by Brian DeChesare Comments (12)

M&I Podcast Episode 001 – Sales & Trading Compensation in 2014

Sales Trading Compensation 2014

When I sent out an announcement a few months ago asking for questions about sales & trading, I didn’t quite expect the response we got.

That one simple email generated 500+ questions, many of which were detailed and intelligent, and therefore way above my pay grade.

To solve that problem, I brought in an associate editor who’s written several great articles on S&T in the past, including one on the equity trading floor and another on a day in the life of an options trader.

He has trading experience on both the sell-side (bulge bracket bank) and the buy-side (hedge fund), and he also managed to write the best S&T interview guide I’ve seen, plus a great guide for S&T internship prep at salesandtradingcareers.com.

We sat down to discuss the most interesting S&T-related questions first – in other words, the ones about salaries and bonuses.

Here’s what happened:

Sales & Trading Compensation in 2014

Click here to download the MP3 file directly.

Click here to download the Transcript for the M&I Podcast – Episode 001.

We focused on compensation in this episode because things have changed a lot at banks since the financial crisis… and even within the past 1-2 years.

Compensation in investment banking, private equity, and hedge funds also looks different, but it has changed less than S&T pay has.

I learned a ton in this discussion, including:

  • Why two traders that both earned $50 million for the bank might get completely different bonuses.
  • Why some banks, at least in London, are now paying different salaries and bonuses to entry-level traders (be careful…).
  • Why “the death of prop trading” has been exaggerated, and why it may not even make much of a difference to compensation.

Why a Podcast? And Why Now?

It seems to be the thing to do.

Several dozen popular blogs and content sites have started podcasts in the past 1-2 years, so why not M&I as well?

Actually, though, this is more like restarting the podcast series from 4-5 years ago.

You can check out the sales & trading vs. investment banking podcasts we did over here, and the ones on cold-calling and networking here.

It was time to change up the format and content here, and a podcast is a great way to cover topics that don’t lend themselves to articles or videos.

Finally, it’s much easier to get guests to sit down for a 30-40 minute chat than it is to go back and forth multiple times with written documents.

If you think bankers are unresponsive when you cold-email them, try sending over a list of 10-15 questions and asking for a 1,000+ word response via email.

Table of Contents, the Transcript, and More

Click here to download the MP3 file directly.

Click here to download the Transcript for the M&I Podcast – Episode 001.

Here’s the full Table of Contents for the episode, so you can skip around if you have ADD or you’re otherwise busy:

  • 2:28: Background of Interviewee
  • 3:44: Entry-Level Compensation in Sales & Trading and Differences Between Banks
  • 8:23: How Pay Changes As You Advance
  • 11:37: How Your P&L Relates to Your Compensation
  • 14:49: Compensation for Senior Traders
  • 17:33: Deferred and Stock-Based Bonuses
  • 20:08: Sales vs. Trading and Compensation Allocation
  • 22:49: Compensation Differences Between Different Desks
  • 25:27: The “Death” of Prop Trading and How That Has Affected Compensation
  • 29:02: Basel III and Other Regulations
  • 30:53: Future Outlook for Sales & Trading Hours and Work/Life Balance
  • 33:57: Conclusion

Got iTunes? Or Stitcher? Or SoundCloud?

Update: You can now subscribe via iTunes, Stitcher, and SoundCloud below:

I’m aware that the sound quality could be better.

A Skype conversation will never be “radio quality,” but the next episodes should sound better as the process is improved.

Of course, my data shows that you greatly prefer to read the transcript anyway, so this might not matter much.

 

Questions or Guest Suggestions?

If you have more questions you want to see addressed on this podcast in the future, leave a comment below or reply to one of the M&I newsletter emails (yes, I personally read everything).

And if you have suggestions for future guests, or you want to be on the podcast yourself, also leave a comment below or reply to one of my emails.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Comments

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  1. I know this is totally irrelevant, but how can I best spin my story to investment banking interviews based off of previous internships.

    Freshman summer I did boutique investment banking, sophomore I did PE internship

    How can I spin my experience for banking interviews as I am recruiting for junior SA? Thank you very much!

    1. M&I - Nicole

      https://www.mergersandinquisitions.com/how-to-spin-investment-banking/ should be useful.

      In your case, I’d talk about how/why you prefer to be in IB after your previous experiences, and why you think you can contribute to a BB given what you’ve learned.

  2. I really enjoyed this interview. The podcast was good, but I’m also a transcript man so thanks for the transcript as well.

    My favorite posts and interviews are ones where your writers and the guest get really technical and go behind the scenes. I like how this interview delved a little deeper than normal. In my own selfish opinion, I’d like to see more of that. However, I also see that the stories I like the most such as the case studies and the links to the 90-slide decks only get like 2 comments which are usually not even related to the story. So I’ll leave that balancing act to you all up there hehe. I’m probably not a good weather vane for content suggestions.

    A really good point in this interview was about how a large part of bonuses are deferred and subject to claw back. It’s easy to think that a million dollar bonus is a check handed to the trader the next day but the reality is more plausible and would be the same way I did it if I ran a place.

    My question about this interview would be how landscape has changed around firms that don’t accept deposits and aren’t under as much regulation as bulge brackets. I wonder if those places also have the decreased risk appetite and are also having their own crackdowns. We’ve all seen how a lot of highly compensated traders end up with Monday morning indictments and even in some cases earn nicknames for their practices like the London Whale. I wonder if this affects the other trading firms not attached to banks. Interesting stuff to say the least.

    1. Thanks! I think the guest will stop by later to answer your questions, but at much smaller places bonuses are still largely in cash and in some ways it’s a lot more appealing than working at large banks these days. Overall pay “on paper” might be lower, but you get a lot more in cash upfront so in reality your cash flow is higher. We did an interview a few months ago with a reader who chose a smaller S&T firm for this very reason:

      https://www.mergersandinquisitions.com/distressed-debt-investing-boutique-firm/

  3. Thanks Brian! I definitely need to give this a listen on my way back tonight.

    Just wondering… Ever had someone who wanted to go from PE into Trading / success rate for that? And how to go about that transition?

    Thanks!

    1. Sure, here’s a story on that very topic: https://www.mergersandinquisitions.com/from-private-equity-to-trading/

      It is really, really hard to make this transition. To do it, you need to show some evidence of following the public markets and also knowing how to execute trades on your own… and I’m not sure how you would do that aside from working at a large bank, since the capital used anywhere else is a lot different.

  4. Hey Brian,

    Great Article. Very Insightful.

    I was wondering, how did you transcribe and write out the text of the interview?
    Is there a Program/Application that you used to transcribe and write out all the words from the interview?

    I currently have numerous audio and video clips that I want to transcribe and write out and I was wondering if there is any Programs/Applications that I can use that will transcribe and write out the audio and conversations inside of the video and audio clips.

    Any and all advising on this will be very much greatly appreciated.

    Thanks,
    Chad

    1. Thanks! We use http://speechpad.com/ for transcripts but I am very OCD so I often review it and make edits as well, depending on how it’s being used.

      1. Hey Brian,

        Thanks for the reply back.

        The website you use: http://SPEECHPAD.COM/ is somewhat expensive. That website charges $1-$3 per each minute of text.

        Manually transcribing and manually editing audio/video recordings is very time-consuming, tedious, and takes up a lot of energy and time and focus.
        For example, It can literally take hours and hours to transcribe a 60 minute audio interview.

        Is there any other alternative/options to transcribe audio/video files OTHER THAN outsourcing to third party Virtual Assistants like SpeechPad?

        Are there any program/applications/software that I can buy and/or download that will dictate and transcribe the audio and video files that I have?

        Thanks,
        Chad

  5. kindly list your podcast on stitcher. i think it’s so far the most popular podcast listening app. http://www.stitcher.com

    1. It’s undergoing the approval process there right now.

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