Productivity is the watchword in markets jobs today. As 'seat costs' increase thanks to higher investments in risk, compliance and technology, salespeople and traders are under pressure to generate higher revenues to earn their keep. Those who don't risk obsolescence and replacement by machines.
So, which products should you specialize in if you want to be especially productive and more than pay for your seat? The chart below, based upon information provided exclusively to us by financial research company Coalition, suggests securitization and G10 credit are the product areas go for. Coalition's data says that securitization salespeople and traders made an average of $6.1m each in revenues in 2014, while G10 credit traders made an average of $5m. This compared to just $2.3m for front office cash equities professionals.
Where you will find the most productive salespeople and traders in investment banks
Productivity in banking is important to the extent that it's aligned to pay. As we reported a few weeks ago, compensation in fund management is increasing as fund managers' productivity rises. Conversely, compensation in banking is falling as bankers' productivity diminishes.
However, productivity isn't the only element in the compensation equation. As J.P. Morgan clarified in its presentation yesterday, pay for markets professionals is also reflective of capital costs and return on equity (RoE). And as the bubble chart below from Credit Suisse shows, RoE in cash equities business is unusually high - which may go some way to mitigating the effects of poor productivity per head at bonus time.
Similarly, some advisory businesses use very little capital indeed, making it less disastrous when senior M&A bankers generate a mere $2.4m per head on an annual basis.
Either way, Coalition's data and CS's bubble chart communicate a similar message: if you want to get paid in sales and trading today, get yourself to a securitisation desk. Productivity here is high and increasing and RoE is strong. It's little surprise that securitization professionals are now some of the most sought-after in the industry,
Return on equity by product area at Credit Suisse
Source: Credit Suisse