With investment banks laying off people and down-sizing, a lot of us trading room veterans sit quivering at our desks, especially in the quiet summer months, wondering what our next move is going to be post life in the markets.
Now I’m not being all negative or anything, because unlike some of my peers who profess a degree of contempt for the current modus operandi, depleted as it is of three hour lunches, huge trades and even huger bonuses, I’m a pretty reasonable chap. I just want to keep on doing what I do best - selling bonds and keeping my nose clean.
Nevertheless, it’s a salutary exercise to take a look at what people actually do once they end up outside the comfort of the market, and the familiar thunk of that (relatively large) monthly pay-cheque.
I met a guy at a party recently who told me he was in M&A - at his own corporate finance boutique. When I went all goofy and slack jawed (humble sales folk always look up to these harder working, better paid and far more serious professionals), he was at pains to put me right immediately.
'You don’t get it', he said, 'The moment you lose that JPM, Morgan Stanley or Goldman business card, you are nothing. All the clout you have is due to your firm’s leverage. We really just eek a living from the crumbs off the table'.
This, of course, is the problem with sales and traders. Without the firm’s infrastructure and capital, our somewhat specialised skill set can have a limited shelf life.
So what do other people end up doing ? The broking route is the market default. Everyone knows someone, and you are still ostensibly doing the same job. But the barriers to success are huge. You need a few tame accounts or contacts who can really help you out, and give you business. If not, you might end up without any income at all. A mate of mine spent his last year as a broker actually paying for his seat, as they charged him for his Bloomberg terminal and other expenses!
Opening your own shop, which senior people used to do, has become impossible because of the expensive compliance and other set-up requirements.
Other favourite alternative careers include:
Opening sandwich bars or restaurants - fraught with danger due to the huge competition out there
Property development, which can tie up capital, is subject to market risk, government tax changes and legal tangles
Working as recruitment consultants (God forbid) - a tough call in a City that is daily shrinking
Consulting work - again subject to the shrinking City and probably where only for the most senior pros with some real experience can add proper value.
And a few people go off to work in sales or systems for places like Bloomberg, and some go into compliance, one of the most rapidly growing financial segments. Go figure!
If I sound less than enthusiastic, it’s because most of these jobs are not nearly as well paid, and seem tame compared to the daily ups and downs of the markets. And where you’re in business for yourself, of course, you have just as much worry and even more at risk than you had on the trading floor. Not that I’m in that league, but a salesperson from my New York days, was rumoured to have lost $5 million in a series of disastrous investments and business ventures.
Most of us have a love hate relationship with the City, especially these days, but be careful what you wish for. Reinventing yourself is often a painful transition - but one that many in the markets are unfortunately now having to make.