AMA: Recent Quitter from Fixed Income S&T to Startups

she_monkey's picture
Rank: Gorilla | 536

Hello. I am new to the WSO blogger community; this is my first post.

I went to a semi-target and interviewed during the crisis, when company presentations & on-campus workshops pretty much dried up. WSO was a crucial source for me when I started finance recruiting in late 2007, and definitely gave me an edge over my classmates. I am hoping to finally "give back" through contributing to the site as a blogger.

Professionally, I have worked on the trading floor for 4 years, and also interned in S&T only. I worked at two banks, one American BB one large European. My experience is mostly in Fixed Income, and split between Sales and Trading.

This fall, I returned to school (not-MBA..but if I go further into detail you'd identify me soooo easily) with the aim of working at startups afterward.

Ask me anything from surviving S&T (esp. during the downturn) to career switches.
I'll try my best to answer/direct you to an answer.

Comments (37)

Oct 4, 2014

Thanks for the post. I recently graduated last year and have been aiming to get to a S&T desk as a fixed income sales assistant. Can you elaborate on why you quit? In addition, what are you expected to know during the interview? How did you network? Thank you, in advance

Best Response
Oct 4, 2014

Sure - as mentioned briefly above, I quit (after four awesome years) to jump on the startup train. It was kind of a "if i dont do it now I never will" kinda thing. I think you're still too young to realize that anything of the same thing for four years is too long...college doesn't count because you take different classes w/ diff professors every half a year. So basically I got bored toward the end despite the great team and my thriving on the chaos of a trading floor. Miss that a lot now actually.

It's harder to answer your Q since you are one year out.. but from my experience recruiting interns/first years, basically (esp for FID) know the recent economic news (rate hike, economic outlook, the latest job data..) and basics about the markets. Just because you are interviewing for FI it doesnt mean you dont need to know where the SPX (S&P 500) is in addition to the 10 year treasury rate.

There was minimal networking to get in-- b/c the bank I worked for came on campus. With that said it's best to network THROUGH your existing network. i.e. if you have a bunch of friends in banking, ask them to connect you to their S&T classmates, and so on. I've also met people that have gotten success cold-contacting people via LinkedIn-- I guess this is more normal in this digital age. (LinkedIn was unheard of back in 2008-2009 when I was recruiting.) I actually had interns (from non targets) that basically cold-linkedin-messaged my old boss and was polite and persistent.

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Oct 12, 2014
she_monkey:

I think you're still too young to realize that anything of the same thing for four years is too long...college doesn't count because you take different classes w/ diff professors every half a year. So basically I got bored toward the end despite the great team and my thriving on the chaos of a floor

This is so true.
Even more than 1 year is too much to take for me actualy. Routines is the number 1 thing to avoid when looking for a job, except if you're like W. Buffet ofc.

Oct 4, 2014

Currently working in FI (middle office) also, which desk were you on? What's your thought on the shrinking spread on FI products now?

Oct 5, 2014

Well, clearly the shrinking sprd => lower profit => lower pay, forever => easier to leave b/c knowing that it'll be forever less pay (i.e. its no longer recession related. it's just permanently less. ) => less opportunity cost to leave

pays aside, i think in general markets will become more automated and efficient, as it goes with any tech development. so spread will remain low and shrink further over time.

so in other words, FI imo is pretty fcked in the next few years.
equities is less fcked, because the shrinking in sprd+staff has happened already. imo equities/fx are already at equilibrium, but rates+credit can shrink further -- in spreads and size of teams/staff.
if you can, don't make FI (presuming you're on the sell side) FO your end game.

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Oct 9, 2014

Did you start in sales or trading?
Same product for both (and which product) or did switch? Any rotations?

Can i have your old sales job?

Oct 9, 2014

Yes I did start in S&T.

Same product for both -- this obviously made the transition easier, and easier to get the look for the opportunity to begin with.

Haha.. unfortunately they replaced my old sales position with an younger (and cheaper) analyst ASAP...

Oct 9, 2014

I'm getting a feeling of deja vu here... I know someone from my school who worked in Fixed Income for 4 years and is now going back to grad school for computer science (with the goal to get into tech). However, it can't be the same person since you said semi-target (I went to a target school)

This seems to be a recurring theme, however, since the perception is that the money to be made in finance is not as good as it used to be, job security is not great, huge fortunes are being made in tech/start ups, plus if you have a foundation in CS your skill set will always be in demand, etc.

Oct 9, 2014
Deo et Patriae:

I'm getting a feeling of deja vu here... I know someone from my school who worked in Fixed Income for 4 years and is now going back to grad school for computer science (with the goal to get into tech). However, it can't be the same person since you said semi-target (I went to a target school)

This seems to be a recurring theme, however, since the perception is that the money to be made in finance is not as good as it used to be, job security is not great, huge fortunes are being made in tech/start ups, plus if you have a foundation in CS your skill set will always be in demand, etc.

So many people I know going back to school to get jobs outside of trading or higher up in management. Some people switching sectors completely like you said, too.

Oct 9, 2014

I know a bunch of traders from top BB groups as well as buyside who are now doing MBA or are applying. They realize that trading is a terrible industry to be in, with shrinking opportunities and very few transferable skills.

Oct 9, 2014

PM me with your alma mater please. Creepy.

Oct 10, 2014

I think what a lot of people don't think about is that the BB is no longer the ticket to riches in S&T the way it used to be largely due to differences in payout btwn BB and smaller shops. If your goal is more money, you are better off doing Fixed Income S&T at a smaller shop kind of like what an earlier poster alluded to because your payout is bigger and you keep more of what you kill so to speak in terms of comp, less bureaucracy, less poitical in the sense that less factors beyond your control that affect how much more you make. Just my two cents. Btw, I work in S&T obviously so I know.

Oct 10, 2014

I've seen a few people do this. They've moved from mid-level positions at larger banks to more senior positions at smaller places (at least title-wise) and they seem to be a lot happier - I'm not sure if it's because of less bureaucracy or higher pay but the point remains the same.
What I want to know is, for someone just starting out, would it be more beneficial for them to start at a brand-name bank for the formal training programme and experience or to jump straight in at the deep end at one of the smaller s&t shops?

Oct 12, 2014

Best to start at a smaller shop.

Oct 12, 2014

Still think big bank. Smaller prop shops can get toxic and make you owe money real fast before u even grasp trading. At big banks, BB or just any big bank really, there's more resources / easier to network both at work and w/ buyside clients. I've seen my fair share of colleagues that moved to mid/small sized firms MUCH happier (and usually went in with a title and pay promotion) .. but I honestly think part of the reason they survive so well at smaller structures is b/c they've been part of a large, established bank's bureaucracy. We (me and traderdaily, other other person that replied) might be inherently biased.

Oct 13, 2014

From most people I know and have worked with or spoken to, it is best to start at BB. You will be provided with the best training and have the best opportunity to succeed. A lot of these mid market and smaller banks will not provide much training, there will be little to no structure, leaving you to succeed on your own. You most likely would have little to no salary (or a draw) in a eat-what-you-kill environment. A lot of these places usually only hire experienced traders and salesmen who have a history of generating revenue. Once you do have a solid book you can make much more money at a smaller shop.

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Oct 10, 2014

@she_monkey: Did you ever consider moving to a smaller shop to trade vs. moving to tech?

Oct 12, 2014

Yea I did. As mentioned in my other reply I've seen several good moves to smaller shops. But then I realized I might just not like finance enough to give smaller shops a run before I *actually* get too old to get another degree. I also looked at junior positions on the buy side. It was a tough trade off.

Btw speaking of which..YO PEOPLE, I feel so stupid these days. Actually I DID probably get stupid. In comparison, I was such a nice little sponge in college...it's pretty scary to see how much your brain/learning speed has deteriorated in just few years. I'm not saying yall are getting stupid as quickly as me but if you have grad school in mind, dont wait until 30.

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Oct 13, 2014
she_monkey:

Btw speaking of which..YO PEOPLE, I feel so stupid these days. Actually I DID probably get stupid. In comparison, I was such a nice little sponge in college...it's pretty scary to see how much your brain/learning speed has deteriorated in just few years. .

lol

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Oct 13, 2014
she_monkey:

Btw speaking of which..YO PEOPLE, I feel so stupid these days. Actually I DID probably get stupid. In comparison, I was such a nice little sponge in college...it's pretty scary to see how much your brain/learning speed has deteriorated in just few years. I'm not saying yall are getting stupid as quickly as me but if you have grad school in mind, dont wait until 30.

I think you'll be fine after 6 months. I graduated in 2008 (I had just turned 20), and started grad school 3 years later after working a very dumb job. Took me a good 6 months to get back in the swing of things but I ended up doing fine and the program was much tougher than my semi-target undergrad.

I realize you are significantly older than that at this point but the way people can pick up new things all the way into their 50s (and possibly later) never ceases to amaze me.

Oct 10, 2014

What's your education background in?

Oct 12, 2014

typical.. economics/finance
and took extra comp sci and math courses for personal interest, which i think helped

Oct 14, 2014

Great insights, thanks guys :)

Oct 15, 2014

As you explained, you got bored after working as a FI trader for 4 years. Can you explain more how you made your decision (ie. why do you want to study to become a developer for tech startups, not to become quant)?

Oct 15, 2014

1. i have not considered becoming a quant at all. i dont know your background but a quant is also extremely different from being any role at a startup..fyi. not really comparable.

2. if you want to cook, you try be a chef at a famous restaurant -- and not filling up trays at the local public school.
similarly, if you want to program, you either try to work at a big tech company (google is not off the table) or at a startup, and as some IT person at a bank.

Oct 16, 2014

I have 2 questions more about the trading part which I find interesting. I was wondering, how you hedge bonds on let's say corporate bonds. And how do you manage your positions for off the run govies and corporate bonds (do you always trade them from a long position or is it easy to short these products).
Thanks in advance!

Oct 23, 2014

seriously?

IG corp bonds can be hedged w/ govies of similar duration
HY bonds are not effectively hedged by trsys, as they express a view specific to the name (i.e. issuer of bond). you can also hedge w/ the bond with its equity/equity derivs if its public. ...clearly i was not in credit trading.

but based on my interactions w/ the credit guys.. you generally avoid outright shorting credit unless you 1. have a damned good reason for it 2. can find locate (ability to borrow) easily.

off the run govt/treasuries are much easier to short; keep in mind govts are MUCH larger in issue size (30+bn USD a pop vs. ..1 bn is considered large for IG corporate issues), so availability to borrow is higher in magnitudes. hedging can be done with on the runs ...also I dont know your ST background.. but there's a lot of RV plays you can do vs. swaps, treasury futures, etc. to name a few. i.e. an "random" off the run treasury can get very liquid if it happens to be the CTD of a 7-10yr (TY) treasury future.

..
now go get urself a copy of fabozzi's fixed income book.

Oct 25, 2014

Thanks for your response. Sorry, I have no ST experience in fixed income. Just very interested in how it works. Your answer still leaves me with some questions, which I could not find in Fabozzi's FI book.
"IG corp bonds can be hedged w/ govies of similar duration" But the corp bonds have higher yields. So, how do you price this (opinion or other specific model)?
And what if a client asks for an offer for a substantial amount in a particular IG corporate bond issue, can you buy back some bonds in the market or via brokers?

Dec 20, 2014

Hi, I am an incoming analyst to one of the BBs starting next summer. Thank you for doing this. I have a few questions. 1. Do you think equity derivatives desk would also be less affected by this general trend of shrinking spreads? or is it less affected than FI? 2. How is the exit opp from BB to hedge-fund? I read several threads about that the exit opps for traders are highly limited, but I just want to hear some real stories from ones with experience. 3. Could you briefly describe how you succesfully transferred to the start-up? Thakn you once again.

Sep 25, 2017
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Jan 26, 2015