Structured Finance IB vs FI S&T
Hi all,
I wanted to post this thread to ask about the differences between the two career paths. I am fortunate enough to have an offer for a BB's summer analyst program in their fixed income group. Assuming I get the return offer at the end of the summer, I'll have the option to choose between, eg, working on one of their structuring desks for ABS, CLOs, MBS, etc. or one of their S&T desks, eg, CDS, rates, etc.
Thinking long term, I was wondering what the difference between the two tracks is and which one would better align with my own personal goals:
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Developing genuine expertise in a particular asset class.
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Working in an intellectually stimulating/interesting asset class. I've always had more of a penchant for macro analysis over micro/corp-finance. My background involves ~1.5 years of part time work in RMBS and I definitely found that to be very, very interesting compared to, eg, CLOs backed by corporate bonds.
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Obtaining a sense financial security/stability within 4 years of starting full time (this will be in NYC).
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Maintaining a strong relationship with my girlfriend/partner and starting to settle down (preferably with her) in that same 4 year time frame.
My understanding is that structuring roles are more similar to traditional IB or DCM, only far more specialized and with less hours, ie, 55-75 hours/weeks vs 65-90 hours/week, whereas S&T is fairly constant at ~50-60 hours/week.
If anyone here who's mid-career in one of these areas could give me some guidance on (A) whether or not these goals are feasible & (B) which track would make more sense for me, it would be greatly appreciated. I'm starting to get very anxious about how realistic the goals I've set for myself really are.
I'm going to try to answer your questions but let me start with this, I have worked in structured products sales for 10 years and the biggest regret of my career is not spending some time in a banking group in the space. I know I would have been an awful banker as it does not align with my skillset at all but I wish I had found a way to grind out 2 years. I have always found structured products bankers to be the smartest people that I deal with on a day to day basis and always come away impressed with their knowledge of the underlying nuts and bolts of a product as well as the sentiment of the market. They talk to everybody (issuers, investors, traders, sales, etc.) so they just have such a good pulse on what is going on in their product. You can do a lot of things from an structured products banking role and its a great place to start and build a foundation of skills that can be applied a lot of places.
1. I think you develop a much better expertise in an structured products banking group than you would trading anything but that is just my opinion.
2. Being a trader is a more interesting job, but I do think there is a good amount of thinking about macro being in a SPG banking role, especially in the RMBS space. The pace at which you have to think about it is much slower in banking but it is still a factor in how deals get put together.
3. At the junior level bankers make more than traders, a junior banker is being paid to do things that are valuable to the process of a transaction. A junior trader is being paid to learn. As you advance the pay gap closes. Another thing to think about is that you will be getting revenue generating responsibility faster as a trader. You will make a nice living either way and you will have a very nice life but you will live in NYC so its not like you are going to be able to save too much money.
4. You will work more in banking, which can be difficult for a relationship but on the flip side S&T comes with a decent amount of client entertainment and as a junior trader you will be going our from time to time. Its a different kind of taxing on a relationship as it can be difficult for your GF to understand that when you are out drinking with your boss and clients that you are working.
Thank you so much for the answer/comment, it's really cleared a lot of things up.
Only question I do have is whether it's possible to start on the banking side and move over to S&T later down the line?
Very common, especially to move to trading the product you bank.
Is it possible to go the other way around? Starting as a junior trader and moving to a structure finance banking role later on?
Its possible but not as common as the other way around
As a trader on Fx and rates, you need to figure out what you like. If you like the idea of what the person above said then yes go for structuring. But if you like macro, being in the markets, trading and speaking to clients, trading is way better and more stimulating.
On top of that, if you get it fast, you can be trading (not owning a book but still trading) very fast.
Finally, also depends on products, ABS/MBS trading is incredibly different than trading rates.
The answer to your question is actually pretty easy, you need to first figure out what you like, then naturally one of the two options won’t be a good fit.
A big thing for me is also quality of life. The idea that I will be directly responsible for (a lot of) other people's money is quite intimidating to me, and it's hard to know how I'll handle that stress. Otoh, trading seems to be much more conducive to maintaining a personal life outside of work. Wrt that last point, is there a big gap between trading and structuring?
Not sure if you’re asking regarding pay, work life balance/stress?
Regarding pay, at the beginning no then yes, with traders taking in more
Work life balance yes too. As you said you do live with the stress of having positions on. You don’t manage other people’s money per se, it’s the firms capital and on top of that “technically” you’re only supposed to be market making not propping (taking position) but in the end you obviously do take and manage (a lot of risk). So yes that part is significantly more than in structuring. But as you said, you work market hours, start early, finish early. Then you can stay do more research do more admin work and stuff but you still finish early. My friends in structuring have longer days than me.
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