Sales and Trading|Vault.com (2024)

• Overview
• Primary Products
• Background
• Defining Events
• Structure
• The Industry Today
• Current Trends and Issues
• Industry Outlook

So what is sales and trading exactly? Many sales workers and traders work on the “sell side,” which refers to Wall Street investment banks that sell stocks, bonds, and other securities to the “buy side.” The buy side refers to the investment management firms, pension funds, hedge funds, and trusts that buy stocks, bonds, and other securities from the “sell side.” Outside the investment banking industry, traders work for hedge funds, brokerage firms, commercial banks, insurance companies, asset management firms, and mutual fund companies.

The most important function of a sales and trading department at an investment bank is, of course, to make money. An investment bank collects significant fees every time its sales and trading professionals execute a deal for clients. Traders and salespeople add incrementally to the bottom line through daily profits and losses and commissions, and raise the profile of the firm in the marketplace.

Opportunities for sales and trading professionals are available throughout the United States, but are best in New York City, where many investment banks, hedge funds, and other financial firms are located. Major investment banks include Goldman Sachs, Morgan Stanley, Centerview Partners, Evercore, and Credit Suisse. Leading hedge fund firms include Bridgewater Associates, AQR Capital Management, Man Group, Renaissance Technologies, Two Sigma, Millennium Management, Elliott Management, Baupost Group, BlackRock, and Winton Group.

For years, an MBA was strongly preferred for those seeking trading positions. The increasing popularity of automated trading has changed the required skill set and educational background for traders. As an alternative to an MBA, employers are seeking traders with degrees in financial engineering, quantitative finance, software development, and related fields. Sales professionals need at least a bachelor’s degree in business, marketing, sales, quantitative finance, finance, accounting, or economics from a top-tier college.

The increasing uses of automated trading and artificial intelligence (including machine learning) have caused steep declines in the number of trading professionals. In fact, 7,300 front office positions were cut at the 12 of the largest investment banks from 2014 to 2019, according to the consulting firm Coalition Ltd. This was an employment decline of more than 13 percent from 2014 to 2019. Despite this decline, there is still demand for traders who work with products that cannot easily be traded—such as illiquid products and bespoke over-the-counter financial products. Additionally, traders are needed to monitor automated trading systems to ensure that trading is conducted properly. There also will be strong demand for traders with programming and software development skills who can develop automated trading platforms (especially those that use artificial intelligence), as well as those with data analytics acumen. “The focus of trading desk programmers is less geared on (or to) user interfaces and increasingly focused on advanced analytics, algorithms, and process automation—solutions that need deep knowledge of both financial markets and technology,” according to The Future of Trading: The People, a report from Refinitiv (a global provider of financial market data and infrastructure) and Greenwich Associates (a global provider of market intelligence and advisory services to the financial services industry). Opportunities for sales professionals will be better because there will always be a need for sales workers to explain financial products and trading strategies to investors.

Sales and trading professionals earn high salaries—although their salaries have been dropping for the last decade. Despite this trend, average compensation for equities sales, trading, and research professionals at the 12 largest global investment banks in the world totaled $500,000 (salary and bonus) in 2017, according to Coalition Ltd.