Know your post MBA Career: Sales and Trading

What is Sales & Trading (S&T) …. in plain language?

Securities Sales & Trading is where the rubber meets the road in the investment banking industry. An investment bank relies on its sales department to sell bonds or shares of stock in companies it underwrites. Investors who want to buy or sell a certain stock or bond will place an order with a broker or sales representative, who writes the ticket for the order. The trader makes the trade.

Individuals working in S&T department of an investment bank are not investment bankers, nor do they work in investment banking. Instead, they are either sales brokers or traders who work in sales & trading.

What do sales people do?

Salespeople are called brokers or dealers. They call clients from the moment the financial markets open until the moment they close, as well as for several hours before and after. Clients might be savvy high-net-worth individuals, pension fund managers, other institutional investors or corporate finance directors. Ultimately, salespeople take orders for financial products and communicate them to their trading desks for execution.

As one of them, you're expected to build a "book" of clients. No matter how long you've been working, and no matter how many clients you have, you're expected to cold call. New brokers make as many as 600 cold calls a day. Most of the work takes place over the telephone: soliciting clients or selling a particular stock or bond issue. You'll use analyst research and every sales trick in the book to push your securities to investors.

Day in the life of a sales broker
The salesperson's day begins early. Most arrive at 7 a.m. having already read the morning papers. Each day a package of research is delivered to the salesperson's chair, so reading and skimming these reports begins immediately. The morning meeting at 7:30 involves research commentaries and new developments from research analysts. The trading meeting usually begins 20 minutes later, with updates on trading positions and possible bargains for salespeople to pitch.

At 8 a.m., the salesperson picks up the phone. Calls initially go to the most important of clients, or the bigger clients wishing to get a market overview before trading begins. Some morning calls involve buy or sell ideas, while others involve market updates and stock expectations. At 9:30, the markets open for business, and salespeople continue to call clients, scrutinize the market, and especially look for trading ideas throughout the day. Lunchtime is less critical to the salesperson than the trader, although most tend to eat on their desk on the floor. The afternoon often involves more contacting buy-siders regarding trade ideas, as new updates arrive by the minute from research.

The market closes abruptly after 4:00 p.m. By 4:01, many salespeople have fled the building but not all. Many say the couple of hours between the close and when clients start heading for home are the best time to discuss strategies in detail. After that, there are the dinners and entertainment with clients that can stretch well into the evening hours.

.. and Trading people?

Traders make money by trading securities. Although they're the ones who transact trades for the brokers and their clients, traders are primarily responsible for taking a position in a security issue and buying or selling large amounts of stocks or bonds using an employer's (or their own) capital. When they bet right, they win big; when they bet wrong, they lose big.

Day in the life of a Trader
If you work as a trader, you'll have to be at your desk before the markets open. You'll spend the rest of the day sitting before an array of computer screens in the company of scores of other traders on the trading floor. The screens are a window into the financial markets, showing movements in the prices of stocks, bonds, commodities and other financial products, as well as real-time news and research reports. At the touch of a button, traders can buy and sell the products whose prices they're tracking.
How trading desks make money - and how they make hiring decisions - differs with each financial product. In recent years, trading of fixed income products, derivatives, energy and physical commodities like metals has been booming. On the other hand, the ranks of equity traders are being reduced as their jobs are replaced by electronic systems that trade more quickly and efficiently.

What are different career tracks in S&T?

If you are a sales representative, your career track will consist of building your business, or book, until you have a substantial number of clients for whom you trade. If you're a trader, your career track will consist of trading financial instruments (stocks, bonds, and other securities). As with securities sales, the job of the trader doesn't change over time; traders get sharper, develop better instincts, and benefit from experience as they go along. Due to the pressure of the career, few last to middle age.

• Securities Sales Representative (Broker) : They act as intermediaries between buyers and sellers, and they make money off of commissions. In some cases, such as when trading stocks, bonds, and options, they need to be registered as agents of an investment house. Brokers give advice to customers and then make deals happen. Usually they specialize in a particular type of security, such as futures, options, or bonds. Brokers are sometimes called dealers, investment advisers, investment counselors, or investment representatives, but the work is the same.
• Branch Manager : Senior sales representatives who have proven themselves on the trading floor may become branch managers. Branch managers hire salespeople, fire those who don't do well, and make sure that brokers meet sales and revenue targets. While branch managers make additional income in the form of commission overrides (a percentage of the commissions made by the brokers working under them), they're responsible not just for their sales, but their office totals.
• Floor Trader : Floor traders run around the floor of an exchange (e.g., the NYSE), swapping tickets and making trades. Floor traders are responsible for locating the buyers and connecting them with the sellers (or connecting the sellers with the buyers). As prices change quickly in a turbulent market, traders are under constant pressure to get deals executed at the prices their clients (or their employers) specify. If a trader can't find somebody to buy or sell at a specified price, the buy or sell order won't go through, and nobody profits-not the buyer, not the seller, and not the trader (or the trader's employer)-because there's no commission. Traders work during an exchange's hours of operation, usually without breaks. They are slowly giving way to Desk traders.
• Desk Trader : NASDAQ is what might be called a virtual stock exchange, as there is no physical building where traders meet to make deals with each other. Brokers have a "NASDAQ desk," which means they can trade on NASDAQ. That desk is actually a bank of traders, all staring intently at their computer screens to see how the market is shaping up, speaking into several phones at once in a mad rush to find buyers or sellers whom brokers or online investors have requested. (Trades made through an online account, such as at Charles Schwab or TD Waterhouse, go directly to the trader, bypassing the broker.)

Who Does Good in S&T?

Securities S&T is a high-pressure career. You're responsible for the financial fortunes of your clients-or yourself, if you're a lone trader. Every day you're making $100,000 (or more) decisions under severe time constraints. The daily fluctuations of stock prices can make you rich one day and break you the next. Brokers eat a lot of antacid.

Securities salespeople and traders work independently, usually with little supervision and very little interaction with management-provided they succeed. If they don't, they're quickly out of a job. To do well, you need a good head for numbers and a hidebound determination to make money.

If you're on the sales side, you'll need exceptional customer service skills; if you're a trader, you'll need to be able to handle huge risk-and stomach huge losses. The upside of these careers is the money brokers can make. Successful salespeople and traders can get very rich. Other valued skills:
Sale
- Outgoing and self-confident
- Ability to grow and maintain client relationships
- Excellent communication skills
- Ability to understand complex products
Trading 
- Passionate about financial markets
- Can function well under pressure
- Self-confidence
- Comfortable with numbers
- Ability to think on your feet and react quickly to changing market conditions

Professional Certifications

There are no hard and fast educational or professional prerequisites for selling securities. However, the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC) require brokers to get licenses, depending on a particular broker's role:

• You'll need to pass the Series 7 General Security Sales License Exam to sell most types of securities. 
• Individuals who wish to sell commodities or futures contracts must pass the Series 3 Exam.
• Most brokers also need to pass a Series 63 License Exam, dealing with state laws regarding securities sales. 
• Managers need the Series 8 License for general sales supervisors in order to manage branch activities. 
• Managers supervising options sales personnel or compliance need to pass the Series 4 License Exam.

Compensation

People entering the field from banking or other financial industries may be able to command a guaranteed base, but in general you will succeed or fail based on your performance. The good news is that your income potential is truly unlimited: The more you work, the more money you will make.

Salary range: $40,000, with a $5,000-plus signing bonus for undergrads; MBAs start at $85,000-95,000, with a signing bonus of up to $30,000. Year-end bonuses fluctuate; they can be as high as 80 to 100 percent of base pay. Compensation in securities S&T is almost always based on commissions.


Exit Opportunities

So now you might be wondering, “Ok, so it sounds like a lot of this is repetitive and like you do a lot of grunt work as a junior trader – surely, the exit opportunities must be better, right?”

Unlike investment banking, where you could go into a wide range of different fields afterward – private equity, hedge funds, venture capital, corporate development, or something completely different, in trading, though, you only have 2 options: stay in trading (a similar “up or out” structure exists as in banking), or move to a hedge fund / prop trading firm.
That’s because the skill set you develop is so specialized – valuing companies and performing due diligence is useful in a lot of different fields, but knowing how to trade CDOs would be completely useless at a startup or venture capital firm.
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with inputs from Wetfeet.com, efinancialcareers.com, mergersandinquisitions.com, umich.edu

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Am I too old (or young) for an MBA?

There was a time when the average work experience of the candidates in the business schools was more than even 6-7 years. On the other hand, today, many schools take a close look at younger candidates, many with no work experience at all (think about HBS 2+2, Yale's silver scholars or Stanford's deferred enrollment). And there is no reason why the average age/work epxerience will not change in coming years.

So while you wonder whether you are too young or too older for the business school of your choice, consider following facts:

• There is no right age to apply. It’s not about age but about your professional maturity, readiness, and the point in your career that count. These things can often be linked to age, but not always.
• If you are someone who is 35+ years, have worked for 10 years, it is pretty certain that adcom will be looking for the evidences of very strong leadership skills in your profile.
• Adcom looks out for the candidates who can gain from as well as contribute to the breadth of experience and diversity in the class. If you are young and have limited experience, you may need to showcase how you can contribute to the overall experience of your classmates. Some candidates have their startups, involved in family business from a young age or have worked extensively while studying that can add more perspective to their work experience.
• If you are one of those who are applying to the business schools in your mid 30s, adcom is specifically going to look at your motivation to pursue an MBA.
• A 23 years old who has lot of insights and higly focused goals will be more impressive than a 28 year old who is not very sure why he/she needs an MBA.On the other hand, there is no reason why a 40 year old who has demonstrated great career progression, good execution of application and has the right reasons to go back to the school will not have a good chance in making it in!

Bottomline: Irrespective of how old or young you are, you have to do a good job of explaining why you need MBA at this point of your career. If you think you are too young or too old, you will have to do a GREAT job in doing this.

Need help to get the best application out there for your dream Business School? Come to BizSchoolPrep Consulting. Whether you are a domestic applicant or an international one, our process is uniquely designed to understand your background, and then create a strategy whose sole aim is to get you to the business school of your dream. Know what makes us different.

Know your post MBA Career: Corporate Finance

It's a blast of the obvious that companies make money. Some of them make a lot of money. Of course, someone has to manage that money or else the company doesn't stay in business very long. That's where the corporate finance team comes in. A company's size, complexity, industry, and stage of development-for example, whether it's a startup or established business-determine its corporate finance department's specific responsibilities.

What “type” of Corporate Finance are we talking about?

Let’s get that right first. The term “Corporate Finance” is often used to describe two separate areas. The first is within a corporation, where finance professionals work on a wide variety of projects pertaining to the financial needs of their firm, including financial and cost analysis, internal audits, Treasury functions, and business development. This work can be characterized as a combination of cyclical work (i.e. budgeting) and project work.

The other area is within commercial and investment banking. The corporate finance divisions of these banks serve the financial needs of corporate clients by providing financing, investing options and other services (see Career Path handout on Investment Banking). This post focuses on the non-banking side of corporate finance.

What is the work profile of a typical Corporate Finance professional?

Corporate finance is a broad heading encompassing accounting, commercial and investment banking, financial services, investment management, insurance, venture capital, and corporate development and strategic planning. Corporate finance professionals are responsible for managing a business's money-forecasting where it will come from, knowing where it is, and helping its managers decide how to spend it in ways that will ensure the greatest return. They pore over spreadsheets that detail cash flow, profitability, and expenses. If you enter one of these fields, your job will center around helping companies find money to run and develop their businesses, manage their assets, acquire other firms, and plan for their financial future. A person’s experience in corporate finance depends on the size and complexity of the company for which they work, but jobs are relatively stable and include many benefits, including high salaries, travel, and numerous networking opportunities.

Few of the responsibilities of a mid-level (post MBA) manager are as follows:

• Create and monitor company budgets
• Explain financial data to company managers
• Write company financial policies
• Hire and supervise junior analysts
• Monitor company cash flow
• Build financial forecasts

What are the different functions within Corporate Finance?

Corporate finance is a very broad field and there are multiple career options within corporate finance. Some of these are:

• Treasury: The treasury department is responsible for all of a company's financing and investing activities. This department works with investment bankers who help the corporation raise capital with stock or bond sales or expand through mergers and acquisitions. Treasury also manages the pension fund and the corporation's investments in other companies. The department also handles risk management, making sure that the right steps are taken to safeguard corporate assets by using insurance policies or currency hedges.
• Divisional Financial Services : In this area, you work with each division's business team to prepare financial plans, make forecasts, and compare actual financial results to forecasts. You may also evaluate the financial consequences of alternative strategies. Responsibilities include everything from analyzing new business opportunities to restructuring a business or developing a capital spending program.
• Financial Analyst: Duties involve determining financing needs, analyzing capital budgeting projects, long-range financial planning, analyzing possible acquisitions and asset sales, visiting credit agencies to explain firm's position, working on budgets, analyzing competitors, implementing financial plans, etc. Often you will be assigned to a specific area such as revenue, planning, capital budgeting or project finance. This challenging job requires good analytical skills, computer skills and a broad understanding of finance.
• Investor Relations: Duties involve dealing with the investing public by disseminating financial information, responding to queries from institutional investors, issuing press releases to explain corporate events and organizing teleconferences with investors. This challenging job involves contacts with top-level executives and requires understanding of finance and public relations.
• Controllership: Duties involve financial planning, accounting, financial reporting and cost analysis. Will get involved in property, revenue, benefits, derivatives, lease and joint interest accounting. This job requires extensive accounting experience.
• Cash Management : This is a company's piggy bank. The cash management group makes sure the company has enough cash on hand to meet its daily needs. The group also sees to it that any excess cash is invested overnight by picking the best short-term investment options. And it negotiates with local banks to get regional business units the banking services they need at the best price.
• Tax : Activities in this area involve administering taxes (i.e., paying taxes on time-or finding loopholes to avoid paying them) and determining how to decrease the company's tax burden. Responsibilities include working with attorneys on tax litigation, researching tax laws and reporting requirements by nation (if the company is international), and keeping up with new government rules and regulations.
• Internal Audit : When most people think of an audit, they think of an outside audit-a large accounting firm like Ernst & Young checking the corporate books on behalf of the shareholders. However, most large companies have an internal audit group that regularly visits individual company branches and checks the company's accounting systems. Internal auditors perform the investigative and corrective work that ensures the external auditors don't find anything.
• Corporate Development and Strategic Planning / Business Development : Corporate development involves both corporate finance and business development. Finance experts in corporate development study acquisition targets, investment options, and licensing deals. Often they assess the best firms to buy or invest in, such as pre-IPO cutting-edge technology companies with complementary products that could either extend the company's product line or mitigate competition.

What are the job requirements for a Corporate Finance job?

• Puzzle-lovers Wanted : Most corporate finance jobs involve solving problems using a combination of intuition and analytics. If you are good at problem-solving, this may well be the job area for you. 
• Team Player Thrives: It is crucial that a financial officer be a team player, whether at the bottom or the top of a company. At the top, relationships are especially important. For a CEO, the chief financial officer is financial whiz, strategist and partner. The relationship needs to be tight.
• Crunching Numbers: These jobs require strong analytical and quantitative skills. If you have a knack for using numbers to understand patterns that influence business, you'll be of great value to your employer. If you can't crunch and analyze numbers, this isn't going to be the right job for you.
• Attention to detail: To make wise business decisions, your employer will be depending on you to get the numbers right-every time. In order to do that, you'll also need to have an understanding of and interest in business.
• Excel, Computer skills, System knowledge: You have to be computer literate with spreadsheets, word processors, presentation packages and large-scale data management tools. This is especially true for entry level positions where you will need to crunch numbers as you get involved in the details of corporate financial planning, accounting and capital-raising.  Be prepared to talk about your computer skills; fluency with Excel, VBA macros, and Reuters and Bloomberg stations are necessary.

What are the benefits  and compensation of a Corporate Finance job?

The company's size, industry and location affect compensation levels in this industry. A corporate finance professional’s pay package may include wages as well as cash or stock bonuses. The U.S. Bureau of Labor Statistics indicates that median annual wages for corporate financial analysts were $73,150 in 2008, excluding cash and stock bonuses, with the lowest 10 percent of the occupation earning less than $43,440 and the highest 10 percent earning more than $141,070. The same research shows that median annual wages for corporate financial managers were $99,330 in 2008, excluding cash and stock bonuses, with the middle 50 percent of the profession earning from $72,030 to $135,070.

Jobs in corporate finance are relatively stable, while performance in these jobs counts. But it's not like your job is going to depend on whether you're selling enough this week or getting good deals finished this quarter. Rather, the key to performing well in corporate finance is to work with a long view of what’s going to make your company successful. Many would argue that corporate finance jobs are the most desirable in the entire field of finance. Other benefits inclue:

• You generally work in teams, which helps you work with people. 
• It's a lot of fun to tackle business problems that really matter. 
• You'll have many opportunities to travel and meet people. 
• Great work life balance, closer to a 9 to 5 work schedule.
• The pay in corporate finance is generally quite good.

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With inputs from www.careeroverview.com, www.careers-in-finance.com, www.wetfeet.com, www.ehow.com, careers-in-business.com

Need help to get the best application out there for your dream Business School? Come to BizSchoolPrep Consulting. Whether you are a domestic applicant or an international one, our process is uniquely designed to understand your background, and then create a strategy whose sole aim is to get you to the business school of your dream. Know what makes us different.
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Know your post MBA Career: Consulting

What do you want to do after MBA?

“Consulting”.

What kind of?

“Strategic Consulting”.

What is that?

“umm…ehh… create the future strategy of the company’.

Isn’t that a CEO’s job requirement!?

‘umm.. ehh..”

This is the stock conversation with almost 50% of our MBA candidates/clients who mention consulting as their post MBA career choice. Consulting is one of the top choices not only amongst the applicants but also the business school students. At the same time there is also a lot of unawareness about consulting as a post MBA career. So let’s take a look at what is this career all about –

What is Consulting?

Advice for $$ – The basic mantra of consulting. As a consultant you find, and sometime fix, the issues and problems that the management sometimes can not. Consultants are recruited to identify the problems and find out solutions through providing new information, in-depth analysis, brainstorming and execution.

Is consulting an industry? Yes. A ~100+ Billion industry and growing. Most of the income is generated in the field of technology, strategy and enterprise consulting. As more and more countries develop, they try to find better ways to improve their economies and thus a large driver of growth is currently in the emerging economies.

Consulting Firms

There are two basic types of consulting firms. The largest ones deal mostly with very big clients, and focuses on issue such as such as profit and cost management, strategic alliance, emerging market entry, while the other ones keep their focus on their specific industries or business functions such as restructuring, customer management, etc. Following are the major lines of consulting services in this industry:

• Strategy: Focused on planning, strategy and services. 
• Technology: Focused on systems, IT integration and implementation, and technical support.
• Service Line: Focused on Customer Relationship, turnarounds, organizational efficiency, etc. It may involve advice as well as implementation. 
•  Industry: Focused on particular industries such as telecom, energy, health care, chemical, etc. It may involve strategy as well as implementation.

While subject knowledge experts, such as in energy, multimedia, logistics, brand, e-commerce, are in great demand in this industry, there is a lot of demand for generalists too. The common factor that the top consultancies look out for their consultants is the strategic thinking.

Consulting is similar to working in a team project. Most of the consultants belong to firms and very few consultants make it good just on individual glory. The biggest and most prestigious firms, like McKinsey, Bain, BCG, Booz, etc, are very selective and extremely competitive to get into, and usually hire only from the top 15-20 MBA schools.  

Responsibilities and Skill Sets

1. Soft skills:

• Solution driven outlook:  Consulting companies creates ideas, solutions, and new ways of approaching a problem. Intellect is their core product. Quick thinking and an ability to use data, research and experience to generate new solutions and find innovative ways of doing things is critical.
• Personality: Find the problem and fix it. Do you enjoy case studies? Are you good in relationship management? Pedigree might help you get into a top class consulting firm but your success as a consultant depends on how you perform. Consulting is a service industry and you need to have the right approach to fit into this industry. Best consultants are motivated to help their clients. Those who achieve excellence in this are more likely to find the consulting experience a satisfying career path.
• Be a Team Player: You work in a team, internal and on client side, and a large factor on your success as a consultant will depend whether others like to work with you or no. The best consultants enjoy being around the people they work with.

2. Business skills:

• Pitching: You should be good to help sell and market the firm you are working for. Other skills include writing proposals, presenting sales pitches, etc.
• Research:  You should be able to transform data into valuable information by performing research through news sources, market trends, interviewing customers, employees, etc.
• Analysis: You should know how to build DCFs or other models and how to use the statistic to drive the recommendations
• Reporting: You should be not just ready but also excellent in preparing slides after slides. Consultants eat, thinkpower point powerpoint slides.
• Implementation: You should be good in planning and executing the ideas that you present to the clients or to your own team members.
• Recruiting: One of your responsibility may be to act as a gatekeeper for recruitment and you should have the skill set to identify the right people for the right job.

How to get the Consulting job offer?

Most of the consultants get the job by legwork, persistence, and pure hard work. Following are the main components of a consulting job search

• Resume/CV: Main elements of a good consulting resume: skills, schooling, and experience. Stress the skills that are relevant to the consulting industry and though schooling can’t guarantee your success in this field, a top brand always make it easier to get the first step in. Your experience should show that you have expertise that the firm can  make use of.
• GMAT and GPA: Top consulting firm look at your GMAT and GPA pretty closely, especially during the interview shortlisting phase.
• Networking: Networking can’t cover for a lack of competence, it is an important step in getting into the shortlist when the firms decide whom do they want to interview. Many schools and sometimes the firms themselves give you the resources to network but it  is upto you to make the most of it.
• Telephone conversations: Phone calls are the best friend of a MBA student who wants to get into consulting industry. A lot happen over the telephone conversations – networking, case practice, interviews, etc. Hence, it is critical to look at how you present yourself on phone.
• Face time:  That’s the best networking tool. Travel to firm’s offices and know the partners, consultants, etc. You will probably be hired by one of those you meet.
• Solve Cases: Cases are the bread and butter for the students who want to get into consulting. You can be good at all other skill sets but if you cannot solve cases in the interviews, it is next to impossible to break into top consulting companies.

Compensation

Consulting is one of the high paying industries for new MBA graduates. Most of the MBA graduates join the consulting industry at Associate level. The base compensation for the top consulting companies such as BCG, etc starts at ~$100K-140K. Add to it the sign on bonus and the annual bonus and we are talking a first year package of ~$150K+. Some other top consulting firms (such as Deloitte) even offer to pay the tuition for the second year MBA - ~ $45K!

Keep in mind that here can be a vast difference in compensation depending upon the firm you choose to work for and the total package for the first year can vary from anywhere from ~100K+ to $150K+. However, $/hr may be a more realistic comparison because typical consulting work weeks are usually close to 80 hrs and involves a continuous traveling. Check out this article to know the other side of the consulting career.

Need help to get the best application out there for your dream Business School? Come to BizSchoolPrep Consulting. Whether you are a domestic applicant or an international one, our process is uniquely designed to understand your background, and then create a strategy whose sole aim is to get you to the business school of your dream. Know what makes us different.

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