So you want to work in the City?
There is no shortage of ambitious young individuals who dream of, and aspire to, a successful career in the City. Images of Rolex-wearing, Porsche-driving twenty-somethings living in their Docklands bachelor pads does nothing to stop the swell of wannabe City Slickers.
But just how real are these images? More importantly, how can I get to work in the City, and where do I start? What are the upsides to a career in high finance? What are the downsides? Which are the best markets to work in? What qualifications do I need?
Those images born from the movie which made the slick-haired Gordon Gecko famous have undoubtedly created one major drawback for any ambitious young individual wanting to work in the City – competition is fierce.
It is this competition which raises the barriers to entry and allows investment banks to demand the very best from the pick of raw recruits coming out of the best universities with a handful of MBA’s and Phd’s. These individuals will be successful all-rounders who have demonstrated leadership and talent in their already brief lives. They were probably head Boy/Girl at their public schools, captains of their various rugby or hockey teams, achieved straight A’s and will have already seen the jungles of South America whilst cavorting around the world during their gap year. They are well rounded individuals who above all are full of confidence. With track records like that, who wouldn’t be?
Masters of the Universe and BSD’s
This group of individuals is likely to have been recruited through the various university milk rounds, and will be destined for careers at bulge bracket investment banks (Morgan Stanley, Goldman Sachs, Merrill Lynch, UBS, Citigroup etc). They will spend a year attending the in-house management training programme which will take them through the delightful intricacies of the equity, bond , forex and derivative markets through to the deal makers in Corporate Finance. These people will be destined for senior management roles within global institutions and will weald enormous power as Masters of the Universe with BSD’s (that’s Big Swinging Dicks for those unfamiliar with the jargon!).
These Masters of the Universe will be rewarded handsomely for their efforts – million dollar salaries, and multi-million dollar bonuses with lifestyles to match. Dining at the best restaurants, jet-setting around the world, the 911 turbo tucked away in the garage at the villa in the south of France.
So what are the downsides for these people? Well there is a very good reason why your 911 is in the garage. You will never get the time to drive it. In return for your high rewards, be prepared to offer at least 2 pounds of your flesh. You will need to live and breathe the corporate mantra, and that also means working all the hours that God sends. I have no problem with that. But you will find that whilst this is entirely acceptable when you are in your twenties and thirties and single, your perspective is likely to change as you mature and develop as a person. Whilst you are single, the successful career with all the material trappings of success are extremely rewarding, but once you find your lifetime partner and decide to settle down, you are more unlikely to want to adhere to the rules of the regime and may look for a more rewarding work/life balance. One morning at 6.00 am, you leave your house, wife and new-born child behind in order to attend your early morning meeting at Canary Wharf to discuss the US and Asian markets overnight activities and surmise what the day ahead will bring for the European markets. By the time you get back, your baby daughter is now 18 years old and starting university whilst your wife has sired several children with your overpaid plumber.
Meet David and Homer
And of course there is the office politics. No organisation is without this bewildering phenomenon. But the fact is that your boss is more likely to be as inspirational as David Brent than Gordon Gecko. This will make you wonder how on earth he got to be your boss in the first place. Financial institutions are notoriously badly managed. Why? Because the good ones have already left by the time they take stock of their lives and approach the stage mentioned in the paragraph above. They have probably also made enough money to pay the mortgage off on the pile in Chigwell. They can afford to leave. The one’s who are left, unfortunately, are thus catapulted to positions unbecoming of an individual who would make Homer Simpson look competent. It’s enough to make you quake in your designer boots.
But despite those downsides (and let’s face it, they are not downsides that are unique to the City), how do I get my foot in the door and start my career in high finance? The scenario where you are picked to work for a bulge bracket firm through the university milk round is of course ideal. But few of us are born with (OK, worked hard enough at school to acquire) the supernatural talents required to be one of those chosen few.
There is hope
There are 308,000 people who work in the financial sector in the City. Only a small minority of those will have come from the milk round. There is hope for you yet.
You could do worse than follow the route that I took. Although my career began over 20 years ago in 1984, the route is still possible today. I had a fascination with the stock market from a very early age. When I was 17 I was the treasurer of an investment club which had originally been set up by one of my teachers at school. We also had the huge benefit of a market professional (the Chairman of Ivory & Sime, Alec Hammond-Chambers) as our mentor. Today, I can still remember the core holdings of our portfolio; Racal Electronics, United Biscuits, Kwik-Fit, Britoil, John Menzies, Guinness and Royal Bank of Scotland.
By the time I had taken my A Levels ( a handful of respectable grades in Spanish, French and English), I was in that very rare position where I knew what I wanted to do as a career – anything to do with the stock market and investments. Against the judgment of many others at the time, I opted not to go to university at all, but to try and find a position working for a stockbroker. I had no pretensions about how lowly the position might be, I had already honed my tea and coffee making skills in the hope that at least I might be able to learn something and build up some experience.
In 1984, stockbrokers were still partnerships The Goldman Sachs, Morgan Stanleys and Merrill Lynch’s of this world were not allowed, as foreign entities, to be members of the London Stock Exchange. Trading still took place on the floor of the exchange, and dual capacity had yet to come into effect. The market was dominated by British firms such as Rowe & Pitman, Scrimgeour Vickers, James Capel, Wood Mackenzie, de Zoete & Bevan, Cazenove, Smith Newcourt etc. These names are long gone, but following de-regulation of the markets, those companies were swallowed up and now exist as UBS, Citigroup, HSBC, RBOS, CSFB, JP Morgan and Merrill Lynch.
As I started to put together my CV, I decided to write to all the leading stockbrokers asking if I could work in their offices for 2 weeks without pay. This would mean that I could gain some experience, and hopefully they could benefit from someone who was prepared to make the tea & coffee as well!
Unsurprisingly, I received many replies with the opening line…”We regret to inform you…”. In many instances I received no reply at all. Some weeks went by without a single acceptance to my offer. I was becoming hugely disheartened. How could anyone turn down an offer of free labour? How was I ever going to land a career as a stockbroker?
It was a not unusual dark and depressing day in Edinburgh when the telephone rang. It was the Head of Personnel of Wood Mackenzie & Co stockbrokers in Edinburgh. I had already received a letter from them declining my offer saying that my letter would be “kept on file.” That phrase was as credible to me as “the cheque is in the post”.
For a position in research you will almost certainly require a degree. It won’t necessarily need to be in a particular discipline, although if your degree is business / financially related, then it would help greatly if you can interpret a balance sheet. You will be working within a specific sector such as Pharmaceuticals, Oil, Technology, Banking, Hotels / Leisure etc. If you have a natural interest or passion for a particular sector than obviously this will help. Your job will ultimately involve writing research reports on specific companies within the sector, providing earnings projections and buy/hold/sell recommendations. You will be expected to attend company road shows and AGM’s, not to mention lunch with Chairmen, Managing Directors and Finance Directors of the companies you are researching. You will also be expected to communicate your findings as well as your views on any breaking news to the institutional sales teams on the trading floors. Initially you will probably join as a research assistant which will mean collating plenty of data and being proficient with Excel spreadsheets. Ultimately your goal will be to become a ranked analyst within your sector, at which point you can name your price. Following recent Wall Street scandals however, some of the quality of research produced by the integrated investment banks has come into question, thus prompting calls for more independent sources of research.
Because competition is so fierce for positions in institutional sales, many companies will require that you have a good degree. However, it is not absolutely impossible to secure a position without one. You could aim to obtain a position in a middle office environment, pass your FSA exams, make sure that you build up a good rapport with existing members of the sales team, and when an internal vacancy arises, express your interest in applying for the position. It can, and does happen. One thing for sure is that you will need to be highly competitive, verging on aggressive. Your job will entail making early morning phone calls to fund managers, detailing any market news and informing them of your analyst’s recommendations. Your call will be one of many received by the fund manager, so he will only talk to you if you have something worthwhile to say. If you join a bulge bracket investment bank you may be lucky enough to inherit a client list, in which case your life will be much easier as you will most likely be selling research provided by a highly ranked analyst and you won’t need to cold-call potential new clients. On the other hand, if you join a second or third tier firm and your remit is to bring new clients to the business, your sales expertise will be put to the test. Rewards for successful institutional sales personnel can be high with the majority of your reward being paid as your annual bonus, linked to the amount of commission you have generated.
This is a position which certainly doesn’t require a degree, and is a good place to start if you want to work in the “front” office. You will however need to be FSA qualified / registered. My advice to anyone wanting to apply for any positions as a trainee dealer is that you should certainly pass your FSA exam prior to sending out your CV. The job itself is not terribly difficult, particularly with the advent of electronic trading. Previously, at a time when most trading was done over the phone, the dealer’s ability to get the best price in the market often relied upon contacts / relationships that the dealer had built with relevant counterparties. You will need to be able work under pressure and pay attention to detail. Accuracy is of utmost importance, particularly when all else around you seems like chaos. A good sense of humour is essential! Positions as a Dealer are available in a number of different types of operations such as retail stockbrokers, pension fund managers, investment managers, banks etc. Remember that as a Dealer you are acting as an agent, and your remuneration will be by way of basic salary and probably a discretionary bonus. It is one of the lower paid front-office positions, but some dealers are still paid handsomely for their efforts.
Most people who are members of T2W are probably already familiar with the role of the Trader and I suspect this is a position which most members would ultimately wish to fulfil. Once again, due to fierce competition, the bulge bracket firms can demand that potential candidates possess top degrees from prestigious universities. The truth is that successful traders may come from a variety of backgrounds. I have met some traders who are hugely academic, yet their trading records are mediocre, whilst I have also had the pleasure of working alongside some blisteringly successful traders who lack paper qualifications. Key attributes will be the ability to analyse and interpret a wealth of data, think strategically and be capable of managing risk whilst achieving good returns. The ability to think quickly and remain level headed whilst under pressure will be a necessity. Your role will be to trade principal capital in a particular market, which may be equities, bonds, currencies or their derivatives. You may be trading particular risk-controlled strategies such as arbitrage, pairs-trading, spreads etc. For those of you looking to enter the trading arena, you could do worse than seek out a position as a trader’s assistant to begin with. You will need to display a passion for the markets, and ensure that pre-interview you are well versed in all relevant market statistics such as current GDP, rate of inflation, currency exchange rates, the level of FTSE, Dow etc.
You will almost certainly require not only a degree, but probably a professional qualification in either accountancy or law. Corporate finance can be a hugely exciting space to work in, except that the pace will be slower than that found on the trading floors. Your job will involve mergers, acquisitions, new issues, fund raising etc. Positions as a corporate finance executive can be found in investment banks, accountancy firms and law firms. Revenues are generated from retaining fees paid by corporate clients, and further fees generated by further transactions. The top players in this field will be responsible for devising multi-billion pound takeovers and mergers. Once again, the rewards for top players are extremely high.
City Recruitment Consultants
Job application advisory services
Of course I would!
However, the gentleman informed me that they needed some extra temporary help in their back-office, processing all the applications for the forthcoming British Telecom flotation. Would I like to help? Of course I would! And they were even going to pay me as well!
And so, in late 1984 my first taste of real work in a stockbroker’s office started amidst shouts of “Buy!”, “Sell!” and “One lump or two?” I must have done something right (probably due to the Gold Blend I was serving), as whilst drinking in the local pub (The Cambridge, off Charlotte Square) with my colleagues after work, they asked me if I would like to work beyond my two week period and accept a full time job with them. Of course I would!
Having at least got my foot in the door, my strategy was then to put myself through my own management training programme. This I would do by applying for positions across the various specialist sectors and learning from my experiences. After 2 years with Wood Mackenzie in Edinburgh, it was time to move to the City and move to a front-office role on a dealing desk. I then moved into corporate finance, and then equity derivatives. By the age of 24 I already had 5 years experience under my belt and moved to Madrid where I headed the equity derivatives desk on what today would be a six figure salary. Most of my peers were only just fresh out of university wondering what to do with their lives.
The purpose of my story is simply to illustrate to those T2W members who post on the site looking for advice about starting work in the City (of which there are many) that if you have a passion for the markets and trading, then it is possible to do it without having a handful of MBA’s and Phd’s.
My advice would still of course be that if you are so inclined, the best route to the City is undoubtedly to secure a place at a quality university (Oxford, Cambridge, Durham, Edinburgh, St. Andrews, LSE etc) and obtain a quality first class degree. For those wishing to be quant analysts then mathematics related degrees are preferred. You will need to demonstrate exceptional leadership skills, a strong understanding of the markets and how they work. Above all, spend plenty of time preparing for the interview. Ideally try and obtain work as an intern during the holiday periods.
Of course, not everyone can achieve such exacting standards, but that should not preclude you from a career in the City. My advice would be to get your foot through the door by applying for positions at the lower levels and impress your bosses by working efficiently and diligently, and demonstrating your passion for the markets. Passing the FSA exam is a must.
I thoroughly enjoyed my time in the City. I have met some very remarkable and talented people with whom I still keep in contact today. The City is not a place for wallflowers, and the trading floor banter and black humour are as essential in today’s politically-correct world as they ever were. Over the past 20 years the City, as a centre of excellence, has inevitably changed. It is more competitive, faster moving, increasingly technology led, more aggressive, and certainly more regulated.
My time and experience in the City has given me the opportunity to continue trading successfully today, and I am thankful for that.
Below are listed some of the areas where you may wish to work in the City, and some additional links to recruitment consultancies, training providers and financial organisations to assist you on your way to your new career.
But always remember…
Success, like the market itself, is random.