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Discover what it takes to embark on a career path of institutional capital markets sales
Published August 15, 2023
Updated July 7, 2023What is Capital Markets Sales?
Capital markets sales is a career path within the capital markets division at an investment bank.
This salesperson is responsible for assisting clients in buying and selling capital market instruments such as stocks, bonds, foreign exchange, and derivatives to earn trading revenue and commissions for the bank. The bank’s clients are buy-side institutional investors that manage money professionally and may include hedge funds, mutual funds, pension funds, and governments.
They are expected to be experts in the financial instrument that they are responsible for, as well as manage and develop their relationship with key contacts within the client’s organization.
Given the high-stakes nature of the industry, there is intense competition, both externally and internally, for capital markets salespeople. Unsurprisingly, the role is highly stressful but also potentially very lucrative, making it highly coveted.How are Capital Markets Sales Departments Organized? Sales and trading
Although we often hear about roles in sales and trading (S&T) lumped together, in actuality the jobs of sales and trading are very distinct, demanding different skills and responsibilities.
However, in most banks, the salespeople and traders work together in a symbiotic way. For example, traders depend on salespeople to help them buy or sell the securities they would like to trade. Salespeople depend on their traders to help make prices for securities that their customers would like to transact.Organized by asset class
Firstly, capital markets sales is a very specialized role as salespeople are expected to be extremely knowledgeable about the capital market product they sell. Hence, a salesperson that covers clients on foreign exchange won’t generally be selling stocks to that same client.
The reason for this clear delineation is simple — to ensure accountability and to encourage specialization. Investment banks want to make sure that their salespeople are focused on maximizing their share of revenue from each client, as well as to be experts on their individual markets or client groups.
You will often see sales teams aligned by the specific market that they are responsible for or the client segment that they cover, most commonly referred to as “desks,” such as:
G10 interest rates sales
Canadian equity research sales
Hedge fund credit sales
Insurance solutions salesWhat Makes for a Successful Salesperson?
For a salesperson, your success is the amount of sales (measured by either volume or commission) that you bring to the desk. While there are rankings provided by third-parties and counterparty rankings provided by clients, the value of a salesperson lies in the ability of that person to convince the client to trade with them.“Smile and dial”
It is often jokingly said that salespeople just need to “smile and dial,” or just use the corporate credit card wining and dining clients, but it is not that easy. In reality, the financial products that they sell are, for the most part, quite generic — a 10-year US Treasury note bought from Investment Bank A is the exact same as a 10-year US Treasury note bought from Investment Bank B. So the real value of a salesperson is to convince the client to trade with you and not with your rival. And that boils down to the strength of your relationship with the client.
So, a salesperson must be self-driven, knowledgeable, extremely responsive, persuasive, and personable. Only then can they win the trust of the client to build relationships and ultimately increase their worth, both for the bank and personally. Indeed, it is commonplace in this cutthroat industry that salespeople with key relationships are poached from competitors.The value of the platform Typical Job Duties in Sales
Capital markets sales work on the bustling trading floor, where they persuade and facilitate investors’ trades, most times based on the firm’s research or trading desk’s “house view” in real-time.
On a typical day, sales start very early. The first thing to do is to review overnight news and trades, peruse the latest research, and formulate their strategy. Most sales desks will have a “morning call,” where various key traders and research analysts may present their latest views. Salespeople are often called upon to outline what their key clients are thinking and how they are looking to position their investments.
Capital markets sales focuses on calling on clients to discuss trade ideas, news, and even trade market gossip. Throughout the day, they need to stay on top of financial trends, monitor new earnings reports, and react to new information. This relevant information must be relayed quickly to key clients and colleagues so those opportunities can be captured.
However, a day for sales is very long and full of stressful hours. The end of the market day doesn’t necessarily mean that salespeople are off the clock. Salespeople may continue entertaining their clients with dinners and drinks. Many salespeople with regional responsibilities may also frequently travel, as well as be available for late-night or early-morning conference calls.
While most roles within an investment bank tend to be stressful and fast-paced, the hours tend to be more “set” for a salesperson than for say, a colleague that works in the investment banking division. Investment bankers may have some weeks where they work over 80 hours when they have a live deal on the go, but there might also be weeks where the workload is lighter. For salespeople, there really isn’t much fluctuation in the amount of hours worked and weekends tend to be more free than an investment banker.Compensation Factors and Salary Expectations in Capital Markets Sales
With this high level of expectations and stress, compensation for good salespeople is high. Compensation for capital markets sales is broken down into a base salary and year-end bonus. As is the case with most jobs in the financial industry, experience is typically associated with higher pay.
But what separates salary expectations in sales from other financial jobs is the weighted impact that an individual’s performance has on bonus pay. The better a salesperson performs throughout the year, the larger their year-end bonus will be. Year-end bonuses can be many multiples of the annual base pay. Furthermore, the overall performance of the desk and the firm as a whole also has an impact on bonus pay.
As a sales manager with more salespeople under their group, their bonus pool also increases and in this industry, that means more power and influence.Job Qualifications for Salespeople
Roles in capital markets sales are fast-paced, competitive, and very lucrative for those who have the right skills.
New sales associates are frequently recruited from highly sought-after undergraduate programs across the globe. If a new analyst (undergraduate degree) or associate (graduate degree) performs well during the year, they can expect to be promoted and continue on the career path toward vice president, executive director, and, ultimately, managing director.
Sales is largely considered a “learning through doing” type of career, and those who exceed expectations on the trading floor can achieve incredible successes. Career mobility is often determined by one’s ability to earn commission and bring on new clients.
Some individuals can perform exceptionally well at the first investment bank they join, while others may find themselves being poached by other firms until they work with one that is best suited to their needs.Additional Resources
Interested in learning more about a career in capital markets sales?
Enroll in Introduction to Capital Markets for an even more in-depth look at this dynamic role.
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