 a year, according to the Options Group, an executive search firm. Sales and trading managing directors can receive up to $1 million in total compensation.
- A rewarding career. A career in sales or trading can be extremely fulfilling for those who are interested in the financial industry and using their knowledge to make money for both themselves and their clients. Sales workers enjoy researching and suggesting trading strategies to customers, and find it rewarding when their suggestions are profitable.
- Many potential career paths. Skilled and experienced sales and trading professionals can either advance to managerial positions at their firms or move on to work at private equity, hedge fund, or financial consulting firms, or they can launch their own businesses. If you decide to exit sales or trading, you can transition to work at a financial regulator, move into risk management in the middle office, or work in management or financial consulting.
- Intellectually rewarding. The vast range of financial products and trading strategies, as well as the fast pace of trading, will keep you from getting bored. You’ll also need to continually learn in order to understand new financial products and trading systems.
- Automation. Many traders have lost their jobs as a result of the shift to electronic trading. As a result, it’s much harder to get a job in the field—especially if you do not have a degree from a top university.
- The work week for sales professionals can be long. You must be available at night and on weekends to “wine and dine” potential and existing clients. Requests from clients can interrupt vacations and family time.
- Lack of geographic freedom. Job opportunities are centered in New York City, London, Chicago, Dubai, and other financial centers. If you don’t already live in one of these cities, you may have to move to land a job.
- Stressful work environment. With so much money on the line, traders have to make split-second trading decisions—and this can be extremely stressful. Sales workers face steady competition for new clients, and they must work very hard to keep sometimes difficult current clients happy.
- Diversity issues. Some investment banks, hedge funds, and other firms that employ sales and trading professionals have a reputation of being unfriendly to women and minorities. This is changing as a result of the #MeToo and other social justice movements, but firms have a long way to go before the percentage of women and minority sales and trading professionals matches their percentage in the U.S. population. Goldman Sachs, Credit Suisse, Deutsche Bank, and other large firms have launched diversity programs, but most people agree that more can be done.