Should I pursue S&T or IB?

Good afternoon all,

I am currently a rising junior in college and pursuing an internship for the summer of 2020. Applications are opening up very soon, and I am torn between pursuing IB or S&T. My personality aligns more with the culture associated with S&T and I enjoy reading about the markets, but many people that I have spoken with have said that S&T is a dying industry. I'm not afraid of the long hours that come with IB and I am attracted to the widespread knowledge I will learn from my experience in IB.

Why is S&T are dying industry, and is it still worth pursuing?
What are the long-term benefits of S&T, and can I still be put in as successful of a position for the future doing S&T compared to doing IB?

 

I'd strongly encourage you to favor IB over S&T. Even if S&T weren't dying due to digitization, it's a very narrow career path with very few exit options. IB on the other hand, despite plenty of drawbacks, is still (for now) a credible career path unlikely to be disrupted too much or too fast by robots, and also provides you with skills for a broad range of other jobs.

That said I never worked in S&T so maybe someone who has knows better / has a more informed view.

 

S&T is being disrupted by digitization. It is still worth pursuing if you like it, though. You need to figure out whether you want to work in Sales or in Trading, and maybe more important than this is whether you want to work in Equities (where products are less complicated and where computers have been leaving their biggest marks) or in Fixed Income where desks usually deal with more complicated products.

After you figure out what you want, you need to have some sort of longer term idea of what you want to do. Working in IB will give you a much stronger technical skillset that is applicable to other jobs in finance, so you will generally have stronger exit opportunities.

However, S&T is not necessarily the end of your career progression like a lot of people try to say. It is definitely not going to build your skillset as strongly as IB and you will certainly have to fight for your exits more, but you can definitely make it to a hedge fund or go into asset management down the line. I'd highly recommend you look into S&T more and figure out what sort of products you want to work with. Trading cash equities or other products that don't require fundamental analysis aren't going to make you the most desirable applicant.

I would personally recommend IB, but that is my personal bias. You should pick (intelligently) the job you most prefer and make sure you're developing yourself into someone with a valuable skillset one way or another.

 

The technical skillset that I will learn from IB is what I ultimately want, but could I also learn that while doing S&T? I have a friend currently in S&T who is also studying for the CFA since the hours of S&T give him that free time. What is your guys' opinion on that? Either learning the technical skillset on the job in IB, or learn it on my own after the market closes in S&T?

 

Take this for what it's worth since I haven't taken the CFA, but I'm not sure the technical skillset of answering CFA exam questions is the same as building financial models day in and day out; it's just a different skillset. If you know statistics/know how to code/want to code you might find S&T interesting and might find a future there, but like other people have said your exit ops are primarily going to be trading at a different shop, not PE or VC or a corporate gig, unless you do the MBA thing.

That's not to say it's not a good gig if you like trading, or the people doing S&T aren't as smart as IBD folks, but I think it's fair to say there are going to be fewer opportunities for non-technical (in the math/stats/computer science sense of the word) people going forward. With automation there will likely be fewer jobs even for the engineering folks simply because a server is faster and cheaper than a person. Figure out what you think you want to do long-term, and if it's anything other than S&T the answer is clear.

 

Whatever interests you more. S&T is in a transitional period. Unless someone has either A) worked on S&T desk or B) has been in banking Or HF for a while, I would take their sentiment with a grain on salt re S&T being dead.

Regulations are changing the way business is being done in S&T. Some firms will fare better than others depending on how they are positioned. Also, some products are considerably less liquid than others. Those products will likely always require high touch execution. As far as sales is concerned banks always need people to sell their shit, ‘shit’ is being redefined now and is a lot different from the 80’s and 90’s...it’s even a lot different than pre MiFID.

I only touched the tip of the iceberg regarding this topic. There is a lot to it and most of the stuff I read online is sophomoric at best and idiotic/misleading at worst.

Did want to mention re hotdog eating contest above. Some of the people on my desk are some of the smartest people I’ve ever met. There is a reason that the best sales guys on my desk have the ear of the PMs at the largest asset managers in the world. Call a PM at a top HF/AM and pitch a stupid idea or two and that will probably be the last time they pick up your call. If you think that everyone who works in S&T is unintelligent that’s just not correct.

I will say, I did get a laugh out of the hotdog eating comment...it was somewhat clever.

 
Most Helpful

Seen some people bashing S&T here (for, broadly, the understandable / correct reasons), however feel that I should give my two cents (pro-S&T) just to balance the debate.

Is S&T being automated / digitised? Yes, hundred percent. Equities, in its traditional form, is dead from a trading perspective: even the more "complex" side of equities (think: options) is getting the full Skynet treatment. That said, there will always be a role for sales people. The bank will need people to flog its execution services and to maintain chummy relationships with PMs / traders on the buy side. Similarly, those PMs / traders will want a human face to give them market colour, flag issues / opportunities they themselves may not have seen, and - crucially - take them out on Thursdays. It may not be as lavish as it once was, and the availability of these roles may be tightening, but they are there and can provide a good career / lifestyle. Same goes for fixed income. Personally, I think those assets will withstand the digital onslaught a little longer, however - again - they will need sales people. Same reasoning as above.

Now, a lot of people have been making the assumption that when you say S&T you mean within a standard IB. I think that if you have a sincere interest in the markets and want to interact with them from an investing / trading perspective, there are a huge number of opportunities outside of your conventional Goldman / MS / JPM, etc. First off, you have the commodity houses and oil majors: Glencore, Vitol, Trafigura, Shell, BP. All are very active traders and deal in both paper (derivatives) and physical. All are relatively immune (for now) from automation and look to be a good place to hone a skillset that can transcend trading (albeit produce a career that may well be limited to that "business area"). There's also the opportunity to work in established asset managers, funds, prop trading shops, etc - here, you'll learn to read the market and (depending on how discretionary a strategy the firm runs) put your view to work.

I agree with a lot of what other people are saying: IBD does teach you more immediately transferrable skills, but your ability to understand and perceive risk is arguably less acute; IBD teaches you stamina, albeit in a relatively low-intensity environment - trading teaches you how to focus intently for 10-12hrs without break; IBD teaches you how to methodically value a transaction over a period of weeks, however (depending on the deal's complexity and how insightful your initial instinct was) you're likely to be second in the queue behind a trader / investor who learnt to act quickly and with precision.

Is S&T more risky? Probably. But can you still have the same opps as an IBD stalwart? Definitely, you just need to differentiate and sell yourself hard down the line.

"Work is the curse of the drinking classes" - Oscar Wilde
 

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