Less stability and fewer exit opportunities in finance S&T careers compared to IB

Finance S&T Careers

A finance s&t career is less stable than IB, even at the MD level. It also offers fewer exit opportunities (apart from trading at hedge funds or at macro funds).

A sales and trading division is responsible for making markets in financial securities including equities, fixed income products, currencies, credit products, and commodities.

Sales and Trading

Sales and trading (S&T) is the division within investment banks responsible for making markets in stocks, bonds and derivatives. It includes professionals pitching buy and sell recommendations to clients, executing trade orders on behalf of them, and advising them when to enter and exit financial positions.

They work in partnership with compliance, credit risk, market risk and legal teams to ensure strict adherence with internal policies and regulations. They must be able to analyze and interpret large amounts of data to make informed decisions in real-time. They must also be able to quickly assess the risk-reward of each trade and choose to execute or not.

Career-wise, S&T is less linear than IB and requires much more quantitative skills and quick decision-making. It can be difficult to move into private equity or corporate development from trading since the skill set is less broadly applicable. Most importantly, the work doesn’t change that much as you progress from an intern to an analyst, associate, vice president or a managing director – only the risk limits get higher.

Investment Analysis

If you have a strong interest in finance, a graduate certificate in finance could help you move up the career ladder or broaden your skillset. The online graduate certificate in finance from Missouri S&T offers courses that cover topics such as corporate finance, investments and financial strategy analysis. You’ll also learn to better assess business opportunities using financial data, accounting analytics and financial technology and tools.

Investing in securities involves making markets in commodities, credit, currencies and fixed income. Equities teams trade shares, options and derivatives for institutional investors; fixed income, currency and commodities teams deal in bonds, loans, treasury bills, mortgages and foreign exchange.

The recruiting process is different for investment banking and sales and trading (S&T). Generally speaking, M&A investment bankers recruit at the MBA level while S&T groups prefer experienced professionals with good academic credentials, mathematical ability and drive. Both require long hours and “grinding it out” to close deals over months or years.

Trading Execution

A traders job requires high math skills and quick decision-making. Traders must also provide deep analysis of complex derivative products and find effective ways to hedge their book to protect bank capital and ensure profitability.

While anyone can open up a brokerage account and buy equities, it isn’t as easy to do distressed bonds, mortgage-backed securities or collateralized loan obligations (CLOs). This means that some banks have the “smart money” chasing their trading desks, which can lead to huge bonuses for top performers.

In addition to equities, most sell-side investment banks also offer foreign exchange, fixed income and credit trading. The most prominent in the market are JPM, Goldman Sachs and BAML (although Citi is not as strong as it used to be). Some of them even offer commodity trading. Most banks also have prop trading desks, but those have been largely spun out to independent Hedge Funds due to regulations. These have higher pay levels but are a smaller part of overall S&T compensation.

Client Relations

Many banks have teams that are dedicated to each client. These are typically referred to as the coverage team or relationship management (RM) team. RMs are the front end, the tip of the spear for the bank and their main contact points with the entire client base.

Different banks structure their RM teams differently. For example, some have buckets for size of client – so a Fortune 100 might be handled by one team while the smaller local companies are served by another. This makes sense from a product point of view as the larger companies might need more banking products than the locals.

S&T Bancorp is leveraging nCino’s Treasury Management Sales and Onboarding solution to provide a clearer 360 degree view of their clients, streamline inefficient processes and workflow, increase speed to funding and more for their commercial, treasury and small business clients. Learn more about their journey here. nCino 2019. All rights reserved.

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