Sales in S&T: Dead-end career path in 2020?
This summer, I will be interning at GS/JPM/MS in S&T, specifically in sales. After doing some research, I am becoming concerened that sales is not the place to be with the current state of the industry. Basically my questions are this:
- Is sales still a good place to be in 2020?
- What are the most realistic exit options for sales, and what desks make these exits most likely? (is buyside possible?)
- How difficult is it to transition from sales into IB or trading?
- Is getting into a top MBA a viable option after 3-4 years in sales?
Thanks for the help.
Personal opinion - i'd rather be in sales than trading. Both are shrinking, but at the end of the day, between the two, who's going to survive? It's the person with the relationships.
Not many exit opps in general if you're in S&T. You have to work twice as harder to make it to the buyside (1) network hard - a sales role will allow you the opportunity (2) and write up pitches and models on your own to show them you have the capability.
Lateraling within the bank from S&T to IB is very hard as well.
Disagree. When sales people go out to meet with clients they almost always bring a trader with them. In the past was possible to jump to buyside, but these days with how few seats there are it’s almost impossible unless you’re running risk. As someone on the buyside, now that things are tougher, i trade with whoever prices the quickest and shows the tightest spread, Also, if anything the sales for products that have already been electronified like equities are probably the safest. Tons of dead weight to cut in ficc still, over next 10 years will def be shrinking whereas equities will probably be the same
As I mentioned in the S&T bonus discussion (you can view that thread), I would not recommend anyone to enter the industry anymore. Both sides, sales & trading are deteriorating with the risk higher and reward lower.
I entered the industry a little over 5 years ago, and back then during my internship I didn't believ that what some in the industry had told me to sway me from reconsidering the industry. I thought the talk was exaggerated (effect of technology mostly) ... Needless to say, a lot has changed in the past 5 years and I've personally seen it now. Almost all of my intern/full-time class is gone or leaving soon as well as people around my level leaving in drones who are all feeling the same way. A lot of senior people are in the same mind set, but they are already in the late stages of their career and just need a few more years (rather than the rest of us who have 30+ years of a career to think of...). I'm also at a top American BB btw.
JP Morgan having a record breaking year in trading (as did most BBs) and banks continuing to proceed to cut people / keeping bonuses flat year on year should be a red flag. Imagine what's going to happen when things actually go bad.
Well, I'll just say a lot has changed especially in the past few years. The fact is resources are being allocated away from traditional S&T, overall the return on capital for the entire industry especially given regulation (ex. RWA) with the advancement in tech, it just doesn't make sense as it did before. When you consider machine learning wasn't really even a field 5 years ago, it's pretty threatening what's going to happen in the next 5.
Like I said, from the past few years I've been in the industry, the mood has just gotten worse on the trading floor even as banks are "doing well". Even if you have a good year in P&L (prop or not), banks just simply don't feel the need to pay you. It also doesn't help when the overall hedge fund industry hasn't been performing either and just keeps losing investor money / cutting people too. When was the last time there was actually good news from the industry? It's just a completely different mentality now.
You'll still be paid relatively well (as it is still better paid than almost all other jobs out there), but there's no denying overall it is an industry in decline with higher risks now as it will be much harder to find other openings if you're let go. If you're in a good seat right now, you're pretty fortunate.
The name of the game is finding the right seat and getting the right breaks (bank is growing your product, senior guy in front of you gets let go, etc.). It used to be that if you could find your way into S&T you were going to have an opportunity to make some real $$ at some point. Now you need a bunch of things to go your way in order to make some real $$. And honestly the right seat is more luck than anything else, and every day there are less and less seats. I would describe the business as dying a death by 1000 cuts.
What you are really learning in S&T is 3 things
There are going to be a lot of people who are going to learn how marketable those skills are in the next 5-10 years.
Once again, everything koalamacro has said is 100% accurate and raw. He is speaking the truth consistently on this forum.
To add to his points above:
I started in this industry less than 5 years ago and I also did not believe what older guys had been saying. I thought they were just dinosaurs who couldn't keep up with technology, but was also wrong and things have drastically changed in the last 3-4 years since i've been around and entire franchises have been cut in the last 2 years which is very scary to think.
Mind you that I have been out of school only a couple years and the vast majority of my analyst class is gone and the rest have one foot out the door. This is S&T and not IB where people do 2 and out; in S&T people traditionally stayed long beyond their 2 year mark so when an analyst class is almost entirely gone after 3 years that is saying something about the industry these days. The bank I started at was a MM and my bonus was awful given the fact my desk had a solid year and I was top bucket; I was shocked as to how small my number was and I asked my MD if it was me and he basically said that was the most the bank could give me and that it is what it is.
As for my analyst class I would say at least 75-80% have left/been laid off already that I can confirm. They're doing all sorts of things but the transition has been challenging because from S&T you don't have that transferable skill set you gain in banking or consulting. Many have had to go back to business or law school and take two years off and well as take on a mountain of debt. For the unfortunate ones that were laid off some are still looking for work, some have gone to work for brokers, some have left the industry entirely. For the lucky ones who made the transition into other fields (IB, ER, HF, consulting, treasury, startup, became programmers), they had to work their asses off because once again, they don't develop those transferable skills headhunters and firms have such a hard-on for.
In conclusion, I would not recommend a career in S&T unless you have a super specialized niche role or are a quant who can program well.
I just wanna "clarify" something because people keep saying S&T is bad. It has been slow the last few years because of low vol and low rates. With the Wuhan virus/Trump/Brexit, this could change. This forum is obsessed with IBD because of dipshits who have seen American Psycho too many times. When the Wall Street movie came out, everyone wanted to be in S&T.
If you're a CS major you could be very useful, even on relatively vanilla desks, like rates trading or rates sales. Even in sales, VBA-knowledge has become commonplace. Any programming skill is a plus, and sales desks have become quite nerdy.
Edit: sorry, been drinking far too much because of the virus lockdown. You should also try: financial engineering/structuring, QIS research, becoming a quant in a bank. These roles have arguably better exit ops than both trading and sales
I am a product manager for an HFT/Algo platform. Most of my job involves finding out the needs of our clients and what features they want built into our system. Based on those discussions I'd prioritize/roadmap what needs to be done and then work with tech to come up with effort estimates and timelines to implementation.
In general, clients are going to ask for a lot and there will never be enough tech resource to do it all - so you'll be spending your time deciding what makes sense. Are multiple clients asking for the same thing? If we build this for client X, can we sell it to client Y also? Is this ask absolute bullshit and are we not making enough money from them for us to justify building it?
You need VERY strong communication/organizational/planning skills to be successful in this role. This is a job that sales could do on their own, or even the developers could talk to the clients directly - Your job is to do this more efficiently than they can, so they can focus on their actual jobs.
I find it to be very interesting work, but like I said, if you're not good at it, you can very easily provide zero value in this role.
In terms of job security, I don't think it's bulletproof compared to the rest of S&T, people absolutely have been getting cut in these roles as well. The difference is that these skills are more transferable to pure tech, some of my former coworkers have moved on to Facebook-type companies.
Can someone explain to me why sales is also at risk for a large downsizing? I can understand with trading given increasing automation etc. but surely relationship management roles will continue to be important and less easily replaceable by tech... Genuinely curious, thanks.
Yes while there will be a need to relationship managers, there is a ton of deadweight on most sales desks It is honestly shocking to me how much deadweight there is.
Most banks have some sort of platform where a client can go on and execute small vanilla orders electronically and no longer need to call up their sales guy to do it; basically, it bypasses the institutional salesperson entirely. Sure they will need someone to manage the relationship and stay in front of the client and determine what is working and what is not working, and how they can improve but clearly that is substantially less intensive and requires less man hours then a traditional institutional sales person.
On a side note, there are tons of 'old head' senior sales guys at banks who are adding minimal value if any at all. When I used to work at a bank some of these guys were really not doing anything except managing a handful of accounts and going to dinner with them. They were managing old school relationships from when they started 30 years ago or more.
Hey, I’m in equity derivatives sales so happy to answer any questions. The industry has consolidated a lot in this area, 5+ years ago for example the equity derivatives sales role was divided a lot more clearly between Flow, Structured products, Solutions etc. Most of the European banks have floundered/blown up especially on the Flow side (RBS, Deutsche etc) and now with the recent corporate dividend cuts due to Covid, French banks have suffered on the Structured side aswell as they have large exotics books (meaning they are naturally long dividends) and as a result have started to withdraw a bit. Only a few US banks remain strong in this area (JP, MS etc) so the headcount number is dwindling and this is a trend that will likely continue. The role across houses has generally consolidated as there just isn’t enough money to be made in eg pure Flow (10 years ago there certainly was) so you’ll likely be covering clients across a wider range of products which makes the role more interesting now. However even so, you won’t be left with as many exit opps as IB or consulting (nothing surprising here) - the main ones being FinTech or moving to the buyside in IR, ETF/fund sales (more doable at places for the larger ETF shops like Blackrock/Aviva/Vanguard) or as a product specialist at a buyside shop that trades derivs - a role sitting between the PM and IR where you don’t manage risk but understand the funds dynamics well and speak to investors with more granularity than someone in pure sales. It’s only worth doing this role if you are at one of the top US houses, but be prepared for further consolidation. In 5-10 years time my prediction is this job will be even rarer to find across banks - already many formerly very reputable houses have shut their equity derivs units and won’t be reopening them. If I was in your shoes, I would stay away from S&T and move to IB/consulting. Believe me it’s not much fun to go to a top target, graft hard for a decade in a ‘prestigious’ field (at the time of leaving uni) then when your industry becomes over regulated and commoditised and you realise it’s time to leave, to find out you have few transferable skills.