What percent of S&T analysts succeed?
People say banking is more stable with more exit opportunities but there is a lot of burnout in the industry. How does it compare to that of traders? what percent of salespeople/traders tend to succeed at what they do? 20%? 50%? 80%?
.
I think its important to remember the relative nature of S&T class sizes: they are not very big to begin with. There are some desks who don't hire analysts at all in a given year because they simply have no need for them. Typically, when they do hire an FT analyst, it's a long-term investment and they really do expect you to be the next associate, then VP on the desk. (It's only natural, they want to groom their analysts early and would rather do it from UG than at the MBA level).
Having said that, I'd say that the emphasis on an S&T analyst's success is greater than that on the IB side, simply because the notion that you will return as an associate right after your analyst stint is far more prevalent in the S&T realm.
What this generally means is that banks aren't on a mission to "weed out" S&T analysts, those who leave, either choose to of their own volition or of course, they were laid off due to market conditions or an inexcusable mistake on their part.
In my analyst class, there were about 10 hired that year and I believe 8 (including me) are still associates with the firm. So your chances are good.
Some things to note:
1)Burn out is an issue. It is more prevalent on some of the more stressful desk and in particular,for those in trading roles.
2)Believe it or not, bad market conditions usually mean the VP level employees are first to go. Reasons? They are expecting more in remuneration, and there are analysts and associates who have developed the skillsets to takeover the VP's responsibilities (again this applies to trading). In sales, relationships are carried from firm to firm so it's less prudent to layoff VPs first.
3)As a general rule, attrition is higher in S&T at the associate level and above due to the volatile nature of the markets. However at the analyst level, those who enter S&T typically stay in S&T and it becomes clear very quickly who really belongs there. in IBD, the career path is much less predictable at the analyst level.
Let me know if you want any of this clarified.
Correct me if I'm wrong - but between research, sales, and trading - there is a lot of switching around too within the three categories for analysts/associates which helps prevent burnout.
i think a general issue on this board is also that nobody seems to know the difference between having a job and being really really succesful. Jut making it 8-10 years in sales and trading does not ensure that you will make more then a few hundred thousand dollars per year, which is fine but not what most equate with success on this board. As the old saying goes "everyone can't be a chief, there have to be Indians also". So the percentage that make it a decade of employment is probably quite high but the percentage who end up running the desk, trading a big book, or running money at a hedge fund is always going to be very very small.
.
That was precisely why i wrote my post in that manner. For the average S&T employee, success is being able to show the firm that even if you aren't Greg Lippmann, you are certainly worth keeping around. Many prospective sell-side traders have got this notion that S&T is a giant sweatshop where you either make huge money or go home. But how much do you "need" to make in order to avoid being sent home? I will classify success as meeting this subjective cut-off point (not the superstar numbers that very few attain)
If you want me to write a post on success through the eyes of one of these stars, then sure. But otherwise, these are directed at the rank-and-file S&T folks.
Now to answer your questions:
1)Stressful can be a bit subjective as well. Do we mean "fastest pace". Do we mean "most difficult deals to hash out". Or perhaps we mean "most illiquid product where hedging is very very difficult".
You can see where I'm going with this. While FX might be the most lightning/volatile quick market due to the "jerkiness" of price action at times (and the very frustrating exotic options with barriers), it is (under most circumstances) the easiest to hedge because the market is so deep.
I'll address this in more detail once you clarify your criteria.
2) In general, if you were going to be laid off anyway, the downturn just made it easier to do so
3) The bottleneck for most traders on the sell-side is VP/Executive Director/Director (based on your firm's naming scheme). This is where some of the superstars get to add "title prestige" to their role and become Managing Director, Global Head, etc. Like our friend Lippmann. (I keep mentioning him because his earning power at this firm was unfathomable: he's an example of "superstar")
Anything else, I'm here to answer.
Can equity traders also trade equity options? And is it true they generally make less money for their firm and thus for themselves?
How would a commodities futures trader trade? would he have a deep knowledge set of his target products and the market in which they are exchanged and so will able to read the macroeconomic state of the economy and make bets accordingly? I'm currently generally interested to know how traders make their trades and for what reasons.
Great posts. Could you share with us the trajectory of some of these S&T superstars? do they stay at their BB, or do they move to a hedge fund after a few years of sell-side experience? i'm assuming that business school is not an option for these guys.
equity traders are either the cash guys who just trade blocks of stocks or the option guys who deal with options. obviously you have other guys like program traders who make markets on baskets of stocks and the ETF traders. everything is specialized these days.
commodity traders at BBs actually dont trade exchange-listed futures according to my understanding. they make a market on OTC swaps, forwards and options and do a fair share of prop trading. every trader has his/her own strategy on making profitable trades, some like to get client flow and just profit from ask offer spreads, some like to have a long term fundamental view and bet big, some like to scalp a few dollars here and there from intraday volatility...
.
@jjc1122
If you have been an S&T employee for 5-6 years and you're a superstar?... furthermore you intend to stay in S&T?... you would never ...NEVER leave to go back to business school. There is nothing business school can teach you about being an FX Derivatives allstar... or a Block-Cash Equity powerhouse.
For the kid who does the 2-year analyst stint, you're not going to be a superstar, but you can make yourself valuable to the desk by becoming an expert on some niche aspect of your business: the firm will undoubtedly bring you back as an associate.
THe S&T people who were outstanding often move to the buy side to open their own firm or accept guaranteed packages at hedge funds (these are typically profitable traders or structurers who have a track record of creating very profitable trade ideas and products ). The flow sales/structuring/trading folks who were superstars (note: it is possible to be a star on the flow side--but this is more typical of sales) tend to STAY on the sell-side because your value to the company consist of your buy-side relationships, simple as that.
@CNB90
On the flow-side, the equity trader vs. equity options trader relationship is kind of like a square vs. rectangle. Square (options trader) is a rectangle (equity trader), but the rectangle is not a square. It's fairly simple, equity options traders use equities all day long to manage their overall exposure. But equity traders (again flow-side) do not really use options because the spread they pay to use options is larger than the spread they collect on their equity trades.
If you
re a prop equity trader, sure you may use options because your job isnt to collect spreads, but to generate alpha.But again at a typical investment bank, less than 10% of the staff are involved in outright proprietary activities, so this relationship tends to hold.
I'm sure this is rare, but I've heard of sell-side traders moving to hedge funds for guaranteed seven-figure paychecks. And of course, there's that 28-year old superstar at morgan stanley who made $11 million but moved to a hedge fund that guaranteed him $25 million.
regarding b-schools, can't a trader learn a lot about finance at a place like wharton or uchicago, that they may not have learned at their job? also, networking is crucial, although i imagine it's not as important for traders.
If your doing well as a Cash Equity trader on the block desk , there is NOTHING business school can teach you that will make you a greater asset to your firm. If you are a Salesperson in Structured FX Derivatives, the only thing that matters is how well you are able to pitch the advantages of your products to asset managers and how familiar you are with FX market trends.
I want you to ask around, and see how many S&T full-time analysts you know (who intend on staying in S&T) decide to go to business school and then return to their firm as an S&T associate.
S&T really shouldn't be considered a 2-year program, because you get the idea that firms try to push out their analyst after their 2 year stint. that is NOT the case. The conversion rate of FT S&T analysts to associates (for those that want to stay in trading) is very very high.
An employee who has done 2 years as an analyst on a desk is far more valuable than an associate straight out of business school who has never really worked on a desk.
Perhaps another way to look at it. In IB, if you have 15 associates, perhaps 12 or 13 are MBA graduates and 2-3 were 3rd year converts. In S&T, if you have 15 associates, perhaps 12 or 13 were granted direct promotions from their analyst roles and 2-3 were MBA holders.
Clear?
I know we all consider trading as a branch of "high finance", but do not assume that because business school is the typical route for IB analysts, it must somehow be beneficial for S&T as well.
It seems like you have to start off at the Analyst level otherwise it's very hard to break into Trading.
How can someone break into trading if he didn't do an Analyst stint at a bank?
If you don't get in right after undergrad, certainly you can get in later on as an associate (http://www.graduates.bnpparibas.com/trading.html)
But as a general rule, your odds tend to be higher as an analyst because essentially all desks will hire at this level (if they have the need).
FXTrader, I really appreciate the insight you add. I think few people in the industry have the time to explain things clearly, and in detail, and you do both.
I understand that in general, the conversion rate for analysts is quite high, and for every Associate-MBA hire, there will easily be 4 analyst promotions. This makes perfect sense; you're promoting a proven entity in an industry where track-record trumps just about all us.
Are there trends across desks, or products? By this I simply mean: are certain desks more MBA-friendly, and conversely, certain desks more MBA-skeptical? Habitually, when an MBA is hired, what is he/she bringing to the table that makes up for the lack of prior S&T experience?
Secondly, are most MBAs placed into Sales/Structuring roles, rather than Trading roles?
Thanks in advance.
Quoting and bumping b/c I would really like to know this as well. Also what is the more important trait in a sales role? sales/relationship building skills or knowledge of the product/market that you are involved in? Obviously you need both but what is viewed as the more critical skill? My only experience since college has been in sales and sales management for a mortgage company. I'll be done with my MBA next Dec from Ross. While I am confident in my sales skills, at this point i am not sure if my "quant" skills is up to par.
Firstly FXTrader, thank you very much for all your posts on this thread. They have been very helpful.
Secondly, I have a few pressing questions about Sales and Trading, which I was hoping you would be able to answer.
1) I've been trying to research the role of Sales in an IB and it seems that their main role involves maintaining links with clients, and fully understanding the products of the bank. However, I was wondering if this was really the case and if could you maybe provide a more indepth overview of the role?
2) Banks often state on their websites that applicants need to be highly numerate. Is there a specific reason for this?
Thanks in advance for your help!
Also is being able to perform financial modeling relevant in a sales role?
What kind of financial modeling do you mean?
How do you know you will do well? (Originally Posted: 07/29/2010)
How would you know you would do well in S&T (trading)? I mean, it's not like banking where if you work your @ss off you'll do fine. Is there any way of finding out?
practice trading accounts? i think its one of those things that you need to learn certain things from people training you. i doubt you could just step in and start making money. so practicing on a simulator is the best thing i can think of.
dont you piss excellence in the morning?
If I drink excellence and piss mediocrity, is that going to impede my chances at being a baller trader? Damn..
Keep in mind that sitting in a market making seat is different than pure prop/directional.
Praesentium aperiam sequi porro inventore. Qui nulla pariatur molestias officia nostrum ducimus. Magnam ipsam ut necessitatibus officia ipsam. Ad qui iste cupiditate odio ratione quaerat.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Molestiae voluptatem est eum similique cumque est. Odio voluptas dolor ut commodi corporis autem sit. Repudiandae aut doloremque voluptas vel. Nulla quo quo voluptatem ipsa quis distinctio odit. Nostrum a nesciunt nihil corporis. Est nihil unde aspernatur sed molestiae esse. Et sed doloribus est architecto aut.