Here's why you'll never make it past vice president on a trading floor
If you listen to Carlo Palombo, the ex-Barclays rates trader who was making £1.5m ($2m) aged just 29 in 2008, being a vice president (VP) in an investment bank is honestly no big deal. Being a banking VP is just like working at McDonalds, said Palombo yesterday. - And not as a McDonalds' manager, but as the guy serving up the burgers and shakes. "VP means junior," Palombo insisted in court as he sought to downplay his alleged role in fixed Euribor rates at Barclays between 2005 and 2009; it's not as fancy as it sounds.
While VPs in banking clearly earn many (many) multiples more than burger-servers, Palombo is right to the extent that while VP sounds impressive, it often isn't. At Goldman Sachs, for example, there are over 13,000 VPs, making it one of the most common job titles in the firm. If you want kudos and responsibility, you need to be a managing director or even a partner.
In this context, new research into the personality of people who become senior managers on the trading floor looks interesting. Conducted over two years by Ian MacRae, author and managing director of 'High Potential Psychology,' a company that investigates the personality traits of top performers in different industries, it demonstrates that the sorts of people who shine in comparatively junior roles in sales and trading are very different to those who excel as managers.
Salespeople in banks are, "significantly higher [than the average person] on both competitiveness and risk approach," says MacRae. "The competitiveness trait is two standard deviations higher than the norm. This is one of the largest differences we see in any industry. This is equivalent to the average population height, compared with the average height in a team of basketball players," he adds.
MacRae's research covers nearly 17,000 people in total and around 500 in investment banking - mostly in London but also in Germany. Alongside extreme competitiveness and a love of risk, MacRae found salespeople and sales traders also had "low adjustment" - meaning that they get anxious about change. In most people, this would be a negative, but MacRae says markets professionals turn it to their advantage: "This is normally associated with higher levels of stress and worry, but when it is used effectively it also tends to be associated with success with entrepreneurs and people whose careers are highly tied up in their own performance."
Overall, he found the top performing salespeople and sales traders in banks have very high competitiveness and low adjustment. "This can be an extraordinarily effective profile," says MacRae of personalities on the trading floor.
MDs are different sorts of people
The ideal personality, however, is very different once you move into a managerial position. If you want to stop being a run-of-the-mill VP and start being a fancy managing director, you'll need to be an altogether different beast.
Firstly, you'll have to temper your competitiveness. The extreme love of winning that made you good as a VP-level salesperson or trader won't help. Nor will your restless anxiety about change. MacRae found leaders on trading floors are both far less competitive and far better able to cope with adjustment. As a manager, you'll need to be very resilient to stress in a stressful environment - rather than not very resilient, but highly responsive.
MacRae's research helps explain why VP is so often the graveyard for banking careers, and why great traders don't make great trading managers.
Palombo is unlikely to be overly concerned by its implications. After leaving banking a decade ago, he seems to have been chilling in Southern California whilst doing something completely different. He told the court yesterday that he never really wanted to work in banking anyway, and only joined Barclays in London to get out of Italy. Once there, Palombo said he didn't like "being surrounded by bankers" - maybe because they were so competitive. Nowadays, he's studying continental philosophy and political theory at the University of California instead. If it weren't for the Euribor case, he'd probably make a great MD.