Financial career track #1: Sales and Trading
For the next few weeks, we’ll be providing you with insights into different financial career tracks available on the job market. This week we’ll be tackling one of the most popular areas in finance: sales and trading. This field is also known as: Sales, Trading, and Research, Global Capital Markets, Global Markets, and Capital Markets Origination.
Roles in sales and trading
Sales
Salespeople working within finance are called brokers or dealers. Their main role is to contact existing or potential clients to try sell them financial products. They cooperate on an intense basis with traders, because when they figure out what it is their client wants to trade in, they must inform traders to carry out the appropriate transactions.
The clients they work with can be institutional investors, pension fund managers, corporate finance directors, and/or high net worth individuals.
Brokers/dealers may start their day by catching up on the latest financial news through reviewing financial publications and reports from research staff. They mainly spend their time on the phone, often cold-calling new customers, especially when they are entry-level employees, who must build up a book of contacts. While on the phone, they introduce the customers to new opportunities and inform about changing conditions in the financial market. In the evening they may have to attend dinner or other forms of entertainment with clients to develop stronger ties. Typically, a broker/dealer must spend time working on projects during opening market hours; however, it is very common for them to discuss strategies with customers after market hours. This means that if you’re thinking of becoming a part of a sales team, you must be aware of the high number of hours you’ll need to put in.
Moreover, their work is not confined to building rapport with clients; often brokers work with employees from other divisions to devise trading strategies and raise capital for the bank by placing newly issued bonds and shares with investors.
Trading
Traders are the employees who actually buy and sell on financial markets. Day in day out, they work in front of 4 or 5 sets of screens, constantly monitoring price changes and news. When an opportune moment comes, they can press a button to buy or sell the particular product they’ve been ordered to track by the sales division. They are forced to make quick decisions that may mean huge profits or huge losses for the bank they work for.
3 main strategies are utilised to make trades, namely short term gains, long term gains, and risk management strategy. Depending on the clients’ needs, the trader will pick the appropriate strategy accordingly.
In recent years, there has been a boom in the trading of fixed income products, derivatives, energy and physical commodities. It may be a wise choice to specialise in these particular financial products.
It is also useful to distinguish between two types of traders: flow and proprietary. Most traders are of the former type, who typically buy and sell financial products on behalf of their bank’s clients. The latter are elite traders who work on behalf of the actual bank.
Sales-trader
A sales-trader is a hybrid of the two divisions discussed above. Similarly to sales, sales-traders recommend securities to clients. On the other hand, once a sale has been made with a client, they trade securities as traders do.
Research
Researchers at banks are the most knowledgeable employees in terms of the ongoings of the financial markets. They usually have strong insight into the functioning of a specific company or a particular sector’s financial accomplishments. Often they work with the sales division, helping them through the provision of expert information on markets. Due to their acquirement of detailed knowledge on the subject, they are also instructed to create and price new financial products.
There are also research sales professionals, who specialise in selling their employer’s research expertise on the market. They are more knowledgeable than brokers/dealers on financial matters, as they are selling detailed research, and therefore, must have a very good picture of the entire financial field.
Structuring
The main aim of an employee working in structuring is understanding complex or specific requirements of particular clients. Hence, these employees work very closely with people in the sales team. The deals they come up with must be perfectly tailored to the needs of the customer. Many graduates are recruited for this particular role.
It is also worth mentioning that within each role employees can be categorised even further through the products they trade, the types of clients they sell to, and/or the sector they specialise in.
Key areas that the team is involved in
It is important to know what kind of areas the sales or trading teams will be giving advice or selling/buying products on. There are five primary fields that a team may be involved in, namely foreign exchange, debt, derivatives, money markets, and equity.
A team dealing with foreign exchange works on behalf of the client to offset his/her risk in future transactions. More specifically, a client would ask the team to make sure that when he/she will need to pay a foreign company in a few months for goods/services provided that the foreign exchange market will remain favourable to the client.
In terms of debt, a team would work closely with governments in the buying and selling of debt through bonds, which are used to raise money for their institutions.
A derivatives team deals with financial products whose value is determined through the expected future price of an underlying asset.
Employees working in a team concerned with money markets focus their efforts on lending and borrowing large amounts of money in short time periods.
Finally, in terms of equity, a team monitors the movements of the share price of a company in order to determine whether to buy or sell equity at a given time. Researchers are highly needed for this type of work.
Skills and qualities
There are a few essential skills and qualities that are looked for in a potential sales or trading employee. The following descriptions give you an idea of what employers would be looking for:
Sales
A salesperson at an investment bank should firstly have exceptional communication skills that facilitate the nurturing and growth of client relationships. Along with communication skills, the salesperson must be outgoing and self-confident; however, he/she must also understand the complex products, he/she is selling to the client in order to be in a position to give advice.
Trading
A trader should firstly be genuinely interested in the functioning of financial markets as well as have a strong numerical skill set. Due to the quick-paced and unstable nature of trading, a trader must know how to work well under pressure and must be a confident decision-maker.
Salaries
Below are some examples of average salaries in Sales and Trading for Associates and Analysts taken from glassdoor.com:
Morgan Stanley salary for Associate level (avg) – $96,250
Morgan Stanley salary for Analyst level (avg) – $60,000
Citigroup salary for Associate level (avg) – $92,225
Citigroup salary for Analyst level (avg) – $69,767
HSBC Holdings salary for Associate level (avg) – $89,698
JP Morgan Chase salary for Analyst level (avg) – $115,974
It is also worth mentioning that traders earn a substantial part of their compensation from bonuses.
If you’re interested in performing well at an upcoming interview, I suggest having a look at the Credit Suisse interview tips page by a Credit Suisse alumnus. For a wider range of interview tips, click here.
Come back next week for a new insight into the role of an investment banker!
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