Sales and Fading ?

Hello WSO Community,

I had a coffee chat with an IB analyst yesterday and we started talking about the S+T industry. He said that it’s not what it used to be and I agree I am sure it is very different then the glory days of high commission and pre financial crash prosperity in the markets. He was telling me majority of S+T guys today are big quantitative guys. Sales portion of S+T is fading quickly.

I would love some insight from some S+T monkeys. What does an S+T career hold for someone today? Is the compensation still good? What do the exit opportunities look like? Does the traditional Sales in trading still exist, if so how is it different from what is used to be?

Any insight would be greatly appreciated

Thanks JohnGutfreund

 

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At its core, finance (as with so many others) is a services business. That means relationships with clients will always matter and that good sales people will always have a role. You may have to move desks or business units or whatever but building and maintaining relationships will be key as long as there are humans involved.

As for S and T itself the business is certainly changing and there are less people than there used to be. Comp is certainly down from previous decades since commissions are lower and there has been automation (and will continue to be automation when possible). That said most banks offer a commoditized product or service and there is only so much price you can compete on. In most cases there are still clients who are human and making human decisions and so the best relationship (all else equal) will win. One won’t make gajillions of dollars like one used to but at the mid to higher levels you can work reasonable hours, not be too smart and get paid very well for what you do and not be on a plane 3 days a week or pulling all nighters.

People will always want to have or yearn for personal connection in whatever it may be. So it’s my opinion that sales will never die. Take different forms? Sure. In the end, IBD, generally speaking, is similar to S&T if you look at it from this lens. Products and services are largely similar. Pricing pressure is there. So unless the banker has something seriously unique he or she is essentially fighting on relationship and the strength of it to win business. That’s sales.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 

S&T isn't dying per se, but it is markedly different from the boom years pre-2008. For one, traders have little to no remit to trade on a proprietary basis, meaning the vast bulk of the bank's S&T income stems from market-making flow and whatever commission the sales-traders are able to generate. The result is that while compensation is still good (broadly on par with IBD), the headcount on trading floors is significantly lower.

In terms of (exit) opportunities for those on trading floors, I think there are still attractive options open. If you're a good trader and have a long history of sustainably generating good P&L, funds will still want you in some sort of PM capacity. Funds also need execution traders for those not able to make the full step-up to PM. I'd also go so far to say that where S&T does have IBD beat is in terms of meritocracy. While less often the case than it used to be, you do still find Directors and MDs in their under 30s - as far as I'm aware, this is a huge rarity in M&A, LevFin, etc.

I'm also skeptical when people say that the "sales" component of S&T is dying. As a number of other users have pointed out, while the execution side of the business is becoming increasingly automated (putting pressure on traders), those on the buy side will probably always prefer speaking to a real person with whom they have a relationship and are able to question for colour over either an automated "screen trading" setup or an AI system that, in all likely, will be comparably cold and clinical in its dealings. I think sales, if anything, looks presently more robust than trading in your typical BB S&T department.

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

It's not that sales is fading... it's just there are A LOT of redundant people in sales who does nothing all day and personally, banks need to get rid of these folks. I was on the equities floor and the sales folk was literally sitting behind me and the guys who have been there for 10+ years (Directors, MDs) are pretty good, on the phone constantly and meeting clients because they got they got swag but damn, no offense, I see these really attractive girls who does nothing all day but gossip and browse on the internet and I think to myself... what a joke. The hardest working people on the floor were definitely the traders (market makers) and the quants. Sales trader, so so... research, not sure and sales, various.

 

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