What is the future outlook for "S" in S&T, trading has almost disappeared. What happens to Sales in the next 10-15 years
There are tons of discussions on WSO about the future of S&T but none that describe what a person in sales would do when automation takes over entirely. Maybe 2030, what are salespeople(Analyst to VP level) doing then?
It is hard to imagine how sales would get horribly affected due to automation. It's a skill-based on networking and communications as much as it is based on money-spinning ideas.
If I had a penny for every time this forum talked doom and gloom about S&T, I'd retire already.
Currently trading, not disappeared, as won't sales.
Were all doomed. Legend says that the reaper will make his rounds in S&T next year and all the salespeople and traders will LITERALLY die. According to freshman college students on WSO, this reaper only targets the useless and unprofitable S&T 🤢, not the prestigious and powerful banking 🥰. I truly trust all these prospects because they are well versed in the application and outlook of ALL areas of finance, and they are not at all biased to the narratives of this site. I only wish that I, myself could be so insightful and possess such wisdom 😞
Well meme’d bro
Apex emoji use, a perfect 5/7 sir.
The sales role has transformed from a traditional sales role into a more 'solutions' based role where sales team are trying to pitch interesting trade ideas to firms already looking for specific exposures. The market is a lot more efficient and banks can no longer really rely on good personalities to do trades, they actually need to provide value to clients which is a lot harder. There have been just as many sales layoffs as trading layoffs from what I've seen at my firm. Also, yes trading is doomed over the long-term and anyone denying that obvious reality is insecure about their job security and trying to convince themselves that everything will be ok.
lol false but ok
What are your thoughts on salestrading going forward?
it doesn't even exist now... if there are salestrading roles they will def be automated within the next 10 years, probably 5 years
that is how it has been described to me by an MD in sales
I work in Fixed income sales and I think before we get into the future we have to understand what the job is really about and what the trends going on in the space are
What the job is about- There are 3 main things that the sales side of S&T is about
1. Relationship Management- People do business with people they like, that applies to both buyside accounts and traders. With markets becoming tighter and bid/ask shrinking relationships are more important than ever.
2. Getting focus- As a salesperson you are in competition with all the other dealers to get the attention of the buyside and get them to focus on your ideas. So a lot of the job is understanding what the clients are trying to and why and knowing what who to push what to based on their strategy. A good salesperson knows if a client is doing A how to show him slightly different that A and explain why its better and why the client should do it. Being able to frame relative value in a way that makes people think about and and act on your ideas is a big part of the job. The people who are the best at this can process a ton of information quickly and know what is important and why. There will one day be some tech that can help with this but I have yet to see it.
3. Management of process and information- Smooth execution of transaction, effective communication of market color and information. I think this is going to be less and less a part of the job as tech can eat into this pretty easily. The actual execution of a transaction is the end process to building a relationship and presenting an idea, who care if the client calls the salesperson to do the trade or uses an electronic platform to do it, as long the trader gets done at a price that both the client and trader are happy with its all good.
Current Trends
1. Most of the "tech" (tradeweb, marketaxcess, etc.) in the sales and trading space is about making the execution of transactions more efficient. No longer do I need to call or IB my salesperson asking for a bid or an offer I can throw it on this platform and goes directly to each trading desk. Also at most places you can lift offers and hit bids via a point click go system they have via BBG or something else internally. If you want to negotiate, as most people do you have to reach out to the salesperson for that. With less transactional needs you can cover more clients with less people. This hurts junior people, as a VP if I'm on the phone pitching something and one of the other chats lights up with a client asking for a bid on this or an offer on that, I'm not going to stop what I am doing to deal with that. My analyst will take that on and will get experience dealing with a trader and the client. There is an element of this job that is about convincing the trader to do the trade at the clients price and convincing the client to do the trade at the traders price. That takes practice, and an understanding of personalities. With more electronic execution that just goes directly to the desk and the analyst does not get that rep. I have a hard time seeing markets of fixed income getting so efficient that the bid/ask is fixed and their is no negotiation but executing transactions is becoming a smaller percentage of they day. On some level this is good as you can spend more time working on things that generate transactions and less time on execution. There is less "forced interaction" that happens via execution so on some level it makes relationship building harder.
2. There is consolidation on both the buy and sell sides. On the sell side dealers are focusing resources on certain products and going away from others, their are few dealers who truly do everything and do it well. On the buy side the largest firms are getting larger which means less people running more more money. Both of these things mean less seats for sales people.
What the future holds- Honestly not really sure. It does not take a rocket scientist to see the business is declining, and that the skills and the relationships built might not have a direct application to other industries. Personally I think the consolidation on the buyside is going to take more jobs away than anything else as most fixed income desks are already pretty lean as is. If I knew how tech was going to play out 10 years from now I would be working at a VC firm trying to bet on that but since I don't I will continue hawking bonds to anyone who will listen to me.
Hey great stuff man really appreciate the depth of the information provided. Could you maybe tell us which desk are already automated? Cash equities is a definite. How about other desk such as derivatives/fx/HY/ Munis etc
You are thinking about it the wrong way, all desks are seeing automation of various things that were part of the job in the past (inventories used to be faxed over 20 years ago, all trades had to be executed by calling someone, etc.). For the most part the things being automated are the annoying parts of the job that don't take any real skill. Anyone can send over inventories or relay a bid or an offer. I would say that desks with frequent new issue that has various structural features (Munis, HY, Structured products, etc) will need more people since its just more complicated and its harder to cover as many accounts effectively when the products are more complicated.
comp/career progression on the fixed income sales side?
is it true salespeople get paid less/promoted slower?
thanks
Following
Traders sometimes paid more and have more upside (bigger bonus and faster promotion) since their P&L truly flows through to the bottom line. Below is the standard ranges at a US based BB. You generally spend about 3 years each at Analyst-Director and if you are a good performer you will climb the ladder, making MD is a total crapshoot that involves a ton of politics. People can stall out at director if you don't have the right people pushing for you. If you are good and can find a bid away you can push for early promotion but with less seats that is becoming harder and harder.
Analyst- 135K-175K
Associate- 200-300K
VP- 300-500K
Director- 500K-750K
MD- 1-3MM
This might be the best take on all this I've seen over the past few months of death of S&T threads.
Sales job has moved from a pure relationship job to a more Solutions job. Flow desks headcount have shrunk over the last decade and you can't have less people managing that many accounts. Especially when Corps and Real Money clients still like having someone to speak to.
I'll focus on the more structured/solutions business.
The Solutions desks work with institutional clients (InsCos, Banks, Pension funds,...) and can pitch trades across assets classes. They need to manage things like capital constraints, accounting constraints, regulatatory constraints etc. Structuring desks help a lot but they can't do that for all clients, regions etc. Banks still need someone to speak to clients. Also still need someone to know the client, get his attention and show him the trade is the best for him. These trades are unique in many ways so there's no best price.
Senior salespeople in these desks, managing tier 1 accounts are among the best paid on a floor, en compared to traders.
Ill add a comment or two.
I heard solutions quite a bit earlier and that is the best way to think about it. Especially in commodities, where surprising, things are not commoditized. Cant really speak on the FX or bond side, but the general rule is this. As margins between bid/ask decline, decimalization takes hold and volatility declines, standard products sales folks get decimated.
As the products that trade get more complex (no I am not talikng about CDO2, portfolio insurance and Asian options in FX), sales/solutions are more valuable.
How do we hedge our Pemex oil position? How can i avoid taxes in cocoa? How do i serve load?, etc.
Other groups would call this Structured Sales, Structuring, or Commodity Sales. This is WAY different than the 3 martini equity sales guys of the past.
Hey that's interesting stuff. Could you suggest some sort of books or links or any sort of material where I could learn more about structured sales.
Thanks
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