What Sellers and Traders Do
Those involved in sales and trading within investment banks are tasked with the goal of exchanging financial instruments, such as stocks, bonds, and commodities, between buyers and sellers. In some cases, this involves using the institution’s own funds to help it profit, though most of the time, the clients are other financial institutions, wealthy individuals, and corporations. While the cinema has glorified the profession to be like a game of high-stakes poker, money is more often made from the fee collected for being a middleman than from buying low and selling high.
Individuals may take positions as sellers, in which they work directly with clients to find out what they need or want, and then convince them to purchase a specific product. They may also work as traders, in which case duties involve more analytical thinking to determine risk as well executing the actual trades. A third component of this includes the work of structurers, who use analytics and data to create packages to suit the needs of clients when those packages don’t already exist.
These positions have been reduced in recent years due to the increase of automated tools and software. Larger financial institutions break down traders into niche-specific desks, such as equities and commodities, and may even refine them further, such as having a desk devoted to individual types of equities or commodities.
Who would enjoy a career in Sales & Trading (Finance)?
Naturally, a deep understanding of finance, economics, and mathematics is necessary for a career in sales and trading. Those who can follow the concepts and perform research do well, but individuals who can compile the information, create their own models, and make solid predictive decisions do better. People who work in sales also need to have excellent intrapersonal skills.
Who mightn't like the career?
Work in sales and trading involves a lot of pressure, and seemingly good deals can go bad instantly due to fluctuations in the market, currency value, and other issues. For this reason, people getting into the field who don’t have an engineering-type mindset or who aren’t prepared for the stress and income fluctuations do not usually do well.
There are many degrees that lend themselves well to a career in sales and trading. Most have a core in finance, but business degrees are often accepted, provided the individual has extensive knowledge of finance.
The ability to use Excel, predictive software, and a variety of other tools is also essential. Getting in with a larger financial institution can be a challenge. Those who are successful typically attend career fairs while still in school, network extensively, and take internships as they finish their degrees. It’s also worth noting that most entry-level positions do not involve direct trading, and therefore, candidates may not need security licenses. However, they are required in some entry-level positions and are certainly required for tenured positions.
Much of getting into an internship depends on attending a reputable university and having strong networking skills. Whether preparing for an internship or general interview, candidates must be polished and prepared to answer questions ranging from personal philosophies, to predictions, economics, and current events.
Role: As an entry-level position, analysts are often tasked with completing projects to support the tenured employees. They may compile more reports or spend additional time learning more about how markets work.
Role: After a year or two as an analyst, or after obtaining a degree, a person may become an associate. The job duties are very similar, though associates may be entrusted with additional responsibilities and more sensitive tasks. Experienced associates may be permitted to make trades as well, though it’s usually under the supervision/ direction of a senior associate or VP. It’s common for someone to remain an associate for 3-4 years.
Role: VPs are expected to be leaders in their niche. They not only have a good handle on predictions and have the finesse to sway clients, but they’re also often expected to devote time to cultivating new business relationships and strengthening the bonds with their existing clients. For this reason, VPs may travel some or take clients out. Depending on the financial institution and the individual’s experience, a person may be a VP for 3-4 years.
Role: Organizations may use the title “Senior VP” or “Associate Director” to denote the next step up. Directors spend even more time developing client relationships and oversee the work of less tenured staff members. There is no direct correlation between promotion to managing director and tenure. Sometimes, even skilled traders never exceed the role of director.
Role: One of the most unique things about a career in sales and trading is that, although the positions may progress, the job, itself, doesn’t change in a remarkable way. Those who began a career in trading are still trading as a managing director, though they’ll also have responsibility over more junior team members and hone in more on strategy. Those on the sales side will still be responsible for sales, though they may spend more time cultivating relationships and arranging larger deals.
Most people involved in sales and trading spend their days at desks, with occasional outings with clients. Because each jurisdiction requires licensure, moving to a new region generally requires obtaining a local license, though exemptions and fast-track options are sometimes available for people with existing licenses.
Analyst: According to Glassdoor, the average salary of a trading analyst is about USD$73,000 in America, CAD$83,000 in Canada, £48,000 in the UK, and AU$80,000 in Australia.
Associate: USD$110,000, CAD$85,000, ₤68,000, AU$90,000
Vice President: USD$140,000, CAD$90,000, ₤71,000, AU$100,000
Director/ Managing Director: Comprehensive salary information for executive roles in sales and trading is not readily available, though most sources indicate the rate is generally two or three times the salary of a VP. High-performing MDs may make as much as USD$1-2 million annually.
Bonuses are a major part of compensation in sales and trading careers. The amount awarded varies greatly on the institution and the role of the individual, as well as the profitability of the deals he and his desk secure. PayScale data indicates that bonuses can be as small as 0.5% of an annual salary for an analyst or as much as twice the person’s salary; putting it in the six-figure range.
Managing directors can earn more than $1 million dollars in bonuses in a year.
Why Sellers and Traders move on
Most people stay in sales and trading, though they commonly move from one area to the next until they find a niche they enjoy. However, burnout is somewhat common due to the long hours and underperforming employees are sometimes let go of by banks.
Furthermore, income is not stable, as much of a person’s wages are dependent upon making good trades, which can be impacted greatly by the economy, so some may leave to find more stable income.