Sales Trading vs IB

I will go for banking if I can choose again. Here is why:

a. Compensation. The mean is much higher for banking but deviation is much lower. In order to get good pay nowadays, you want to be in a right bank , right desk, good year and perform well. It is actually challenging to meet so many requirements at same time.

b. Exit option. If you are an average trader, your job security is no good. Banks would rather hire younger and cheaper people instead of keep you. You have to be really good once you become VP, one bad year can mean you lose the job forever. No buy side will hire a trader if you have a bad stint. Even middle or back office may not want you because they you can be hard to deal with. The only exit option is to become a retail trader or sell car insurance if your trading career didn't work out.

c. Regulation. Regulation on trading is much more than banking because of systematic risk associated with it. It will only get worse if not the same.

d. Job Mobility.  Hedge funds investment related jobs head counts are decreasing over time. This is because of there are many hedge fund closing than launching over past several years. The bigger fund get bigger but they don't necessarily need more people.

e. Politics. Almost most of CEO in BBS nowadays come from a banking or wealth management background. Sales trading is a business doesn't get love from CEO.

f. Taxes. IB share the same pain. New York and New Jersey will for sure rise tax again. It is really bad for high earner getting cash bonus instead of carry.

Feel free to add more. This only for US job market. 

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Comments (17)

  • VP in S&T - FI
Dec 13, 2020 - 1:19pm

Another thing is trader can be framed and get little sympathy.

It happens to my bank, there was an accident involved both trader and business control people. Business control people together wrote a lot of secret email to sabotage the trader. No one speak for trader and the company decide to just punish the trader. Now, not only that trader is fired and also get a permanent record in his brokercheck profile. 

Internally, there are too many people in the bank don't like trader, especially those traders with bad emotion control. They are willing to do anything to make trader's life miserable. The worst thing, usually company management choose to sacrifice trader to save company's reputation. When that happened, trader became useless and disposable.

Most Helpful
Dec 13, 2020 - 1:37pm

Oh wow. How original. Yet another daily thread about how S&T is worse than banking. Can we please fuck off with these? The two roles are vastly different. How about people just do what they like and stop trying to validate their career choices with people on the internet. We're all dying anyway

Dec 13, 2020 - 11:01pm

i swear its the same dude spreading this fearmongering bs every now and u even work in S&T bro?

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Dec 14, 2020 - 12:28am

To be honest seems like someone who's salty they didn't get an offer. 90% of what this dude says is fear-mongering bullshit

  • 1
Dec 14, 2020 - 2:14am

It's always the same broken ass english as well....

like, is this dude even trying?????

"They say money can't buy happiness? Look at the fuckin' smile on my face. Ear to ear, baby!" - Boiler Room

  • 1
  • Analyst 3+ in S&T - FI
Dec 21, 2020 - 11:18am

Astonished at the amount of people listing the reasons why S&T is the worst job out there and IB is the promised land, every other week.

Some people actually enjoy what they do in S&T and they make a decent living out of it. Some of them (breaking news) make more than their IB colleagues. Not everyone wants to work 80h a week, or move to PE.

Also can't stand this "average trader" mindset. No one aims at being average. Or does that mean IB is full of people afraid of being average and maximizing their job security ? I personally don't buy that, I think everyone maximizes their own utility function (Money for some, prestige for others, exit options, job interest ...).

Is S&T golden era behind us? Yeah it is, chill out guys.

Jan 2, 2021 - 12:52pm

Lots to unpack here, so let's go through your points one by one. 

A) Compensation

By "good" pay, it seems you're referring to "outstanding" pay (i.e. 95th percentile territory). The four criteria you refer to are (with the exception of personal performance) political in nature - at the very least, they're out of your control. You cannot, for instance, influence whether the bank, at group level, places strategic significance on S&T, nor whether the bank or even your desk alone has a good year. The reality here is that if you yourself perform to standard, the desk and bank don't have a stinker, and you're valued in a more general sense by your team (e.g. are pleasant to work with, generate actionable ideas), you'll be compensated accordingly.

B) Exit options / job security

This outlook seems a little glum to me. You are definitely allowed to have a bad (but not disastrous) year - take it from me! The bank won't cut you at first glance if you have a solid prior track record, and it won't massively blight your prospects on the buy side. It's also worth saying, of the few trading floors and firms I've worked at, and the traders I know socially, few seem "average". Now, you may argue that if everyone's above average, "true" average may simply be higher than initially considered, however the reality is that all of these people are in their seats for a reason: they've beaten out 3-4x as many people for the role. With margins shrinking as they are, opportunities to hide mediocrity are few and far between - most people in trading seats on the street nowadays are pretty handy. 

C) Regulation

While it's true that regulation and risk appetite tightened significantly in the wake of the 2008 financial crisis, I'd actually argue that - as a consequence of the pendulum swinging "too far" - regulation is actually in the process of correction and will ease over the next few years. But this is a conversation for another thread...

D) Job mobility

Hedge fund headcount (and other buy side opportunities outside of trading in a bank) wax and wane with trend. This year, for instance, discretionary traders outperformed quant fund markedly, with quant fund performance - once hailed as the killer of human traders - having now proved rather stagnant since 2016. There may be periods of thin opportunity, however this will be offset by periods of great talent demand. It is not an inexorable trend. 

E) Politics

Somewhat correct - CEOs currently are certainly more likely to have started in IB / AM than S&T (think DJ Sol at GS vs Blankfein before him). This, however, does not necessarily mean they don't value the role of S&T within their banks (they most certainly do value S&T) nor that they still harbour the anti-S&T tribal sentiment (if they ever did) of their formative department. This is also not to say that CEOs in the future won't come from S&T. Each banking department goes through periods of vogue over time: from S&T in the 1990s, to IB in the 2000s, to AM in the 2010s. Just because a division is slightly out of favour now (debatable in itself), doesn't mean it always will be.

F) Taxes

Not really specific to the death of S&T (as the poster says), so no interest in talking about this to be honest. 

Finally, I'd just like to say that IB and S&T are vastly different businesses within the same organisation, requiring two distinctly different skillsets. It's more important that anyone choosing a career choose one they are suited to and enjoy, than choose one just because it seems to have long term potential. The amount of people on this forum going into, say, IBD and then hating it after working so hard to secure a FT position is heartbreaking. You'll be far happier and far more successful doing what you truly want than what you think you should want. 

"Work is the curse of the drinking classes" - Oscar Wilde
  • 10
  • Analyst 1 in S&T - Other
Jul 1, 2021 - 11:27pm

Appreciate these words... been second guessing myself a lot lately for making the jump from BO to S&T. Set to start this summer. Needed to see this post

Jan 13, 2021 - 12:37am

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Jan 13, 2021 - 9:47pm

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