How sales jobs in investment banks fell out of fashion

Pity the investment banking salesperson. Pity – especially the salesperson who deals with mid-sized low value clients. His, or her, job is not what it used to be.

Alongside London fixed income traders, Citi has been dumping London fixed income sales staff. Earlier this week, Bloomberg reported that Citi has also laid off five bond salesmen who, ‘sold debt to mid-size investment firms.’ Four of them had been with the bank for ten years. Citi now wants to focus its voice salespeople on its larger clients, said Bloomberg.

Citi isn’t the only one putting its sales manpower behind larger and more lucrative clients. Deutsche Bank has set up a lower-touch sales and trading operation in Birmingham to service clients who trade less actively and in smaller volumes. Many of Barclays’ redundancies have also been in sales as the bank shifts to a more electronic trading model too.

The disappearance of sales roles isn’t new. Banking analysts have predicted their demise for years as electronic platforms take over. In the process, the standard fixed income or equities sales person has morphed into something very different, say headhunters.

“Now, it’s all about selling the platform,” says Russell Clarke, partner at London search firm Figtree. “It’s been going on in equities and FX for sometime, but in the past 18 months it’s become much more apparent in fixed income. If you work in sales, it’s about servicing your client and getting them to use the platform more.”

It’s wrong to demarcate today’s banking sales roles into voice sales [speaking to clients about trade ideas] or system sales [selling a bank's electronic trading capabilities], says Clarke. The best salespeople now do both. “It’s not just a question of selling the platform and leaving them to it – salespeople need to add value. They need to keep on marketing the bank’s platform, to talk about clients’ trading strategies and find out what kinds of research is needed. The sales job is to bring the client into bigger and more profitable trades.”

Overall, however, fewer salespeople are now needed, and their numbers are likely to drop further. This is especially the case in FX, where around 80% of trades are already executed electronically but banks are expected to increase the electronic proportion in the wake of the fixing scandal.  “You have two options if you’re in FX sales now,” says one FX headhunter, speaking on condition of anonymity. “Either you need to have very high-level discussions with your clients so that you’re really adding value – and that means covering the full macro spectrum. Or you need to do your damndest to specialize across e-commerce and electronic systems. The younger generation are already been forced into this.”

There are third and fourth options, but not everyone will want to take them. Some salespeople have gone to brokerage firms like BGC Partners and ICAP, but they are moving towards an electronic model too.  Simon Maughan, head of the product specialist group at OTAS technologies and a former banks researcher in London, says other bulge bracket salespeople have ended up at third tier firms which don’t have big electronic trading platforms and still focus on calling clients. “But the pay is quite a lot less in those places,” he adds.

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