S&T vs IBD Part 1 Recruiting

1 / 20 Mergers & Inquisitions Sales & Trading vs. Investment Banking – Part 1 – Recruiting Introduction Brian:

Hello everyone. Welcome to our podcast. This is Brian from Mergers & Inquisitions. I’m here with Jerry, who has been a contributor to the site, and has been working with me on a couple of things behind the scenes. Most of you know Mergers & Inquisitions. Just in case you don’t, it is dedicated to investment banking: how you get into the industry, and then how you maintain your sanity once you’ve broken in. That’s the basic theme of the site. The reason we’re doing this podcast is because I also get a lot of questions about sales and trading. I can answer some of them, but I have not worked full time in the field – I’ve not even done an internship in the field before. Jerry, who has done both an internship and worked full time in sales and trading before, is much better positioned to answer these types of questions. What we’re going to be doing as we go through this is doing a comparison between investment banking and sales and trading, starting with recruiting and how you actually get into the respective industries. Then we’ll be getting into the actual job: what you do when you start working, your co-workers, the lifestyle, and other questions of that nature. That’s the general structure for what we’re going to be doing here. I’m here with Jerry, who has been a longtime contributor to the site, and has been helping me with a couple of projects behind the scenes. Jerry, why don’t you just introduce yourself to everyone?

Jerry:

Hi Brian. Thanks for having me here. I went to Stanford for my undergraduate degree and studied Management Science & Engineering. Then I worked in trading at two bulge bracket investment banks. Then I proceeded to start my own proprietary trading firm. I’ll be attending the business school at The Wharton School this coming fall.

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2 / 20 Skills Required in Investment Banking vs. Sales & Trading Brian:

Feel free to e-mail him with congratulations on that one. I’m just kidding – he doesn’t want to be inundated with e-mails. Just to get started here and kick this off, one very basic question I get on investment banking versus sales and trading is about the kinds of skills that you need in each field and the kinds of people who tend to stand out and do well. From my perspective, with investment banking, I think one big misconception is that you need rocket science level math to succeed and get ahead. There is some math – you have to do Excel financial modeling, obviously, so you do need to know accounting and financial modeling skills. However, I think of investment banking more like a marathon than a sprint. The people who do well and get ahead are the ones who can really put their heads down, focus for long periods of time, and spend months on a project or sometimes years with a client or on a deal, just getting everything done and making sure everything is in place. If you’re the type of person who’s really good at working on extended, long-term projects and working long hours, though maybe you’re not the best person with mental math, with doing arithmetic in your head, or with making very quick decisions, that’s not necessarily a bad thing for investment banking. I don’t think you need it quite as much. Those are the kinds of skills that you need for investment banking, I would say. How would you compare that to sales and trading?

Jerry:

I would say, definitely, that analytical skill, as with most finance jobs, is very important in trading; even more so than in investment banking. The other thing is also personality and mentality. When recruiters are looking at how to hire traders, they want to hire people who not only will be able to do the math, understand how the numbers work, and build spreadsheets, but who will also be mentally tough enough to stand the stress of trading, and be decisive enough to actually execute those trades when the opportunity arises.

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So, personality and psychology actually play a much greater role than most people think initially when applying for these jobs. Brian:

That’s a really good point. I guess the way I would summarize it is that for investment banking, it’s more about working hard. However, I think trading is more about working smart. That might be one way to think about it.

Jerry:

That’s definitely a good way to put it. Hours, when working at a trading job, can vary. Obviously, a lot of trading jobs focus on market hours, so some traders get in a little bit before the market opens and leave shortly after the market closes. However, they might be able to make a lot more money than somebody else who works many hours past the market close. It really depends on how much money you’re making, and how much work you actually do can vary widely.

Brian:

In terms of people who stand out – I think for investment banking, anyway – they’re not really looking for people from a particular background. You can get in from a wide range of backgrounds. Liberal arts majors, science people, math majors, engineers, salespeople, and finance people, obviously, can all get in. I don’t think they’re really looking for a specific background in terms of school or academics. I just think they’re really looking for someone who is a workhouse, is very attentive to detail, can work long hours, and can burn the midnight oil. They’re really looking for those types of people. I’ve heard before that for sales and trading, you have to be a little more quantitative. It’s like you were saying before. Is it more people who have done math, hard sciences, and things like that who typically get into sales and trading?

Jerry:

A broad range of people can get into trading, but it’s true that it’s mostly people with technical backgrounds like engineering or math, and also people with an economics background.

Recruiting in Investment Banking vs. Sales & Trading

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4 / 20 Brian:

Okay. So in terms of the general recruiting process for both of these industries – for investment banking, it’s a little different in the U.S., Europe, and other regions. In the U.S., if you’re at a well-known school where banks come to recruit – a so-called “target school” – then you apply online, you submit your resume, and you get a first-round interview. If you do well, you go to the Superday round of interviews. You might go through multiple rounds, but eventually you’ll get an offer like that. In Europe and other regions, it’s a little different because you don’t really do on-campus rounds. It’s more applying online, and then going for phone interviews or interviews at the firm itself. Then you have to go through an assessment center, and you might have to take an online test, a numerical test, and things like that. It’s a little different, but the basic process – for investment banking, anyway – is similar in that you start out applying online, at least if you’re at one of these schools or if you’re in a position to apply. Then, you go through many rounds of interviews to eventually get an offer. Is that pretty much how sales and trading works, as well?

Jerry:

Let me talk first about trading. Basically, the process can vary widely, just because there are so many different options in trading. There are the trading arms of investment banks, and there are also hedge funds which obviously do a lot of trading. Then there are proprietary trading firms that are even more specialized than hedge funds, in that they only focus on trading and do nothing else. So, to apply for the trading arm of an investment bank, obviously, the application process would be similar to applying for an investment banking job at those companies, and it would be a lot more structured. If you were applying to a hedge fund or a proprietary trading firm, then the process would likely be less structured. There are even some firms where you can just put down some of your own money and trade at that firm for a given amount of time. Then, after a while, you can negotiate a salary. It really depends on

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5 / 20 what type of trading you want to do, and what type of trading firm you want to work at. In terms of sales, in most cases you would be looking at sales positions within investment banks. Again, this would be quite structured, similar to the investment banking application process. However, it would be slightly easier, in that it wouldn’t require as much analytical skill. It would require a lot more people skills and communication skills. If you can just prove that you’re a good communicator and you have basic understanding of finance, then you could potentially land a sales job at an investment bank. Brian:

Ok, interesting. One question I get a lot from people is about if they don’t have any finance experience. Maybe we’re talking about university students who just haven’t done any internships, or maybe we’re talking about people who have already graduated and have been working for a few years. How should they position themselves to get into sales and trading and investment banking? What I generally say for investment banking is that you really have two options. You can start with local boutiques, local firms and try to get in at those, and then move up to a bigger place. Or, if you’ve been out of school for too long, then, usually, going back and going to a top MBA program is really your best bet, because that’s where all the top banks are going to recruit, and you can make a career transition there. For sales and trading, is this different in any way? You mentioned a couple of different roles. Does it depend on what you’re trying to get into, specifically?

Jerry:

That’s a good question that a lot of applicants to the finance industry have. Basically, for these jobs, some people think they need to take the CFA and study tons of finance before they apply for these jobs. That’s actually not true. You do need some basic financial common sense, but you don’t need to be an expert at finance to do well in these jobs.

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6 / 20 For example, in trading, I’ve found that a lot of people with almost no finance training beforehand come into a trading position and actually do very well early on in the job. It might be because of their ability to really concentrate and make decisions quickly. It might be just because of the way that they’re able to focus. Don’t think that you can’t get into trading just because you don’t know tons about finance. I would say that the best thing is to read up on a couple of books about trading. You need to really prove your interest to the recruiter. Some people just kind of feel like doing trading – they’ve messed around with an online account. That’s fine, and you should definitely also have your own online account. However, also prove that you are able to comment on the market; you love the stock market or you love whichever market that you’re following; you’ve read lots of books and articles about it and you’re really passionate about it. The recruiters want to find people who are actually passionate about trading, and not just people who are doing it for the money or who just feel like doing it. Brian:

Okay. We’ve established that you don’t really need to have a hardcore finance background to do it. What about in terms of the actual process? Let’s say that you’re talking to someone who is two years out of school and they’ve been doing a different job. Let’s say they’ve been doing marketing or they’ve been working in healthcare policy or something like that, and they want to start doing trading. Maybe they got interested on their own, they started trading in their spare time, and now they want to do it professionally. What would you say to someone who’s been out of school and is now interested in moving into trading?

Jerry:

I would say to first start out with those basic steps of starting your own online account and reading as much as you can about trading. If you don’t have enough money, then maybe you can use a mock account to simulate trades.

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7 / 20 In addition to that, you can apply to these proprietary trading firms if you don’t think you have the qualifications to get into the trading arm of an investment bank. You can apply to a proprietary firm which has lower barriers to entry. A lot of these firms might have a program where you actually share profits and losses with the firm. Or they might have an introductory training program, after which you decide whether or not you want to stay with the firm for a longer amount of time. Basically, it doesn’t matter what sort of firm you’re at. As long as you’re able to make profits with your trading, then everyone will want you. It actually doesn’t matter if you’re trading at a small firm or at a big firm, or if you’re trading at a hedge fund, proprietary trading firm, or investment bank. You can just get started with a firm that has lower barriers to entry, and then you can move to another investment bank if you really want to. Brian:

That’s a really good point. I remember a couple of years ago when I was interviewing for a prop trading firm in the U.S. They actually had a lot of people who had been software engineers at Microsoft or other places. They just got tired of programming all day, so they decided to go to a prop trading firm. You would think that they would say, “You don’t have a finance background,” but it’s just like Jerry said. If you can make money for a firm by trading, they don’t care what your background is. I think, to some extent, there’s probably less of a focus on pedigree, where you went to school, and all your paper qualifications in trading. If you can make money, even at the junior levels, everyone wants you. That’s really what you have to keep in mind there. I have one other question in terms of recruiting. You did an internship in Japan, and then worked there full-time. Are there any particular differences with sales and trading recruiting in Asia, compared to the U.S.?

Jerry:

I think for the global investment banks, their recruitment process is pretty much similar globally. In the case of Japan, they recruit both within Japan and at the top universities in the U.S., and also in Europe; mainly in the U.S., though.

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8 / 20 Basically, there are two batches of people because people graduate at a different time in Japan – It depends on what country you’re in. The bank might have one or two batches of graduates that enter the firm, depending on where people are coming in from. The application process is quite similar. You start by applying online, you attend information sessions, and you go through a set of interviews. Then, if they think you’re appropriate, you get the job. I would say that it’s pretty much similar anywhere for the big investment banks. Language Requirements in Sales & Trading Brian:

On that note, one other question I get is just about language requirements if you’re interested in working in a different part of the world. What I usually say is that, for investment banking, you need to be basically at a native-speaker level. Even as an analyst, you’ll be going through 100-page-long financial documents and writing a lot of stuff, so you need to be native-speaker level and, arguably, even better than the average native speaker because you have to do so much writing. Is this also true for sales and trading, or do you not need as high a level of language skills there?

Jerry:

It’s totally different between sales and trading. With trading, all you need to know is English. This is especially true in countries or places that are more internationalized, like Hong Kong and Singapore. In some other countries, like Korea and Japan, where the domestic language is much more important, you can still get by with just English, but the native language comes in a little bit more useful. Since my expertise is mostly in Asia, I talked about those countries. However, I’m sure that anywhere in the world, you just need to have a good feel for numbers and you need to know English; and basically you’ll be able to trade any market. For sales, you need to be native or native-equivalent to be able to sell securities in that language because it’s all about the

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9 / 20 relationship with the client. Obviously, if the client speaks to somebody who doesn’t speak their language as well as possible, then it’s not a good idea for the investment bank to let a salesperson speak to the client. If you want to use English to work as a salesperson in a country that doesn’t primarily speak English, then you’ll probably be serving clients that also speak English. For example, if you were working in Japan, and you wanted to sell Japanese securities and you spoke English, then you would be selling to, for example, American institutions or maybe other Asian institutions that have English-speaking representatives. You wouldn’t be selling to Japanese investors. This would be similar for most other countries. Brian:

I thought that for sales you actually needed to know the native language of the country. It sounds like it would be really helpful, but you would just work with different investors or different clients.

Jerry:

Let me just clarify that. In sales, it’s really important to know the native language, and most of the salespeople will be people from that country. It might be 90% Japanese people and 10% foreigners who speak English natively. There is usually a much greater demand for a country’s securities domestically than internationally.

Networking Into Sales & Trading Brian:

Okay, I see. One other question I sometimes get, moving more into the recruiting process, is in terms of networking. The networking process for investment banking that I’ve written about and taught before on the site is that you basically have two options. You can try cold calling local, smaller firms and try to work your way into an internship or even a full-time position there. Just go after something local that doesn’t have a structured recruiting program. Or you can try contacting alumni, getting referrals, and going through people. You can try to develop relationships, set up informational interviews, and then leverage those to break into the industry. The advantage of the second method is that you

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10 / 20 can access larger banks more easily if you take that approach to networking. For sales and trading, in terms of networking, do those two approaches still work; cold calling and then developing relationships? Jerry:

Similar to investment banking, cold calling can work sometimes. If you can network in other ways – through alumni or through LinkedIn – then that’s obviously better.

Brian:

In terms of the logistics here, let’s say you’re working in your sales and trading job, and some student from your old school decides to contact you. They say, “I’m really interested in trading, and I would like to set up a quick phone call with you to discuss your experience.” That happens a lot when you’re trying to network your way into investment banking. I guess my thought here would be, because of logistics – traders are busy all day, and they always have to be monitoring the markets – is it even possible to actually schedule a phone call with a trader in the middle of the day to conduct an informational interview like that?

Jerry:

Basically, the best time to set up a call with a trader is definitely not during market hours. It would be slightly after market hours, maybe one or two hours after the market closes. They’re more relaxed, they don’t have to stress out about market movements, and they’re just going over the trades that happened over the day, so they’re much more relaxed and happy to talk to you. If you call too late at night, they might be trying to finish up their work to go home, so that might annoy them. So if you’re trying to schedule a call, the best time may be at 5:00 or 6:00 at night for many traders.

Brian:

What I usually say when approaching bankers is that you don’t want to go in there and say, “I follow the market every day and I read The Wall Street Journal constantly,” and try to sound overly impressive or try to prove that you’re a finance guru or anything like that. Focus more on the other person’s background and their own interests. Do most of the question asking and let the other person do most of the talking.

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Would you change that at all if you wanted to approach traders or network with people in trading? Jerry:

Basically, the best way to network with a trader is to get into a casual conversation with them about the market. This shows your understanding of your ability to analyze the market, and also is a way to bond with the other trader. For example, you could talk about a recent event: “Today, this company announced their earnings, and it was way below the expectation. How did that affect your position?” Or you could say, “In my virtual portfolio, I did this.” This basically shows that you’re really excited, passionate, and knowledgeable about the market. Then, the trader that you’re talking to will also start to talk about their experiences and what they see the market as. Basically, you’ll bond that way. Then you can segue into actually potentially working at that firm, or something like that.

Please, Stop Thinking About the CFA… Brian:

It seems like, for trading, it’s actually more helpful to demonstrate some knowledge of the market, and to actually talk about a business topic. I wouldn’t say that’s taboo when approaching bankers, but it’s usually better to start the conversation off on a different note. It sounds like that is one difference between the two fields there. One other question I get – and I think we briefly talked about this before – is if there are any exams that are useful in terms of breaking into these industries. I’ve criticized the CFA before on the site. If you’ve been reading a long time, you know that I generally think it’s a waste of time if you’re trying to get into investment banking. It could be helpful for other fields, but not so much for investment banking and private equity, in particular. That’s my view on the mostfrequently-asked-about exam question that I get on the CFA.

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12 / 20 There are a couple of other exams. For example, there’s the Series 7 and Series 63 exams, and then a couple of other similar exams abroad. Then there are other certifications. I generally say that stuff is fine, but don’t spend too much time on it. If you’re trying to break into the industry, having a solid network and having solid work experience will always trump any kind of certifications. For trading, before, you alluded to the fact that it’s similar. It sounds like the CFA is also not too useful for trading. Jerry:

That’s right. If you want to study the CFA for the purposes of getting into trading, I wouldn’t go any further than Level I, since there are three levels of the CFA. Level I will just give you a basic coverage of some basics to finance that you would need to know for any finance job. What’s more important than the CFA is actually to prove that you know a lot about the market. As I’ve mentioned, reading trading books, doing your own mock trading, and reading news related to movement in the markets – that really shows your knowledge and passion about the market. That’s actually more important. If you’re in school, it also helps to take classes on the capital markets. In some colleges, their Economics Departments will offer classes like Banking & Money, just to prove that you have some sort of basic grasp of economics and how markets work.

Sales & Trading Resumes Brian:

That’s helpful. So moving into the next step of the recruiting process with resumes – I’ve written extensively about investment banking resumes before, and given templates and video tutorials. Basically, the overarching advice I would give for investment banking resumes is that, if you’re a student in undergraduate or beyond that right now, try to focus on maybe 3 or 4 key work experiences. If you went to a top school, then certainly highlight that. The biggest mistake I see is people trying to fit in too much extraneous stuff, trying to include 12 different internships or 12

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13 / 20 different student groups. Pick a few key ones to focus on, and make sure that whoever is looking at your resume can remember it. Make sure the formatting looks good, that it’s all legible and all readable. Try to think of it as “less is more.” Try not to cram on too much. Then, when you’re actually writing about your work experience, pick a project-centric format and talk about specific projects, clients, or deals that you’ve worked on. Or do something that’s task-centric instead. For example, you could say that during a sales job, your first task was finding clients; then your second task was going and visiting them; and the third was following up and closing the sale. Then you sold $XX amount over the summer or over a certain time period. For sales and trading resumes – and maybe it’s a bit different for sales than for trading – are there any key differences from investment banking resumes? Jerry:

I think there are many similarities. However, obviously, skills like presentation skills and leadership skills would be a little bit less important, compared to investment banking. I would say the three most important aspects you would want to make sure to include in a trading resume would be 1) the ability to focus well; 2) analytical and quantitative ability; and 3) demonstrated interest in capital markets. For the first item – the ability to concentrate for long periods of time – if you’re a student, let’s say you worked for long periods of time in the lab doing experiments. Or if you are at work, you had to work for long periods of time on certain projects and doing analysis. You could talk about that. In order to talk about quantitative ability, the second point, if you’re a student you could talk about the quantitative classes that you took and test scores; for instance, on the quantitative section of the SAT and the GMAT. Those all help. In terms of demonstrated interest in capital markets, besides the things I mentioned before, you could also talk about how you joined an investment-related or trading-related club on campus.

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14 / 20 If such a club doesn’t exist on campus, you could even create one. For example, at Stanford, they have an organization called The Blythe Fund where they actually manage a portfolio of stocks with real money. Even though that’s investing and not trading, that demonstrates that you’re interested in the capital markets. Brian:

I see. I think the overall idea for both types of resumes is similar, but it sounds like the focus is a little different. You have to really show more of an interest in the markets for sales and trading. One question I get a lot, actually, is from people who play poker or do other types of gambling. Is that okay to write about on their resume? Similarly, if they’ve done some informal trading – like day trading – in their spare time, how do you feel about listing those types of items that aren’t really work experience? Is it okay to turn those into work experience on your resume?

Jerry:

I wouldn’t exactly put it as “turning that into work experience.” However, listing interests such as poker would definitely be helpful in the eyes of some recruiters. There’s the really famous book Liar’s Poker, which is about some of the most famous traders in history. So, I think trading and poker definitely have a connection there. Basically, any sort of interest that you would want to list needs to show that you’re able to take calculated gambles, or you’re able to take a risk and make decisions under pressure. Knitting a yarn at home would not be an interest that is related to trading, whereas doing relatively extreme sports might show that you’re willing to take a risk, which is necessary in trading.

How to Ace Your Sales & Trading Interviews and Land Offers Brian:

I see. So moving into the last segment here on interviews – you can read tons about investment banking interviews online. I’ve written probably dozens of articles and created a lot of videos on investment banking interviews and how to tell your story. Just to recap and summarize, there are both fit questions and technical questions. The fit questions really focus on your story

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15 / 20 and your background; what motivation you have for wanting to do investment banking. You’ll get typical questions on strengths and weaknesses, teamwork, leadership ability, and things of that nature. You’ll get asked about your work experience. Then, on the technical side, most of the questions will revolve around accounting, valuation, corporate finance, and some financial modeling, depending on what kind of work experience you have. That’s basically the breakout for investment banking interviews. You have to have at least a basic understanding on the technical side, I think, for most interviews, even if you have no experience. Everyone knows that sales and trading interviews are a lot different from investment banking interviews, but I am not an expert on this. What do you see as the key differences? Jerry:

I think that, for trading interviews, there will be a larger focus on brainteasers and technical-related questions; and also personality and psychology questions. Let me explain a little bit more about that. In terms of technical and brainteaser questions, they might ask math questions that might appear in a math competition in high school. For example, if you have a large cube that is made up of a length of nine smaller cubes on each side, and it’s painted on the outside, how many smaller cubes are painted on two sides? That was an actual question I experienced at one interview, so there will be questions like that. There will also be questions like, “Let’s give you a certain situation. For example, you bought a stock, and you told yourself that you would sell it at a certain point. Then, the stock dipped below that point, but your colleague told you that the stock was going to go back up. What do you do?” Basically, that puts you in a theoretical situation where you’re in an actual trading situation, and you need to be able to demonstrate that you have some basic understanding of what is good trading behavior and what is bad trading behavior.

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For example, cutting losses when you’ve promised yourself to do so is something that any trader needs to follow, and you need to have concepts like that. Brian:

The bottom line is that, in trading interviews, they’re not going to ask you, “How do you value a company?” for example.

Jerry:

It’s unlikely they’ll ask you that question. However, you still need a basic grounding in finance. For example, if they ask you, “What does market capitalization mean for a company?” you need to know what that means because that is still related to trading.

Brian:

You also mentioned that there were some personality differences with how interviews are conducted and how you answer questions. Is it the same kind of fit questions that you get with investment banking interviews, where they’ll say, “Tell me about yourself; tell me about your strengths and weaknesses”? Is it all questions like that, or are they slightly different in trading interviews?

Jerry:

I think, in that regard, trading interviews would be very similar, in terms of the interviewer really wanting to know what the personality of the candidate is like. They’ll ask the candidate to give a brief introduction of themselves, and will basically try to gauge, “Is this person really hungry for being a good trader, and are they really passionate about the capital markets? Or do they just want to check it out, and they don’t really want to do it that badly?” They’ll want to know, “Is this person somebody who can think very quickly? Does this person look like somebody who’s willing to take risks and is tough? Or is this person really nervous in this interview, and do they seem very soft and unable to take pressure?” Personality aspects like these will definitely be felt by the recruiter.

Brian:

One really important part of the interview process – and I think this is true in almost any interview – is telling your story in the beginning. In other words, when someone says, “Walk me

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17 / 20 through your resume,” or “Tell me about yourself and tell me about your background,” it’s how to answer it. I’ve written about this before. For investment banking, I think the key points are to start in the beginning; that is pre-university if you’re in university, and at university if you’re beyond that, or maybe even in business school. Pick a beginning point. Then talk about what made you interested in finance or investment banking, specifically, and how that interest developed over time. Then talk about what you want to do in the future, how investment banking is related to that, and how it’s going to put you in that position. For sales and trading, is that still a good format to follow? Obviously, you talk about how your future would involve trading, but does that general format still apply, or would you change anything? Jerry:

I think that format definitely applies, in that you want to tell your story about how you got interested in trading. You don’t want to make it sound like you just got interested in trading a couple of weeks ago, just because your friend told you it was cool. You need to demonstrate that you’ve been interested in trading for a while, and tell what you’ve done to learn about it. The one key difference would be the way you talk about what you want to do in the future. For investment banking, you can talk about how you might want to be the CEO of a big company, or how you might want to do private equity or a lot of international deals. Investment banking has a lot of exit opportunities. Trading, to be brutally honest, does not have as many exit opportunities. If you start as a trader, then basically you’re going to either have to do trading for your whole life, or you’re going to need to move to another job that pays a lot less. This is because trading uses a skill set that is specific to trading; for example, being able to follow a squiggly line around on a chart all day.

Brian:

You make it sound so appealing!

Jerry:

Some people get bored of this really easily, and some people love it and are excited about looking at this squiggly line year

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18 / 20 after year. I just want to be honest. You need to evaluate for yourself if trading is really for you. When you’re answering questions about your future, you need to make it clear that you’re committed to trading for the long term, and you’re not looking to start your own Internet startup after two years of doing trading. That just wouldn’t make sense to an interviewer. Brian:

That makes a lot of sense. One other question I get is from some readers who have struggled with preparing for sales and trading interviews. If you think about investment banking interviews, I think it’s easier to prepare. You can learn accounting and you can learn valuation. You might get some tricky questions, but it’s all material that can be learned. Even for the fit questions, you can prepare beforehand with stories and plan out what you’re going to say. For sales and trading, though, there are a lot more brainteasers and a lot more quick-thinking-on-your-feet type questions. How would you recommend preparing for them?

Jerry:

Besides getting a basic grounding in finance, and reading books about trading, there are actually books out there that contain sample questions for trading. You can search for this on Amazon.com. Basically, you need to rehearse telling your story about how you got interested in trading. If you’re a little bit rusty on those brainteaser questions, you can pull out some math competition preparation books from high school and look at those. Just get your mind working again to work on those brainteasers. Again, what I said before about demonstrating interest and being able to describe that effectively is the most important point.

Brian:

I’m assuming that in most sales and trading interviews, they’re probably going to ask you to pitch a stock to them. You could get this question in banking interviews, too, but I think it’s probably more common in trading. What do you think is the best way to structure a stock pitch in an interview?

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19 / 20 Jerry:

Basically, you need to be able to back up your stock pick with concrete evidence. This won’t be a problem for you if you read The Wall Street Journal every day and you follow the markets. You’re going to be able to talk about this very effectively. If you don’t read that, then you’re going to be making stuff up, which is going to be hard. Don’t pick a stock that everyone else is picking. If you pick a really big blue-chip stock like Google or Apple, half of the other candidates are going to pick a really popular stock like that, and you won’t be able to differentiate yourself. You should pick a stock that you think is a little bit less popular, and talk about why you think it’s good. You can talk about valuation; for example, or the P/E ratio compared to other companies in the same industry. You can also talk a little bit about the technical analysis. If you had to choose one out of the two – technical or fundamental – I would go with fundamental. Technical analysis is believed by some people, but not by others. So, going by fundamental analysis is a bit more reliable.

Brian:

We’ve been talking about mostly trading interviews. How is it different for sales? I’m assuming that, again, they’re probably going to ask you to pitch a stock, because that’s what you do in sales. Aside from that, what kind of differences do you see for sales interviews?

Jerry:

For sales, it’s a different situation, since you’re going to be pitching stocks to clients instead of discussing with other traders about advanced movements in certain stocks. For example, as a trader, you might be discussing advanced technical analysis techniques with other traders. If you’re a salesperson, though, and you discuss anything too complex with a client, they might not understand, and that might make them not willing to buy the stock. Basically, you need to be able to explain any sort of complex reason for buying or selling the stock in an easier way. I would say that all the other points that I just described apply, but you need to make sure that it’s in a user-friendly way. You need to be able, in a simpler, more understandable way, to pitch how to sell a stock.

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20 / 20

Brian:

In sales interviews, will you get brainteasers and math questions, or is it all just focused on your communication skills?

Jerry:

It’s more focused on your communication skills because, as a salesperson, you don’t actually have to do that much analysis yourself. You might have to do a little bit, but most of it will actually be repeating what the internal research and traders said. You’ll just probably extract bits and pieces of that, and tell that to the client – so you don’t need to actually have superior analytical skills. You just need to be able to synthesize information that you’ve absorbed.

Brian:

We have spoken for about 45 minutes right now, and discussed how to get into both investment banking and sales and trading; and something about the recruiting processes for both of them. I think what we’re going to do now is break, and conclude this podcast. We can pick up next time and talk more about what you actually do on the job, things about the lifestyle, the pay, the hours, coworker interaction, how you get assigned to groups, and then, of course, the exit opportunities. That will be in a separate podcast. I think we’ve gone on for long enough here, so we’re going to conclude this one. Thanks, everyone, for listening. We hope to hear from you again soon. Jerry, do you have any closing comments?

Jerry:

Thanks for having me, Brian.

Brian:

Sure thing. Again, we’ll be picking this up later with the second part, where we focus more on the lifestyle and what you actually do on the job. Thanks for listening. We’ll speak with you again soon.

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