by Jerry Chi Comments (99)

Sales & Trading vs. Investment Banking, Part 2: Lifestyle, Co-Workers, Pay & Exit Opportunities

We wrap up our series on Sales & Trading vs. Investment Banking with this podcast, focusing on the lifestyle, your co-workers, pay, and exit opportunities.

Whereas Part 1 was all about recruiting, this one’s all about what happens when you actually get the job – and we go into subjects like pay and bonuses in both fields and what “models and bottles” means for traders.

Once again, Jerry’s the expert here so he’s the “interviewee.”

What You’ll Learn In This 50-Minute Interview

  • How you “learn” trading and why it’s completely different from learning financial modeling
  • A day in the life for both a trader and a salesperson, how much money you trade, and how you can take a bathroom break if you need to monitor the market all day
  • Whether or not trading floors resemble Liar’s Poker, how you interact with your co-workers, and what “going out” means
  • How you get paid in sales vs. trading at banks vs. prop trading firms vs. hedge funds
  • Exit opportunities and why we both left the finance industry

Listen to the interview right here:

[audio:http://podcasts-00.s3.amazonaws.com/S&T-Part-2-On-the-Job.mp3]

Training Programs & Group Assignments

  • 1:30: How the training process differs for trading, and why you might be working with Monopoly Money at first
  • 3:50: Junior traders vs. “real” traders and how you move up
  • 5:45: Picking a desk: fate vs. free will?

A Day in the Life of a Trader

  • 8:20: A day in the life of a trader – what time do you wake up, what time do you leave, and can you take any bathroom breaks?
  • 12:40: What happens when you need to take a trip to the dentist during market hours?
  • 13:25: How much money do you actually trade as a trader – banks vs. prop trading firms
  • 15:10: Average hours per day
  • 17:00: Relations with the sales force – pleasant or do they want to assassinate you?
  • 19:15: What salespeople do all day (hint: you better like the phone)

Co-Worker Interactions

  • 22:00: How much you actually talk to your fellow traders during the day, and why the hierarchy is flatter than the investment banking hierarchy
  • 24:50: How much does a trading floor resemble Boiler Room or Liar’s Poker?
  • 26:00: Models and bottles for traders. Sorry, you know we had to say it at least once…
  • 29:15: Interests outside of work? What, really?!
  • 30:30: Is sales & trading overly male-dominated? What to do if you’re female?

Exit Opportunities & Pay

  • 34:00: Sales & trading exit opportunities
  • 36:30: The bottom-line: Pay in investment banking vs. trading
  • 40:00: How to earn a $100 million bonus (only works at Citi) and how much you’ll receive as a % of your P&L
  • 41:30: Payouts at prop trading firms and hedge funds
  • 42:20: Pay structure for sales people and how much you can make in sales
  • 44:00: Bonuses in sales: the sky’s the limit, but it’s a different sky
  • 45:30: Why we both left our respective industries – investment banking and trading

Sales & Trading vs. Investment Banking Podcast Series:

About the Author

Jerry Chi graduated from Stanford, worked in equity research and trading in Japan, and then started and sold his own prop trading firm in China. He earned his MBA from Wharton, and then worked at Google and Supercell in Japan.

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  1. Martin Iglesias

    Hello,

    Big question, currently living a bit of a one-man-band of a life and have to carefully consider whether to prepare for a Sales interview witt J.P. Morgan. Already got an M&A offer from UBS but their division is underperforming.

    My ultimate goal is to get a good position in a good PE firm/HF (depending on whether I do M&a or sth else). Would you say JP Sales < UBS M&A or vice versa (both are London office roles). Thanks in advance

    1. M&I - Nicole

      Both are great options but if you want to work in PE M&A is a better option. Rarely do people from IB sales move into PE. However, if you want to work in sales then I’d go for the JPM role if you get it. http://www.mergersandinquisitions.com/private-equity-recruiting/

      1. Martin Iglesias

        How about Hedge Funds?

      2. Martin Iglesias

        How about Hedge Funds? Will a Sales Role at Jp morgan be more useful due to brand recognition?

        1. Nicole Lee

          Yes I’d say so.

  2. Brian,

    How hard is it to switch from investment banking to sales & trading after your first 2-3 years, or visa versa?

    1. M&I - Nicole

      It isn’t as hard in the junior level, you’ll have to network a lot and demonstrate clearly why you want to make the switch. You’d also need to demonstrate you have what it takes to succeed (in S&T – ability to think on your feet, passion for markets, ability to trade/spot trends, ability to interact with investors; in IB – ability to analyze numbers, know IB process, know how to execute deals) However, as you progress in your career, it will be harder to move from banking to S&T because firms want candidates who have experience with the markets and have been through the ups/downs of market cycles. Likewise, IB would also want candidates who have had deal experience/experience dealing with corporate clients as you progress.

  3. Is it true that with the increased regulations on banks, there is a reduction in the number of entry-level trading (S&T) positions in investment banks ?

    If I am still interested in being a sell-side trader, does it help that I have degrees in CS & Math ? (I mean, does the CS degree give me an advantage over other S&T Trading applicant-students with only a math/econ degree ?)

    Thanks!

    1. If you do a search for sales & trading on the site, you’ll see more coverage of this topic.

      Yes, lots of traders are switching to HFs or prop trading. Degrees in math and CS will help and will give you an advantage over other candidates.

      1. Hi Brian,

        Thanks for your reply.

        I did search for sales & trading here on M&I, and I found a lot of useful stuff. But I did not find anything about how regulations are affecting the job scene within S&T. Could you point me to some relevant links.

        Also, is there any article that talk about how the job scenario is changing across different types of jobs in finance as a result of regulations??

        Thanks!

        1. See: http://www.mergersandinquisitions.com/2010-financial-reform/

          Most prop desks are being reduced, shut down, or shifted around so traders are leaving large banks and moving to prop firms or HFs. I think some of the more recent S&T articles this past year address this issue as well.

          1. Thanks!

  4. Are physics grads common on the trading floor?

    1. M&I - Nicole

      Not sure if they’re common but I’m pretty sure they are on the floor

  5. Outstanding podcast.

    You have literally made a decision for me with this discussion, much appreciated !!

  6. What is the marketplace for S and T jobs like with the state prop trading is in after 2008? When were these podcasts recorded? I really enjoyed them and this website!

    1. M&I - Nicole

      There is still hiring activity in S&T though not as robust as the time before the crisis hit.

  7. Petagine

    Hi

    What kind of opportunities does a market researcher
    at a high-frequency trading boutique have??

    Does the job differ alot from the equity research in S&T? I heard HTF uses more of statistical approach…

    1. M&I - Nicole

      Yes, they do. Equity research is not in S&T, but is usually under Equities in banks. ER in a BB, I believe, is more qualitative, unless you are in the quant strategy research team.

      1. Petagine

        sorry i meant to say ‘exit opportunities’ instead of just ‘opportunities’ haha that must’ve been confusing.

        What kind of exit opportunities does a market researcher at a high-frequency trading boutique have??

        Would he have a shot at equity research in BB after few years?

  8. Hi M&I,

    I have recently been offered a position with an infrastructure fund within a banks markets group. I had originally applied for investment banking and have never considered this kind of job. Do you have any information that could help me make a decision; lifestyle, exit ops, job security etc etc.

    Thanks!

    1. M&I - Nicole

      I think the deal experience and skill set you acquire at the fund should be transferable to other funds. Re landscape of infrastructure funds, pls check http://www.deloitte.com/view/en_GB/uk/industries/eiu/ebff8bf70e60f210VgnVCM2000001b56f00aRCRD.htm

      Lifestyle – I think it depends on your firm and business cycle

  9. confusedguy

    hey! ive been reading through this website quite a lot and heard the podcasts etc also. trouble is – i really still am not sure where i would fit in. I have previous IBD experience (at a boutique) but I’m not sure if its for me or is trading for me? I have a quantitative background, I like maths/stats etc. So I was attracted to the financial modelling/valuation part of IBD a lot. i also liked the fact that i wasn’t always around numbers i.e. pitch books etc allowed me to get ‘in touch’ with my creative side. I’ve never experienced a trading floor, but it seems like fun, and i trade FX myself in my free time. But now I’m confused which division I should apply to. My background shows a lot of IBD focus, but I can’t figure out what I’ll actually enjoy long term. Is there a test or something that can help me? I reviewed all the online material and bits of each profession seem to match me.. I just can’t seem to find a ‘perfect fit’ if that makes sense? Can you help a little?

      1. confusedguy

        Thanks this was awesome!!!! :D

        Follow up question. I was talking to a recruiter and it seems my raw knowledge/technical knowledge is good but my social skills are okay (i appear normal, social person) but not ‘top notch’ which is a bad thing for investment banking. How does one improve that?

        1. M&I - Nicole

          By talking to as many people as you can. Understand & speak the IB language. Socialize w bankers and see how they act/speak

  10. In terms of trading at a company that is an alternative asset manager and has its own trend following system how does that work for a new trader? I am going into John W. Henry and Co. and they have their own long term trading models they follow for commodities and futures markets. What is the base salary avg. of a new trader at a company like that and how is the bonus affected since all trades are systematic and non discretionary?

    Also is it better or worse to get into companies like that if you have taught yourself about trading for years and managed a live 6 figure account for clients, and have been taught by a mentor who has over 30 years experience trading futures privately and in the CME, as opposed to having a bachelors or masters degree in finance?

    Thanks

    1. M&I - Nicole

      Readers might have better insights to your first two questions

      If you’ve had the experience you listed, I’d go and start my own firm. For trading, deal experience is more important than degrees I believe. But some top trading firms do prefer candidates with degrees from targets too

  11. Hello Brian
    I`m 16 years old high school-er and I want to become a trader for Bank of America or Barclay’s Capital. Right now I`m studying the market. I would love it if you gave me some advise to how I can reach this goal of mine.
    Thanks

    1. M&I - Nicole

      Join an investment club. Trade your own portfolio. Read up on investment books and shareholder letters from major funds. Follow the markets (WSJ helps). Land yourself an internship

  12. How does pay differ across asset-classes in s&t? I’m primarily interested in sales. Thanks

    1. M&I - Nicole

      I haven’t worked across the asset-classes in S&T so perhaps you should ask your contacts on the trading floor for a better feel. I just know that in equities, sales, traders and sales traders (in BB) pull in a reasonable amount, depending on their bank and performance.

    2. Pay differences in S&T have less to do with the asset class and more to do with what the bank’s niche is. S&T in a sector the bank is well-known for will be paid more because they generate higher commissions.

  13. Great Podcast!

    One question I had: What happens when you are a Trader and you don’t perform well enough and get fired? Is it possible to find employment elsewhere or what kind of opportunities would you have?

    1. It’s tough because trading is so specialized. So you’d pretty much have to do something outside of finance unless you’re relatively junior.

  14. Hey Brian, great podcast!
    I would however, like to know a bit more about the sales desk. Could you perhaps include a bit more about that in your next S&T article? Just a suggestion.

    1. It’s on the list and we hope to cover sales soon.

  15. Hi Brian,

    I would like to know one question concerning IBD’s exit opportunities. Can I switch from IBD to Sales department after working a few years in the first one? I mean without loosing position or even being hired on a better one.

    1. You probably can but it’s definitely not common and you would need to know people in the department

      1. As I know, IBD people are the best and the most elite sales because they need ro sale complex and complicated products to thier clients. But, of course, they do not need to understand the market as goog as sales people.
        So I thought it would be simpler…

  16. I would just like to start by saying thank you for these podcasts and the website as a whole as they have been very helpful for me to gain an insight into investment banking and sales and trading.

    Just a couple of follow up questions though:
    As a student hoping to go to university september in the uk to study economics bsc I just wanted to know how important work experiece is over here, and whether it would be the best route into gaining access in sales and trading and what skills do you think would be best to develop to become a successful trader.
    as i have already set up a dummy account spread betting account and as i turned 18 i bought a long term position in a ftse100 company and wanted to know if there is anything else that i should be doing.

  17. Hi M&I,

    Since I last blogged at one of your articles, I’ve managed to secure a position as a Trainee Trader at one of the supermajor oil companies. Would you be able to provide me with some advise on whether I should make a career as a physical oil trader in an energy company or should I look to move to a bank? Additionally, should I look at physical or strive to move into the paper group? Do you have any idea what bonuses are like for traders in Energy firms?

    Thanks

    1. I don’t know about bonuses there. It really depends what you want to do… if you want to have a better lifestyle and work/life balance the energy company is probably better but you’ll make more money or at least have a higher ceiling at a bank or HF.

      1. Thanks M&I. Just three quick follow up questions. How easy/difficult would it be to move from a Trader role in a supermajor to a trader within an investment bank/hedge fund? Do banks and HF’s value energy trading experience in an investment bank? Also, with banks getting into physical trading (Morgan Stanley recently bought tanks in Canada), do you think there is higher upside in physical or paper trading? Thanks again

  18. Hi,

    First of all thanks for putting together this website. It’s really helpful and I really enjoy reading it!

    I’m currently looking into summer internships for next year and to which divisions I should apply. However, I do not really understand why S&T are always grouped together?
    I am very interested in sales, but honestly I don’t see myself being a trader. Can you apply directly to sales?

    Also, I’m interested in the Merchant Banking / PE part of for instance GS (london office). Do you have any idea about the hours people pull in those departments, what the difference in environment is with the IBD deparment, etc etc?

    Thanks a lot!

    Cheers

    1. Depends on the bank, some let you apply separately and some do not. Merchant banking is similar to PE / banking… still long hours, especially at bulge bracket banks.

  19. Hello,

    I would like to please ask a few questions about “sales”.

    Although I understand that grad roles typically hire under “S & T”, will I generally have an option which division to interview in? Should candidates for sales be well versed in major economic theories like traders, or do they look for the soft skills?

    Are the interviews typically less technical than, say, IBD and trading? What do you think I should concentrate on? I’m presently studying towards a Masters in Accounting (good business grounding I feel). I work in financial services and feel that sales is better orientated towards my strengths.

    My mental arithmetic sux. Do you reckon I should polish this up for interviews?

    Any other random tips?

    Many thanks.

    1. Soft skills are more important, but you still need to know basic economics / finance. Interviews are less technical – focus on your salesmanship and on being articulate and persuasive in interviews.

      Mental math isn’t as important for sales interviews, but you may still get questions on it if you have a combined S&T interview.

  20. Aussieguy

    Hi Brian,

    Great podcast. Great site, loads on info. Thanks so much for doing this.

    One Q about Sales and Trading — where do the people who are let go end up?

    I know from a few of my S&T friends that turnover is extremely high, am concerned that if someone is let go after 5 to 6 good years, they’re pretty much hosed in terms of going to another lucrative job / getting out of trading. Is this a valid concern?

    1. You’d pretty much have to find something else outside finance, so yes, it’s a valid concern. Depending on their background, some may go into a technical field like engineering, others may go to normal companies and do marketing or something else like that.

      But it’s rare for a “failed trader” to continue in the industry.

  21. Appreciate the female question. Thanks.
    Great article once again.

  22. I seem to can’t get the interview to load or download, wondering if it’s on my end or your end.

    1. Just tried and it was working – everything is hosted on Amazon.com, which occasionally has glitches but overall is quite reliable.

  23. Thanks so much for the article guys. I can’t tell you how long I’ve been searching for information online about how to break into professional trading. Been a frequenter of this site just hoping that things that applied to IB would also apply to trading.

    I’m actually finishing up school in Seattle (University of Washington) and am trying to get an internship. What’s the best way to find firms with trading desks outside of New York. I’ve had a foot in the door at Russell for a couple months (agency only) but am having trouble finding any more. Any suggestions?

    1. Best idea is to get a friend with Capital IQ access to search for local trading firms outside of New York (search by region and industry) – you could also try simple Google searches or looking into paid directories / lists of trading firms online. Otherwise it’s actually quite tough unless you have access to a good alumni database / a lot of people in the industry.

  24. M&I,
    Thanks for the article. It’s great.
    My resume is actually kind of like that person, except that I didn’t have that JP Mogran thing. My work experience is sort of here and there (in marketing, PR I did in my sophomore summer), so I have been trying hard to bankify it. But it’s hard cuz I didn’t do any of finance stuff in my internship. I am taking finance course now and do lots of project regarding DCFs, amortization, forcast…Can I put that in the work experience? I did put that info in my cover letter.

    1. Yes that’s fine for resume as well

  25. Thanks for your advice. I definitely need to broaden my search and be more persistent as well.
    Still, what do you think could have gone wrong in the cold calling/emailing process? I basically follow the advice of people on the site who managed to pull it off, so…The only thing is I talked to one alumni and he said the weak part of my resume is there is no business/finance-related experience there, so yeah I know it’s gonna be real hard. But if it were all about this, then there is really nothing I can do.

    1. Could be any number of things from not asking the right questions to not being direct enough to not getting through to the right people. On your resume, if you really don’t have business experience you need to spin your way to success:

      http://www.mergersandinquisitions.com/investment-banking-resume-no-work-experience/

  26. Hey M&I,
    Thanks for all your awesome articles.
    I’m a junior from non-target with a pretty good GPA but don’t have any ibank or finance experience. I have cold emailed and called hundred of boutiques and small firms in NYC to ask about summer internships and offered to work for free, but still to no avail. Lots of them said they’re too small to take interns and lots of them didn’t get back to me. It’s already April, and I don’t have any other option, so it’s been pretty frustrating.
    Is there still anything I can do now?

    1. At this point you probably want to think about options outside of pure finance… think about bus dev / finance at startups, mid-size companies, and so on. It’s hard to say whether you just need to be more persistent or whether something was wrong with your approach to networking without knowing what you did, but at the very least I would broaden your search to more types of firms.

  27. Anonymous

    Brian,

    Whats the best career path to pursue if i wanted to eventually become a PM at a hedge fund? Asset Management? M&A? Equity Research? FICC Research? S&T?

    1. Probably asset management or S&T depending on the type of fund you want to go to

      1. follow on:
        -Equity research and (equity) asset management (two are the same thing really) if you want to go into equity HF (e.g. long/short)
        -FICC research or (fixed income) asset management for credit-related funds
        -Trading for most any fund where fund strategy is related to which market/strategy you traded
        -M&A, etc is largely irrelevant

  28. Hi M&I,

    I tried very hard to cold call for internships (I am a freshman and I want a career in investment banking) and finally got two opportunities. One is in R***K Savings bank. I will most likely work as a teller. The second one is in G***ro Wealthholdings, a boutique money management firm. The work is: Selling to and servicing an existing client base developed through our prior relationships.
    Building on current client relationships to provide your clients with investment products.
    Establishing new clients through our extensive qualified prospect network
    I don’t know which one will be better for a future career in IBD

    Thank you!!!!

    1. Definitely the boutique money management firm, at least it involves skills that are somewhat relevant to IBD

  29. is there a big diff between a 3.47 and a 3.5 for investment banks?

      1. is there a difference at all? i know people keep saying 3.5 is the cutoff so is that a special situation

        1. Just round the 3.47 to 3.5 on your resume, easy solution. I guess psychologically there may be a difference but why worry when you can just round (see the FAQ).

        2. Is doing two bachelors at different universities an excuse for going down to 3.0 or would that stil be a con?

        3. *edit:

          Of course when doing them simultaneously in 3/4 years.

        4. No, it’s still not an excuse for a 3.0. 100x better to do just 1 degree and get a 3.5 or over

  30. GPA rounding question, know you hate these but couldn’t find an answer — if my transcript says 3.49 but i calculated it myself and it came up to 3.4899 can i still put down 3.49?

  31. Great article Brian.

    Just a quick question though regarding career transitions. I know you’ve covered the topic in the past but I don’t think it was from the perspective of research and so if I accept a current offer for a junior role in equity research am I forever doomed in IB/ECM even if I transition through an MBA program in a few years given I won’t have “deal experience”?

    Thanks.

    1. You can certainly move in from equity research, but you should make the move sooner rather than later… much easier if you get in before the MBA program rather than after.

  32. Awesome podcast. Hope theres a part 3.

    Hope to hear about many of the topics covered here on IB. While theres quite a bit of overlap (IB vs S&T recruiting/fashion eg) hopefully we can get a more distinctive S&T perspective (summer internships particularly since S&T interns can’t do anything on the job)

    I’d personally like to hear more about the quantitative or computational aspects of S&T.. Whats required these days in terms of math and programming, how thats affected the culture on the dealing room floor, etc. (Jocks -> Quant-Jocks -> Quants/Nerds?)

    1. There’s actually an article on S&T internships here:

      http://www.mergersandinquisitions.com/sales-trading-intern-day-in-life/

      As far as technical skills, it varies by what group you’re in but in general the math required is still pretty basic, at least at the intern level. That may be different at some hedge funds but at most banks the requirements are not very high.

  33. Brian,

    completely unrelated question, but how is Public Finance group within IB viewed? Exit opps?

    1. Aljun?

      I would like to know as well. I’m having a hard time finding information on this.

    2. It’s ok but definitely not viewed as highly as traditional investment banking groups like M&A, LevFin, solid industry groups, and so on. Your skill set is a lot more specialized which means it’s harder to move into PE / HFs afterward. I don’t know a tremendous amount about public finance but that’s the essence of it – somewhat better lifestyle but more specialized skills and more limited options afterward, similar to ECM.

      1. Hi Brian,

        I notice a fair amount of readers ask about public finance. I’m not sure if you remember me, but you helped me back in 07-08 with recruiting. Anyway, if you would like to do a post on public finance, I now work as an analyst. Please feel free to e-mail me. I’d like to dispel any myths about my group.

        Thanks

        1. Hey sure thing and yes I definitely remember you Ben – glad to hear everything worked out. I’m in the midst of a new product release right now but I’ll email you as soon as I have a chance and we can either set up a time to chat.

  34. Brian,

    Your site has really grown and blossomed into a must-read resource. Well done and double well-done on transcribing the whole podcast – it must have taken ages, but increases value.

    So no Patrick Batemans in sales & trading? LOL

    :)

    1. Probably not as many as in banking, but I’m sure they’re still out there…

      Re: transcribing, this is what transcription services are for. :)

  35. What about for summer interns in trading? Easy to go back to interviews, at different firms, and say you learned from the experience but would prefer banking?

    1. For internships it’s much easier to switch vs. full-time. But yes, basically say you learned but would rather work on long-term projects, work with clients, etc. and see banking as giving you a broader skill set. Interview on this one coming up in the next few months.

  36. I’ve seen firms recruiting for overnight traders who have knowledge and can trade in Asian markets. Any thoughts or experience on this topic?

    1. I don’t know much about it offhand, but I think it’s most common at tiny prop trading firms… some firms actually recruit you and let you work remotely over the Internet using their platform

  37. Hey Brian,
    A great podcast. In podcast Jerry talks mainly about Equities Sales, i wonder if you can ask him sometime to elaborate on FICC Sales, particularly FX and Commodities. From what i’ve read so far it seems that for FICC Sales people tend to be more quant and there job is not to just “pitch” ideas but to work on more sophisticated deals, especially if you work with hedge funds. I would like to understand how Sales’s person job is different between desks/products.

    Thanks in advance,

    Sincerely yours, Andrey

    1. I’ll see if we can do something on that – not sure how much he knows personally but we may be able to do an interview with someone else

  38. We need podcasts, so that we don’t need to download individual files.

    1. ? Not sure I understand your question

      1. Hey Brian,

        I believe VP was referring to having some sort of podcast collection available on iTunes. I know, personally, this would help tremendously as it would save me a considerable amount of time downloading each podcast manually, changing the tags to labelling it as a podcast, organizing it, etc.

        1. I’ll see what I can do, but honestly there are literally 4 podcasts on this entire site. If we do more in the future I can set something up, but for right now 99% of the content is text.

      2. How would one “non target” break into a trading career in TODAYS world, compared to 10 years ago. Other than discretionary trading and paper trading, what other factors should i consider?

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