Sales or Trading

[AlexLielacher1]

During my career in banking I worked as a corporate bond trader and later a fixed income sales person. In this post I will share with you the differences between working in trading versus working in sales.

Trading

Throughout my internships and my time at university all I wanted was to become a trader. It took me several internships, hard work and a lot of determination, but in the end it all paid off and I managed to get a seat as a graduate trainee on the corporate bond trading desk at a large British bank.

Shortly after I started working there were deep cuts in the credit trading department, leading to quite a few people either getting made redundant or leaving in the months to follow. That led me to start to trade within about two months of landing in my seat. I ended up trading corporate bonds for about 2 years before leaving the bank and moving into a sales role at another house.

Trading at an investment bank involves you making markets to clients, dealing with sales people, brokers, middle office and your seniors, while constantly monitoring market moving events and staying cool under pressure when the markets move aggressively against you.

What I loved about trading was the decision making power. As a trader, even at a junior level, I decided what trades I did and didn’t want to do and priced inquiries accordingly. I remember when I started out I thought to myself ‘it’s quite amazing that they let a 24 year old with 3 months trading experience decide whether he wants to buy 3mm of x-bond, off say Blackrock or Fidelity, or not' especially when the sales person who wants to close the trade is the head of sales with 20 years experience. But as a trader you make that decision. That’s your job.

That decision-making power, however, also comes with great responsibility. After all, if you get it wrong, you lose money and if you get it wrong too often throughout the financial year, and you don’t make any money, not only do you not get paid (and most likely fired) but neither do sales and research, as there is no money in the pot to go around. That is a constant pressure you feel, especially on the days you lose money. Even when you aren’t in the office you often end up thinking about your positions or pray on a Friday evening that nothing geopolitical happens over the weekend and you start your Monday off being down 100k.

An important thing to note about trading is that the roles are quite different depending on asset class. I worked in a flow-trading role on a credit trading desk. That is very different from trading say, exotic FX derivatives, where you spend hours pricing up exotic options on an excel model and executing maybe 2-3 trades per day.

Sales

After working in trading I found switching to sales to be very rewarding and more enjoyable.

Your role as a sales person is to manage the relationship between clients and the bank, to be more precise, the relationship between your clients and your traders. Your trader will not always want to do the trade that your client wants to do, so he might pass or give you a bad price. This is where your people skills come into play as you need to keep both your traders and your clients content in the long run.

Sales involves calling key clients in the morning with market updates, new issues (if you work in credit or equities) and to show them your traders’ axes (axes refer to trades that your trader wants to do like, for example, sell 10mm of BMW 20s bonds at X-spread level). The use of Bloomberg chats has become increasingly popular over the years so you find yourself copy and pasting a lot of information and prices into various client chats. You’d be surprised how much copy and pasting you end up doing when working in sales.

Furthermore, you have client meetings each week to build or strengthen your client relationships. And if, like me, you cover regions outside of the UK then you will go on business trips to visit your client base. Those are usually a lot of fun, especially when visiting conferences in places like Amsterdam.

The big difference between trading and sales is that in sales you get paid for volume of trades you do regardless of what direction the market goes. Whereas in trading you get paid to manage and take risk, so there is a lot of downside when you get it wrong. In sales you do not have that downside, so you have a lot more piece of mind when you leave the office in the evening.

The main reason why I made the conscious switch from trading to sales is that less and less traders are needed as banks had to reduce balance sheets and liquidity in the bond markets dried up. On the other hand, banks will always need sales people to communicate with clients so at this stage I firmly believe it is the better seat to be in, and the pay is pretty much the same.

 

[Daniel Plainview1]

As a former salesperson myself, I certainly echo Alex's comments - the lack of downside in sales especially helped me to get a good night's sleep!

In my experience, although it's somewhat of a cliche, it still rang true: sales is more of an art than a science.
While there are a certain finite set of decisions a trader normally learns to take, depending on which way the market is moving (and arguably, the good traders on the whole are the ones who have mastered these decisions and can correctly execute them in robot-like fashion, when needed), there is less emphasis on being as methodical for a salesperson.

Sure, being organised does help (especially knowing what task to do and when in the day to do it), but for example, the skills required to manage a client who is a market professional (a hedge fund manager, for example) can be vastly different to the ones needed to manage, say, a treasurer of an airline company. This means that you can't sit down and learn a 'one-size-fits-all' process. Often you have to 'play it by ear', which means being a good listener in order to determine what your client's specific needs are, and also being creative to deliver customised solutions to the client. As a derivatives salesperson, structuring complex products can be a key part of a salesperson's role (if the desk does not employ dedicated structurers), which generally demands coming up with a range of ideas to present to clients. Again, much is dependant on individual client preferences, which often makes sales so varied and interesting.