“The times they are a-changin’’ wrote Bob Dylan in 1964. And he was right, course – they’d been changing before, and they seem to have continued to do so ever since. As humans, we are in the somewhat unique position both of being largely responsible for the existence of the ‘a-changes’ while, nevertheless, also needing, sometimes desperately, to find ways of adapting to them. Developments, be they technological, societal, political etc. do not occur in a vacuum, and their implications invariably spread to realms entirely unrelated to the spheres from which they originated. To be continuously successful, every institution and every individual needs not only to adapt to these various shifts as-and-when they occur, but also, where possible, to forecast what the next changes might be, and what changes they should make in advance to best take advantage of them.
And investment banks, for as long as they’ve existed, have been spectacularly good at doing so. The evidence for this claim? Simply: they still exist. But their forms of today would be largely unrecognisable to someone of a few decades ago – they have grown and diversified, driven and guided by an inherent eye for opportunity, beyond recognition, though without a change in moniker. What percentage of an investment bank’s headcount these days is taken up by traditional investment bankers? A fraction – one which continues, on the whole, to decrease.
And there have been threats to their existence – or at least to their more recent diversified models. Tighter margins, increased competition, more abundant automation and similar minutiae chip away at their edges, but credit crunches, London Whales, and subprime mortgage collapses represented genuine existential threats which would have torn less adaptable entities apart and scattered their pieces into the wind. Not investment banks, though. A Chinese Wall here, a Volcker Rule there, and, although it’s never quite ‘business-as-usual’ afterwards, it never takes investment banks long to redefine what ‘usual’ actually is.
But there are casualties along the way: while investment banks as entities in themselves may be impervious to all change, their employees are not. And, perhaps, nowhere is this more apparent than in the teams of front-office salespeople, diligently covering their given client segments on their given product suites. Irregardless of whether they are hedging a German corporate on their macro exposures, selling a corporate/government bond to a UK Asset Manager, or providing a bespoke long-dated ALM ‘Solution’ to an Italian insurer, it’s these groups of sales people who seem to encounter the strongest buffeting from the winds of time.
The reason for this is, perhaps, that, as a sales person within an investment bank, these winds really are coming at you from all angles. Automation is increasingly commoditising products which historically would have required a bespoke human input; regulation stifles (with good reason) sales avenues which may otherwise have been open; ‘efficiencies’ allow a smaller number of salespeople to cover a larger number of clients; the increasing sophistication and autonomy of the end user client segments reduces their reliance on obtaining that sophistication from a 3rd party. The list goes on. These developments may be great news for IT developers, risk managers, or people proficient at spamming emails – but they’re all to the detriment of the front-office, ‘high touch’, relationship driven salesperson.
And sentiment on the role itself is also in a constant state of flux, and varies from bank to bank. Are salespeople a partner or poor cousin to their respective trading colleagues? Do they provide invaluable intelligence and flow, or are they often an unnecessary intermediary between investor and trader? Is it the name of the salesperson or the name of the bank for which they work which is really facilitating the dialogue?
It’s developments and variations of opinion on questions such as these which have driven a huge amount of the change I have witnessed during my 17 years of recruiting fixed income sales people for investment banks. Clearly the structures of the teams for which I’ve recruited have changed, but, every bit as seismic, is the change in interpretation of what constitutes a sales person of ‘calibre’. In 2010, a sales person was largely judged on the scale and portability of their network. Other considerations, while not immaterial, were considered very secondary. Who cares if he/she only got a 2:2 at university so long as his/her clients like him/her? Not a mathematical genius? If it’s not a problem for their clients, then it’s not a problem for us! Who needs our salespeople to be able to speak more than one language fluently so long as their clients don’t need them to?
Those days are long gone – partly because of similar developments on the customer side, and partly due to a general shift in recruitment policy across all levels. Graduate recruitment, clearly, could never use relationship scale/depth as a metric for calibre, but there has been a demonstrable change in perception of what ‘potential’ looks like when it comes to candidature for sales roles. An indefinable ‘je ne sais quoi’ in isolation is not enough – it needs to be supported by hard data: a top mathematical or technical degree from a leading university; demonstrable excellence in an extracurricular activity; evidence of a charitable mindset; and, of course, fluency in enough foreign languages to suggest an actual physical presence when work stopped on the Tower of Babel. And things are constantly changing at the senior level as well: as the customers’ recruitment values have changed, the suspicion on how portable their relationship really is with a given salesperson has grown. What’s considered more fundamental now is how well the general style/demeanour of the salesperson reflects the institutional self-perception of the hiring entity. While it’s not been a linear progression across all banks, it’s undoubtedly the case, especially within the tier one community, for banks to increasingly consider their salespeople as cogs in the relationship mechanism, rather than the mechanism operators themselves. There has been a growing belief that the customer relationship is held entirely by the institution and not the individuals within it – the individuals just need to reflect the preconceived identity of the institution because, apparently, the customer is on the phone with the institution, not the individual.
It’s this sentimental shift which is driving one of the key personnel trends of the past 15 years: Juniorisation. In the early 2000s, when a bank lost an MD (in sales, but not just in sales), there was an MD level gap to be filled – not necessarily with an external hire, maybe an internal transfer/promotion. Same at Director level. How different things have been since 2010, however. Since 2010, departures from sales teams have almost always been motivated by, and certainly resulted in, a more junior contingency solution. Losing someone they didn’t want to lose is always a bitter pill to swallow for any investment bank, but the opportunity to bring in a more junior replacement is invariably at least half a spoonful of sugar. The relationships didn’t leave with the salesperson anyway, right? A more junior/cheaper salesperson could be just as effective at reflecting our identity, right?
The so forth ad absurdum end point of this juniorisation is not a world in which newborns are pitching complex hedging solutions to FTSE 100 Treasurers – it is a world where sales teams simply don’t exist at all. A non-human identity or image doesn’t necessarily need a human to proliferate it through a human hivemind – attractive, abundant and consistent branding, coupled with competitive pricing and seamless execution will achieve that. But that really is ad absurdum. As long as there is competition in a market, sales will remain perhaps the most important and sought-after skill in professional services – even if a salesperson’s impact on the likelihood of a trade executing is minute, it could, nevertheless, be the difference between that trade happening or not. And in the binary, all or nothing, world of finance, that difference is often worth hundreds of thousands, if not millions, of pounds in revenues.
But are the banks right, up to a point? Does it really matter if they aren’t? The answer, which may sound like a cop out but isn’t, is: it depends. And knowing why and on what could really benefit anyone who is looking to work for one. In an interview, display yourself in a way that reflects the platform and the situation. This may sound obvious, but it flies in the face of the ‘wisdom’ you may be given elsewhere. ‘Focus on your strengths’, for instance – surely that’s ubiquitously good advice, right? Well, not always. Sounder, or at least more fleshed out, advice would be ‘Focus on your strengths which best reflect and satisfy the specific context of the role you are interviewing for, and the institution that role is with’. Realise that apparent strengths in one context may actually be weaknesses in another.
Clearly, the suggestion here is not that you need to be a totally different person for each interview, but chameleons, never mind how many appearances they can adopt, do, nevertheless, only have one face. There are multiple ways of expressing the truth – and choosing the most appropriate one is likely much more important than you’d think.
If you’re an Associate interviewing to be junior on a 6 person pod at a tier one US investment bank, the early client exposure you obtained by being the no.2 on your two person current pod isn’t going to appeal as much as you might think. If you’re interviewing with a boutique or broker, don’t expect your spotless track record of production at a bulge bracket to be enough to land you the job – you may have been pitching a very different identity, and your face may not fit.
And if it’s been more than 10 years since you last looked for a new job? Bear in mind that the times have ‘a-changed’ – and you may need to make some ‘a-changes’ too.
