Sales & Trading vs Banking

A friend and I were chatting about this again yesterday, and I thought I'd post some observations about the types of people I think flourish in each area. I'm stereotyping and generalizing, so clearly anything I say is just something I tend to see frequently. It's not "necessarily" true (so maybe I'm being irresponsible posting it, but I hope my blurb here keeps me out of trouble), but it's like saying "Asians are better at math." Well, there are plenty of Asians who suck at math. Demographically, however, Asians do tend to be better at math. If you don't believe me, take a walk on MIT's campus.

I'm a statistician, so everything I say just reflects that I think the characteristics I see are "more likely" to fit in each area. The best bankers, salespeople and traders are probably just really bloody smart. I believe often that the best of each world could often be a pretty good player in the other two worlds too. I don't believe they would be as happy.

So here goes my stereotyping of bankers vs traders. This is largely for entertainment purposes.

Bankers love money. The amount of money they make fuels their pride. Bankers tend to be the flashy type who loves to show off, albeit in a subtle and intelligent way, that they make a lot of dough. Traders love money too. But for them the money is really a scoreboard. It shows that I trade that much better than the next guy. Bankers are also competitive in this way, but not nearly as cut-throat. Bankers are happy with making a whole lot of money. Traders have to make more than the next guy, regardless of whether it's a lot or a little total cash.

Most junior bankers think of their roles as temporary. I-banking is a feeder industry. They train and pump out analysts for other industries. Most of the people in banking look at it as a stepping stone. Many don't even care to get promoted after 2 years. Junior traders tend to want to be in it for good. They want the high-octane life and swings in wealth. Bankers would rather receive the steady and high cashflow as they work. Traders want that one monster year.

Traders are gamblers. They see odds in everything and calculate on the fly. Bankers don't care as much about such minutiae. They would rather lock in their high pay and not take excessive risk. Traders see the potential upside in every risk and will take the risk if they like the upside. Even the job itself is a large risk.

Firms get rid of mediocre traders as fast as they can because mediocre traders can lose a lot of money. Firms don't get rid of bankers, even if they're mediocre, because they can still produce a baseline amount of money with their time. That being said, banks get rid of bankers who's pay is rising too quickly because the newbie can do the job almost as well. Seasoned traders are paid a premium because they have somehow survived the trial of time in the markets.

Bankers work hard when they need to, but frequently they don't want to think about work when they are off the job. Traders make everything about trading. They "lift offers" when they see a good discount at a store, they see the effect of commodity prices in everything they buy, and you are "done" when you propose anything they agree with. Most people find this annoying, especially bankers who often want nothing to do with their jobs outside of the office.

Bankers are naturally better looking. In my experience, however, bankers don't look as attractive after a few years in the industry. Sales and trading people tend not to deteriorate as quickly.

Bankers often have the motto "work hard, party hard." Traders often tell newbies to "work smart, not hard."

Bankers love to boast about how many hours they worked. "I worked 100 hours last week!" "Yea, well, I worked 110!" "I worked 120!" They like to show that they are that much more dedicated to their job than the next guy. Implicit in the dialog is "I worked more, so I will get paid more." Sales and trading folk like to boast about the guy they fucked on their last trade.

Bankers have longer attention spans and can work for a long time at a goal. The big deal is won over hundreds of hours and weeks of hard work. Traders are only as good as their last trade.

Bankers build relationships. They value their colleagues as their "team" build a lot of camaraderie in the office. Office politics plays a key role in everything. It is very much a relationship based business, both as a whole and within each office. Sales and trading people can love you one moment and hate you the next moment. You can have a guy yelling at you for fucking up, and the next moment ask you out to lunch. You always start with a clean slate the next day with your fellow salesperson/trader. How you treat each other at work seldom effects whether or not you really like each other.

I did not comment much about sales people. I feel like there is a lot more diversity in personality in sales. What I do see as a common thread is the ability to act nice no matter what. They have the ability, should they choose to use it, to be always friendly and jovial. Some of them are wicked smart, some of them are dumb as rocks. What really matters is that they can get people to like them in a very short period of time. They are also greedy, but they are perhaps not as cut-throat as bankers. They get paid a lot, which annoys traders. If you want to climb the ranks of a company quickly, sales is probably the way to go.

Hopefully this didn't seem too biased one way or another. Just my observations, hopefully somewhat amusing. Another amusing Traders vs Bankers vs Sales discussion is here:
http://www.informationarbitrage.com/2007/01/the_wall_street_1.html
For those of you who don't already read www.informationarbitrage.com, it's definitely worth your time. This guy's smarter than me, more experienced than me, and funnier than me. He's writes a very opinionated and intelligent blog. I'm claiming I'm not in competition because he comments on the markets, economy and society. I'm just helping people get onto Wall Street.