Sales and Trading

After basically minting money for decades from the buying and selling of bonds, currencies, and other financial products, earnings at investment banks have decreased significantly in recent years. The 2020 COVID-19 pandemic triggered a surge in stock market volatility and increased revenues to a five-year high, but profits declined significantly beginning in 2022. The following developments have reduced profits in the investment banking industry:

• Increasing regulation by the Securities and Exchange Commission and other federal agencies have created a need for banks to spend more on risk management and compliance and also limited some types of trading practices.
• Continuing interest rate increases by the Federal Reserve in an attempt to regulate supercharged economic growth—as well as reduced consumer mortgage volume and fewer corporations issuing debt or busying competitors—have reduced industry profits.
• Advances in technology, which allow securities owners to trade directly with one another (cutting investment banking sales and trading departments out of the equation).
• Competition from brokers, hedge funds, and other financial firms that offer the same services as investment banks, but more quickly and at a lower price.

These factors—and the increasing use of automated trading and artificial intelligence—have caused steep declines in the number of sales and trading professionals. In fact, 20 of the largest investment banks cut at least 61,905 jobs in 2023, according to calculations made by Financial Times. At least 20,000 of these job cuts occurred at Citi, Morgan Stanley, Bank of America, Goldman Sachs, and Wells Fargo, according to CNBC.com. The 2023 staff reductions represented one of the worst years for job cuts at banks since the 2007–08 financial crisis. During that crisis, banks eliminated 140,000 jobs.

Employment of securities, commodities, and financial services sales agents (including investment banking sales agents and traders, but also many other types of investment industry professionals) is projected to increase by 7 percent from 2022 to 2032, or faster than the average for all occupations, according to the U.S. Department of Labor (DOL). However, the DOL predicts that “continuing consolidation in the financial services industry is projected to slow employment growth for these workers over the next decade. In addition, automated trading systems have reduced demand for securities traders. Because simpler stock purchases can be made online without a broker, financial firms will focus on hiring sales agents with specialized areas of expertise and strong customer-service skills.”

Given this information, should you still pursue a career in sales and trading? The answer is yes, but you need to enter the field fully aware of the highly competitive nature of the job search and the rapid changes that are occurring in the industry. Traders will likely want to work in areas where it is difficult to match sellers with buyers. These areas might include illiquid products and bespoke over-the-counter financial products.

Sales workers of the future will transition from being facilitators to generating trading ideas for clients and providing advice to clients to help them make the most effective trades. Many also see sales jobs splitting into “high touch” and “low touch” positions. “High touch” sales professionals will have the highest level of industry knowledge and experience and work with their company’s top clients. “Low touch” sales workers will have less knowledge and experience and work with a larger number of lower-level clients, often steering them toward their firm’s electronic trading systems.

A 2023 Pew Research Center analysis found that 37 percent of workers in the finance, insurance and real estate (FIRE) sectors face a high degree of exposure to AI. This group ranked second (52 percent) to workers in professional, scientific and technical services. Workers in banking, finance, accounting, and real estate were asked to gauge how AI would affect them in the next 20 years. Twenty-two percent believed AI would help, more than hurt, them. Thirty-four percent said it would equally help and hurt them. And 17 percent said that artificial intelligence would harm them more than it would benefit them. Twenty-five percent of respondents were unsure of its effects. Although some people fear losing their jobs to AI and other technologies, the lesson to take from these results is that it is better to embrace technology and learn as many new technology skills as possible rather than to have an adversarial relationship with changes brought by technology and shun technology-related continuing education. New technology will drastically change the financial industry in the next decade, and those who are knowledgeable about programming, artificial intelligence, machine learning, data analytics, and other technology will have the best job prospects.

Salaries for sales and trading professionals have also taken a hit in recent years due to automation, decreasing revenue, and other factors. “Pay cuts have been most dramatic at relatively small Wall Street firms that focus on investment banking, securities trading, and wealth management and lack the large retail operations of rivals,” according to Financial Advisor. Despite this earnings decline, sales and trading professionals still make a lot of money compared to people in most other jobs. Total compensation for sales and trading associates ranges from $150,000 to $240,000, according to WallStreetOasis.com. Sales and trading managing directors may receive more than $1 million in total compensation.

The long-term trend is toward fewer jobs due to electronic trading, the use of artificial intelligence, and other factors. But there are other opportunities for sales and trading professionals. Sales workers can transition to jobs in commercial banking, wealth management, and other financial fields, as well as to sales jobs in other industries. Traders in investment banking can find job opportunities with buy-side institutions, in risk management, with financial regulators, at private equity firms, or at management or financial consulting firms. Some choose to parlay their knowledge of trading into jobs in financial sales or customer relationship management. Others earn advanced degrees in computational mathematics, software development, or related areas and land positions in fintech.