So, where does the money come from?

Part I: Life of a Salesman (and Saleswoman, for those who care about political correctness)

In response to some of my recent posts on bank earnings, one of my many (and by “many,” I mean two) followers said the following, “Dude, I really don’t care what you have to say about VaR or some Swiss bank’s equity trading results. Tell me where the money’s coming from, or at least give me a colorful story.”

I think I’ll do both. In the next few posts, I’m going to explore the engines behind Wall Street – that is, the employees who call the trading floor of investment banks home. I’ll begin with salespeople, not because they’re important but rather precisely because they’re irrelevant and it’s a Thursday night. Simply put, I’m too lazy to make a more substantive post.

Still, I’ll do my best to organize the topic in a semi-coherent fashion. Currently, the job of salesperson on Wall Street involves five main activities (listed in no particular order):

1) Looking attractive
2) Forwarding Bloomberg messages to traders
3) Taking clients out to dinner/getting hammered with said clients
4) Ordering lunch after spending several hours opining on the day’s dining options
5) Discussing plans for the weekend, which begins at 1 pm on Friday

To be fair, all of these activities tend to be closely connected, but for the sake of simplicity, I’ll deal with each separately.

Looking attractive

For better or worse, we’re not in the 1980s any more, so banks don’t place as much of a premium on looks as they once did. In fact, at my bank, most of the salespeople were male, and most of the female salespeople were aesthetically challenged. Still, a few made attempts to look attractive. Some put on a lot of makeup; others not a lot of clothes. Traders within the bank and beyond no doubt appreciated the efforts. But, when push came to shove, many preferred strippers. Trader preferences aside, all salespeople need to look presentable to impress clients. So, whether male or female, most in the sales force are far more put together than the traders they receive prices from and send inquiries to.

Forwarding Bloomberg messages

Speaking of sending inquiries, salespeople must be familiar with the all-important “Forward” key on Bloomberg, the chief messaging system that banks use to communicate internally and externally. See, while banks may cull employees from some of the finest institutions of higher learning in the world, at the end of the day, the function of a salesperson comes down to one skill – forwarding an inquiry from a client to a trader and on occasion, forwarding a price from a trader to a client. This complicated series of actions can take quite a while to get used to and surely, salespeople have been known to screw it up. But, once they’ve mastered the art of forwarding Bloombergs without reading them or otherwise making an attempt to understand what’s going on, they’re all set.

Taking clients out to dinner

The great thing about being in sales is that you get paid to spend the bank’s money on fancy dinners for clients. To be fair, at the beginning of these dinners, some clients expect you to deliver a few coherent words on some aspect of the market. But, once you’ve spewed some incomprehensible “market color” and the drinks start flowing, everybody gets too drunk to figure out what’s happening. Of course, you never knew what was happening, but that doesn’t matter. If you concentrate on beating your hangover and somehow getting in by 7 am the next morning, you’ll be golden.

Ordering lunch

No matter what’s happening, lunch tends to be the focal point of a salesperson’s daily routine at the bank. In fact, the very day that Lehman collapsed, I remember the salesforce debating the ramifications of an important decision that would no doubt affect all their lives – Mexican or pizza? They ended up choosing the latter. Fortunately, on that day and many others, they ordered enough to feed a whole army of worried traders. As I discovered, it makes sense to befriend a salesperson. You’ll likely pick up some free lunch and at the very least, will develop a fine sense of the dining options in the area.

The weekend

If lunch is the focal point of a salesperson’s day, the weekend comes a close second. And it comes early. When many people think about life on Wall Street, in addition to great riches, they envision bad hours. While it’s true that young guns on the corporate finance side can put in as many as 100 hours a week copying and recopying pitch books for deals that will never happen, on the trading floor, the hours really aren’t all that bad. Particularly, for salespeople, and particularly, in the summer. At times during the summer, I wondered whether Friday had been officially added to the weekend by one of those many government fiats emerging from Geithner’s office. Indeed, the sight of a salesperson on the trading floor after 1 pm on a Friday was about as common as a subprime loan that hasn’t defaulted. Once the day’s pressing business had been effectively disposed of – all of the lunch orders had been deposited in the trash – salespeople tended to make a rush for the exits, usually en route to a Hamptons hideaway. Don’t get me wrong, the Hamptons are nice, but the whole trip had to be anticlimactic for the bank’s most dedicated laborers. After all, nothing can be good enough to justify a mention every other sentence. Still, I’d take the beaches of the Long Island Sound over a musty trading floor carpet any day.