Wall Street is an exciting place to be, and sales and trading is one of Wall Street’s most exciting areas. If you’re a financial market junkie, then sales and trading might be right for you. Along with an interest in financial markets, it will help you break into the industry if you have a background in computational finance, software engineering, or another tech field. In recent years, there’s been a trend toward automated trading, some of which is done by using complex algorithms.
So what is sales and trading exactly? 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 profits and losses 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, Morgan Stanley, Centerview Partners, Evercore, and Credit Suisse. 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 Group.
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.
The increasing uses of automated trading and artificial intelligence (including machine learning) have caused steep declines in the number of trading professionals. In fact, 7,300 front office positions were cut at the 12 of the largest investment banks from 2014 to 2019, according to the consulting firm Coalition Ltd. This was an employment decline of more than 13 percent from 2014 to 2019. 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 with programming and software development skills who can develop automated trading platforms (especially those that use artificial intelligence), as well as those with data analytics acumen. “The focus of trading desk programmers is less geared on (or to) user interfaces and increasingly focused on advanced analytics, algorithms, and process automation—solutions that need deep knowledge of both financial markets and technology,” according to The Future of Trading: The People, a report from Refinitiv (a global provider of financial market data and infrastructure) and Greenwich Associates (a global provider of market intelligence and advisory services to the ﬁnancial services industry). 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 their salaries have been dropping for the last decade. Despite this trend, 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 environment 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. It’s important to note that pay and bonuses have declined over the past decade, but they still are much higher than average pay and bonus amounts in most other professions.
- 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, Morgan Stanley, Credit Suisse, Deutsche Bank, and other large firms have launched diversity programs, but most people agree that more can be done.
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