Morning Coffee: The keys to survival as a hot young trader. The simple secret to a 40-year investment banking career

If you have ambitions to remain in a trading role for any significant period time, it kind of goes without saying that you need to understand technology. Right now, some of the best traders understand how to code. In the future, technology will be absolutely central to trading jobs, but then trading jobs might not be in the large banks at all.

At least this is the view of Michael Spencer, founder and CEO of ICAP, the interdealer broker reinventing itself as an electronic and post trade services business and moving away from voice broking.

Spencer is one of many senior finance figures writing in Financial News on how the industry will develop over the next 20 years. Large banks, he believes, will struggle to keep hold of staff as regulatory and capital requirements make it difficult for them to compete as market-makers with cheaper non-bank competitors who can provide support throughout the trade lifecycle.

Traders are getting “younger, smarter and savvier”, he says. Banks and non-banks will compete for talent from large tech companies like Google and Microsoft and these stars of tomorrow will “expect more freedom in how they work, where they work and what they wear to work. It will be the firms that embrace this that win”.

But if technologists are likely to be hot property on the trading floor, Spencer believes that there will be fewer of these working within large financial institutions anyway. Banks will instead turn to cloud-based solutions to replace the clunky legacy infrastructure that holds back innovation.

“Financial institutions move away from time-consuming, in-house builds and outsource these services,” he believes. So, there you have it – work for a HFT, or non-bank player and develop the sort of skills that allow you to create IT systems that you can sell into large banks – simple, right?

The antithesis of this viewpoint, however, has come from James Runde, the vice chairman of investment banking at Morgan Stanley who has worked at the bank for over 32 years.

Writing in the Harvard Business Review (picked up by Business Insider), Runde says the secret to success is being able to read and empathise with people. Forget the idea of psychopaths in investment banking, emotional intelligence (EQ) is not only the secret to developing long-term relationships with clients, it’s also essential for a career in investment banking.

"Without EQ, it's likely that you will be your firm's 'best-kept secret' — not recognized, not appreciated, not promoted and, often, not properly compensated," he said. "Developing EQ is just as pertinent for the recent graduate who is starting out, as it is for the seasoned veteran."

Success isn’t just about technical skill, to be successful you need to be self-aware, flexible and open to new things, he says.

Meanwhile:

U.S. investment banks have already started hiring for senior roles in Paris, and Frankfurt – as well as shifting back and middle office roles – says headhunter DHR International (Financial Times)

London is still the top financial centre in the world – just (GFCI)

Goldman Sachs’ head of Asia investment banking Michael Smith is departing. This is not connected to job cuts in the region (Reuters)

To some extent Deutsche Bank is its investment bank. It can’t just scale it back like Credit Suisse or UBS, which have wealth management and retail banking to support it (Telegraph)

Deutsche Bank is making a play to expand in equities, and it’s just promoted Ashley Wilson to lead the division in EMEA (Bloomberg)

Moelis & Co is hiring technology investment bankers, mainly in the U.S. (Bloomberg)

Commerzbank is cutting 9,000 jobs and suspending dividends. Shares have plummeted (Bloomberg)

The UK faces a £10bn ($13bn) tax blackhole if it fails to secure access to the single market for the City (Times)

“This will almost certainly become another example of a failed attempt by a central bank to generate growth and inflation.” (Bloomberg)

Perry Capital, the 28-year-old U.S. hedge fund where Sir Chris Hohn started out, is shutting its main fund (Financial Times)

The person behind pro-Trump ‘super political committee’ is…billionaire banker Andy Beal. (Bloomberg)

“For any professional investor, this is the most difficult period we’ve ever experienced. You have historically high multiples of cash flows, low yields. I’ve never seen it in my career. It’s the most treacherous moment.” (Bloomberg)

U.S. investment banks have over-hired in Asia and need to cut back. Chinese banks are taking all the deals (WSJ)

Jamie Dimon is riding to the rescue of Italy’s banks. Parliament doesn’t seem impressed (WSJ)

A tiny investment bank called Broadhaven Capital has just secured a big pay-day (Business Insider)

A former HBOS banker accepted weekly envelopes of cash and ‘sexual entertainment’ on a regular basis (Financial Times)

Contact: pclarke@efinancialcareers.com