There are so many roles to choose from in the banking sector, all with their own benefits and challenges, that it’s worth doing plenty of research before committing to a particular area. If you get on to a graduate scheme, you may get the opportunity to rotate across a few functions and get a taste for which one suits you best. Read on to find out exactly what kind of role might be right for you.
Trading is a very technical role requiring analytical ability as well as keen instincts and knowledge of the markets. Traders price and execute trades, undertaking transactions in bonds, currencies, equities options or futures with traders at commercial and investment banks or large institutional investors, creating complex structured products. Trades are made for short and long-term gain, either buying investments for a return over a long period or trying to ‘beat’ the market. Traders try to balance their portfolio and offset risk by dealing in different investment types.
Strong diagnostic ability is essential for this role, as well as passion, energy and dedication to an occupation that will involve long working hours and high levels of responsibility from an early stage. Having the ability to think on your feet and learn on-the-job in an extremely fast-paced environment is also key.
Also known as investment or asset managers, fund managers make investment decisions on behalf of their clients. They buy and sell shares, bonds and other assets in order to increase the value of their clients’ portfolios. Fund managers can work for independent companies, divisions of banks (including investment banks), institutional clients (such as pension funds, hedge funds and insurers) or for private individuals. When compared to other areas of banking and finance, wealth management is an area that has been resilient to economic downturns.
Institutional vs. private
Institutional fund managers usually handle far larger sums of money than fund managers investing on behalf of private clients and this is therefore generally seen as the more prestigious area of fund management. Private client fund managers deal with wealthy individuals. The amount of responsibility for the portfolio will vary from total decision-making powers to simply being responsible for tailoring the funds to suit the client.
Hedge fund management
This is an area that has seen massive growth during the last two decades, with London becoming Europe’s hedge fund capital. Hedge funds are investment portfolios which seek to improve returns from a given level of risk or, more likely, reduce risk for a given level of returns. This is done by mixing traditional investment methods with newer shorter-term derivative techniques to neutralise the effects of market conditions. Originally regarded as ‘alternative investment’, hedge fund management has now become a mainstream investment method in its own right.
In addition to a great deal of expertise and knowledge of the markets, fund managers need a lot of self-confidence and credibility so that clients have faith in their decisions. This is especially vital when the market indices are falling and the portfolio may not be performing as well as expected.
Sales people are the middlemen between traders and clients, taking orders and negotiating rates with clients on behalf of the traders. Hours are long, and those working in sales will spend a lot of time on the phone to clients, with whom they will often develop strong relationships. Work in sales doesn’t involve long-term projects: it begins when markets open and ends when they close, with new projects every day. The environment of the trading floor is high-octane, dynamic and very efficient. It can be stressful, but many working in the industry find it practically addictive and thoroughly enjoy what they do.
Investment analysts develop particular areas of expertise. They research and analyse specific sectors in order to advise their colleagues in sales and trading departments about different markets, as well as sometimes creating new financial products. Lifestyles tend to be less hectic in research than in sales and trading, and working hours are usually less intense.
Jobs in research are very meritocratic, which means that very quick promotion is possible. Graduate jobs in investment analysis generally start in the larger investment banks, but working for specific asset management companies is another possibility. Career progression can involve moving into areas like hedge fund management.
Also known as relationship managers, client advisers provide specialised services for wealthy individuals, such as portfolio management and estate planning. The most important aspects of the job are building and maintaining long-term relationships with clients, as well as keeping up to date on developments in the financial markets in order to understand and anticipate trends. Client advisers are involved in financial planning and dealing, especially when acting for clients who like to take more of a risk.
In investment banks hours are long and job security is initially low, although this increases with time. The atmosphere can be highly competitive and networking skills are important for career progression. Rewards for client advisers can include some of the most generous pay in the finance industry.
Risk management within banking is about the identification, assessment, prioritisation and management of risks that can arise in an industry that is in a constant state of flux.
There are many different types of risk within financial services and so this role can be extremely varied. Some are employed within trading and investment banking areas, where expertise in statistics and financial modelling helps to set trading limits and constraints. Other areas of focus can include risk management of large or new projects, risk assessment within the insurance sector, planning for business continuity in the event of a disaster, and managing technological risks.
Strong risk management is more important now than ever before, with heightened concerns around international terrorist and geopolitical activities.
The financial services industry is highly regulated, with local and international laws and regulations invariably shaping business activities within the UK and abroad. Legal, compliance and risk management roles help to ensure that businesses and their staff remain compliant with the substantial amount of rules and regulations, as well as any contractual issues and internal business strategy. Compliance and legal specialists can operate in-house or on an outsourced basis. The compliance department makes sure that all company employees know the rules and regulations and abide by them. They have heavy liaison with HR departments to ensure that all necessary training is carried out and that staff documentation is kept up to date. Compliance staff must investigate any suspected breaches of the regulations and provide any information to the regulator that is demanded. The role requires a particular type of sensitivity.
Security & Fraud Specialist
Business security and the prevention of fraud are of ever-increasing importance in a world of cyber-attacks, identity theft and global terrorism. Recent fraudulent activities, such as the Libor scandal, have intensified the pressure on banks to operate transparently and according to best practice.
Security and fraud teams offer intelligence gathering, investigation and incident management services and are often closely linked to operations and technology services. They work across the specialist functions to support the whole business. They look at fraud management, business continuity, cyber risk, insider risk and physical and people security.
The work tends to attract problem-solvers, with inquisitive and analytical minds. A large part of the role is relating technical issues to managers across the business, so communication skills are key, as well as discretion when dealing with sensitive issues. People in this area tend to be specialists with deep industry knowledge, so entry-level roles are not all that common.
Traditionally a back office role, operations deal with the administration required after a trade has been made. If this area is not working effectively, there is potential to lose any capital generated by the trade. Operations is increasingly recognised as fundamental to a firm’s profitability and central to its risk management.
The outsourcing of operations is becoming progressively more common, as firms demand more operational support. The increase in trade volumes, the complexity of the trades and the rigid regulations imposed on firms mean that exciting opportunities can be found here.
Business Technology Specialist
The use of IT is integral to the smooth running of the banking sector. Transferring assets from seller to buyer and payment from buyer to seller used to take several weeks, but now takes three days or less. Speed and technology have become vital because of the huge increase in the number of trades taking place on a daily basis. However, much of the technology can only be used on the simplest of trades. Many are now extremely complex, often taking place across international borders.
Technology roles can be some of the most diverse, as the impact of tech is felt across all functions of a business. You could work for a large organisation or a Fintech start-up – the options are really varied.