European Equity Trader - Matt Wheeler

Investment Banks have the most extraordinary number of jobs within them - it can be completely mind-boggling. Every time we went near one, we found a whole new department or group of people that did something we’d never heard of. This seems to be due to the immense specialisation within banks, where it can be quite possible to sit next to someone but have no idea what they do.

There are a couple of major distinctions worth highlighting. Investment Banking or ‘IBD’ tends to be the department which most people imagine when thinking about an investment bank. They are the ones doing huge M&A deals, putting in incredibly long hours (14 hours plus each day - including weekends, for months at a time - is not uncommon) and schmoozing with business leaders. Work/life balance is not easily found, but on the flipside the work you do will likely be high-profile and give you an enormous breadth of business and finance experience. This means that if you want to leave London or Investment Banking at some point you shouldn’t have a problem, as the skills gained are very transferable. We've met ex-bankers in companies ranging from renewable energy start-ups to large pharmaceuticals.

Capital Markets is where you’ll find the traders, salespeople and research analysts. They’re market-based and are the ones you see on TV shouting down phones and pacing frantically in front of five flickering computer screens. They’re monitoring market activity and reacting immediately to any changes. It’s noisier and a bit more adrenalin-fuelled than IBD. One of the big perks of Capital Markets (other than the actual job), is that the hours tend to reflect those of the market. That means early starts, with most people in the office by 6.30am, but it also means you tend to be out by six in the evening - and there is almost never weekend work. So if you’re an early riser the work/life balance is pretty good, especially compared to IBD. One limiting factor is that you’re in a highly specialised, role usually in a very specific market area, so there’s not much in the way of transferable skills. If you’re an FX institutional salesperson it’s not that easy to move into another product area, and you’re going to be tied to working in London (or another major financial centre).

Beyond these two areas you have a massive range of middle and back office functions. There’s Technology, Operations, Legal, Finance, Marketing and HR for a start. So if banking interests you then it’s definitely worth looking at the breadth of what’s on offer. The other thing that struck us about banks was just how diverse they were. Without doubt, they had the most mixed workforces we saw, with every member of a team often from a different country. While this makes for a really dynamic and interesting work environment, it does mean that when you’re applying for a job, you’re not just up against your peers in this country but across the whole world - so that application form had better stand out!

Who are you and what do you do?

My name is Matthew Wheeler, my particular area of focus is consumers, so it is a very tangible sector, you can walk down the high street and you can see a lot of it, when you stay in hotels, casinos, we do from the top we do food manufacture, beverage, food retail, general retail, luxury goods tobacco, hotels and gaming stocks.

What is Investment Banking?

An investment bank differentiates from a commercial bank in that you can't go and have an account with an investment bank. A commercial doesn't go and invest your money for you so if you have got money you want invested, whether it be in equities or bonds, you go to an investment bank for advice. You go to a commercial bank more to borrow money for a house or loan or to have a deposit account. An investment bank is very much, you will go there for advice; it is a bit like going to a lawyer, I suppose, and it’s got many different areas. So therefore if you had a company that you wanted to sell, you would go to an investment bank, you wouldn't go to a commercial bank. And then that investment bank has the secondary platform that I work for, the Equity Trading platform, whereby perhaps your company might be traded on one day. They will also advise you where to invest your money, invest in bonds or stocks or property, which you won’t get at a commercial bank.

What attracted you to this career?

Well I started straight from school, and I really ended up in it by chance because nothing really attracted me to it, but working on London and working with numbers was something I always wanted to do, and I have always enjoyed the risk side of things - so it was really numbers and the risk that I enjoyed.

What does your job involve?

So the first part of it is, a customer will come to me - normally through a sales person - and they for instance want to invest in Tesco shares. They can do that one of two ways; they can work to buy Tesco shares in the market place, which is an electronic market whereby we have algorithms and computers that will work in these electronic market buying Tesco shares. Or, if they want to buy a sizeable slug of Tesco shares and speed is of the essence, this is sometime quite difficult, so I as a principal will sell Tesco shares and will take on the risk by selling the shares and I will go to the market place and I will buy them in my own time, and hopefully I will buy them a little cheaper than I have said to the client. Of course this does not always work and we end up paying more than we have sold them for, but on the whole the idea is to see them for a little bit cheaper than we bought them for, and hence that is where we make our margin.

My job really comprises two halves. One half is looking after our customer base, and part of that is that we are involved in putting up capital where they want to invest in retail or general retailers; and the other half of is trade on the firms account, in other words with the firm’s own money, and the idea is that we buy stuff and it goes up and we sell it, or it goes down and we buy it back. So those are the two halves of the job.

What do you do on a typical day?

My day starts at around six-thirty in the morning and normally it finishes around five. In fact my day probably starts at the time I get on the train when I start reading what has gone on in overnight markets. A lot of research is published early morning and overnight, so I spend a lot of my time reading that, so actually when I arrive at my desk I’ve got a good idea what markets have done in Japan and Hong Kong and Australia overnight, I’ve also got an idea of what we’re talking about, the themes for the day. The first half an hour I spent gleaning any other news that has been written by our competitors, that has been written on one of the stocks that we cover; also a lot of stuff is written in the press, so the FT. There are a lot of websites now that publish news, so that is half an hour spent gathering any bits I didn’t get to read on the train. Then we have a meeting about five past seven whereby all the six industry group books have a meeting - we have a discussion about news flow, about where the market will perhaps trade that day. Then we normally get out about seven twenty-five and then the next half an hour is perhaps talking to a few brokers on the streets - so in other words a few of the brokers who service a lot of banks within the City to glean any extra bits and pieces that have been said by other banks in the last half an hour. Then markets in Europe open at eight London time, on the whole, and the trading day basically goes all the way through to four-thirty and then close; everything is closed by four thirty-five, and then there is a sort of tidy up process.

Now within that trading day a lot of it is spent on the desk; however, I do have meetings during the day where I want to sit down with an Analyst and discuss a certain topic, or discuss certain stocks. Obviously, because I am involved in the recruitment process within the firm, there may be an hour set aside each week for that for those tasks.

Occasionally we will have companies in after the close to come and talk to us, we may have Tesco management in, mobile brokerships, they will come in and we will get a sales force together and trading, and we will be in there and listen to Tesco management and what they’ve got to say, and we will go and push those ideas or tell our customer what has been said. So you are normally out of here by five-thirty, but when we have companies in it is nearer six-thirty.

How is Capital Markets structured?

You have Research, and obviously Research is an area that researches the underlying companies, so they spend their days talking to the CFO, speaking to industry sources about macro. There are two or three things; there is the underlying business, then there is the macro situation, and they bring it all together and they produce research, so a lot of their time is spent building models within Excel, speaking to CFOs and producing an end product or a piece or research. And normally that product ends up having a buyer rating and equal rating or a sell rating. Then the other part of their job is they go and market their research, so Analysts tend to travel one week in every month, they are travelling to United States or they are doing a European trip and they are pushing their research to the end user, in other words, the investor, which is the pension fund - or there are a lot of hedge funds these days, so they will spend one week in a month marketing their research. They will also spend some time with companies taking them round investors in the States or in Europe, so the companies can have a better relationship with their underlying investors.

So you have Research, then you have Sales, so the Sales are there to effectively sell the research to the client. They spend their day picking what they believe is the best piece of research that day, or what is going to get the most amount of traction with their customers, and whereby they are then going to receive orders as a result of the research - that is how they will make their money. You know, we all get paid a commission for executing the business we are given as a result of pushing the research. Those orders that are produced then come though the sales trading team. So sales trading sits between sales and trading, and a lot of institutions will have dealing desks, whereby all the fund managers will route their orders through a centralised dealing desk, lots of PMs running different funds all over the world, and all these orders will normally be routed through one desk because they may have two or three funds that want to buy stock and it is much better for these orders to be grouped together and then it can be controlled. You can’t have one buying them from one broker and buying off another broker, and also you get different prices. So then those orders, they will have their contacts at investment banks and brokers whereby they in turn will give their orders to Sales Traders. Sales Traders will come to the Traders and either ask for capital, whereby as I explained in Tesco earlier, we will put up capital and sell them stock and then we will go and unwind the ensuing risk; or those orders will come in and we will work them in an electronic algorithm, so basically a computer that has been set up to trade with volume – so, in other words, as sales trade - we will be given an instruction whereby the computer buys a third of the volume, so for every 100,000 shares we trade we will try to buy 33,000.

Why Trading?

As I said I came into this by chance, I didn’t pick it. I sort of grew with the business, and trading is where I started and I have been doing it for twenty odd years and I didn’t really pick the industry I wanted to be involved with. I wanted to work with the stock market and I was good with numbers, and if you have those skills you tend to move towards trading. If you are better at talking and pushing a sales story and building relationships then sales is perhaps an area you want to go to. If you have a very good analytical mind then perhaps research is the area you will end up in. But I didn’t choose it.

What are the best bits about your job?

One of the best bits over the years, for me, is having been involved in a lot of recruitment and training over the years - and actually seeing someone you have trained go on and be successful in the business, it’s always a great feeling, to see that happen. So I would say seeing someone start with you, you see them grow in their career and then go on to be very successful, for me is one of the highlights

What are the worst bits about your job?

The worst bits - some people say early mornings, but I don’t mind the early mornings, it is quite quiet and there is no one around. One of the worst bits of it is, everyone has bad days; and I suppose getting things wrong, losing a lot of money is not enjoyable, so I would say that is one of the worst bits of it really.

What has been your greatest achievement?

I arrived in this firm in 2002 and I came to trade oils and utilities. And about six months in my boss, my line manager, came to me and said: ‘Look, we haven’t got a Pan-European consumer product, we would like to set one up, will you do it?’ So in 2003 we set up what is now Consumer Trading and what is now the Consumer Industry Group, and, you know, we’ve taken it from nothing to being a number one share last year in Consumer, so I think that is an achievement I can be proud of.

Any regrets?

I might have - the firm I worked for before, I had a couple of opportunities to work abroad and for whatever reason they didn't happen. I think I would have enjoyed working in New York for a bit or Hong Kong for a bit. I didn’t do that and it is something I wish I had done.

What is the pay like and are there any perks?

It is performance-related - you perform and you like to think you get paid. If you do perform and you don’t get paid, it is a very competitive market place and someone else will come and poach you. So it is a very competitive place and is all based on performance, more so than it has ever been. Bonuses are paid once a year and this is when the kicker comes, so you have a base salary and according to your performance over the year, you may or may not receive a bonus.

The benefit of having health care in a place like this is that you buy it on such a large scale, from the firm’s perspective you are buying it at a far greater discount than if you would do if you were just going to go and buy off the street. There is a pension scheme - to be honest with you most big firms and industries have pension schemes now and you can contribute over and above and the firm do match it so yes, that’s a benefit. As far as jollies go, I don’t really think there are many of those any more.

How long is a working day and do you have to work out of hours?

There is no one who comes in here at weekends in trading, every now and again because it is a European job you know we will have a Bank holiday in the UK but Europe will be open so we may work on a Bank Holiday but all I would say is a lot of money throughout Europe is run out of London, so you will find that when London is on holiday the markets are very quiet and if you have to work a Bank Holiday, you will be able to take that Bank holiday in lieu. I basically work in the office for eleven hours a day and I do another hour on the train, so it is a long day. And in trading it is not so much the length of the day - you are looking at screens all day long, so it is more of a concentration thing. In research they probably have a longer day but they get up and can walk out for half an hour but trading is markets open at eight and close at four thirty, so that part of the day you have really got to be there, especially if you want to seize various opportunities that may arise in the day.

Interviewer: But what if you want to do an hour for this or an hour for lunch, is it the case that you can't?

You have lunch at your desk on the whole. Going back ten to fifteen years, you would go out to lunch, but that doesn’t happen anymore. It is just a competitive structure of the market place at the moment and I can’t see those pressures easing.

Is there much in the way of travel?

I travel probably three or four times a year. This year for example I have spent a couple of times in America, I spent a week in the spring in America seeing customers, and I will spend a few days next week seeing customers - so probably about three or four times a year, but not nearly as much as someone who worked within Research, an Analyst in Research will do an awful lot of travelling, but you don’t so much in trading. There is video conferencing that takes place now, which cuts the cost of getting on an aeroplane, having someone on an aeroplane means they are out of the office and not working. Are you always on call on your BlackBerry? Yes, I have been on holiday and ended up doing some work, so it is the nature of the world we live in now, the communications. When we go away we are never totally away, unless you leave the technology at home.

Do you have to be based anywhere in particular?

You could do, but one of the beauties of having a trading floor like we have here is that you create your own market place. You know, I could sit in a room on my own somewhere, but you wouldn’t have those same discussions with a lot of people, the experience of being in the room. You immediately feel in the room there is something going on in h  emarket, when there's is a deal happening there is a buzz and so it becomes very sterile if you were to take it away. We try to replicate our own market place, what would have happened twenty-odd years ago, when we had a stock exchange trading floor where there was a market place and you could feel things going on and feel it was busy.

What is the working environment like?

So the working environment - we basically work on a football pitch, which has got rows and rows of desks that are then decked out, you probably have four or five computer screens per desks and three actual computers underneath.

Within trading, it used to be very male-dominated twenty to thirty years ago, there were almost no women in it, there are a lot more women now in research and a lot more women in sales. As is happens within Ellerman Brothers we now have three out of the traders, so we now have about twenty two trading European equities, of which three are women so we are trying to encourage women to come into trading. 

At the height of the dotcom bubble a lot of firms went to dress down so you didn’t have to wear a tie or wear a suit, you could come in a pair of smart chinos and a shirt. The dotcom bubble finished and a lot of firms decided that we would go back to wearing suits, so it is very much suits for men and smart dress attire for women. 

At the time there were a lot of investment bankers were seeing CEOs at these small dotcom companies and these CEOs would turn up in t-shirts and so I think it was more of a case whereby they wanted to sort of fit in with the client they were seeing at the time and it spread throughout the bank and the industry a little but and that of course sort of stopped and the corporate customers changed again and a lot of the IPOs, so Initial Public Offerings. of some of these dotcom businesses and of course they were all run by people that were sitting in front of the computer screens a lot of the day so didn’t need a suit or tie, so investment bankers felt they should also perhaps dress down a little bit and hopefully then gain their business basically. But once that finished it moved back to business orientated suit and tie, which to be honest with you is far easier in the mornings - getting up and get a white shirt, you can’t go wrong.

How did you get into your job?

Well I don’t think I am a very good representation of what you have to do now, but when I started you came straight from school, so I didn’t go to university - I literally finished my schooling in the summer and I looked for a job and I was working by October. Nowadays, we have the beauty at the moment of being able to choose from really any university we want to choose from, which does make the process quite a long process because there are only a few jobs we offer every year and so these days you need to have good A-levels and you need to have a good university degree, really, to get an interview. Then there is the interview process where I think you have three interviews, and then we lose some after the first interview, and then some after the second and then the finals whereby there are jobs at the end of it. There are other ways of getting into the firm now, we have internships but again there is an interview process but you will come and work in the summer, the year before you work, so you will come here for eight weeks and work, which is a very good way of getting in to it and it gives you a very good idea of what the firm is about and perhaps what area you will slot into best.

Normally you will be made an offer or not at the end of that internship, so you go to your final year of your exams knowing that you have just got to get your exams, if you get the grades that we want, then you have got an offer of a job.

How does the graduate scheme work?

You are given the opportunity and I think to start with you will rotate to different areas of the bank and I think there are other banks where you are not exposed to different areas of the bank and hopefully by doing that you will get an idea of I like that or I don’t like that and visa versa. Those people who work in those areas can think I quite like her, I quite like him, I don’t think you are going to fit here, I think you are going to fit there. So I think you get a much better idea overall of being in an investment bank and through that you can narrow your choice down and you will end up picking three areas you will home in on and hopefully one of those areas, they like you and you like them and the two marry.

What are the key skills required for your job?

I think one of the keys is you have got to have concentration and it is very much a forward-looking job so you have got a number of stocks you are looking after and you are continually going through if this was to be announced, how would this stock react, so you are continually going through your mind if that announcement came out and there were a merger and we could get together with so and so, yes that would be good news and there is a sort of a multiple they would trade hence, this is the price, because as soon as deals get announced people want to know straight away, is it good news or is it bad news, so you spend a lot of your time mapping out stuff in your head, how will things trade. So that when they actually happen, you can then be very instinctive, and you can say right it is good news, because stocks will move very quickly because markets are very efficient these days so normally stocks will find the level very quickly and that is an opportunity to make or lose a lot of money.

What's your top tip for breaking into your industry?

I think you have got to be able to communicate, you know communication is the most important. It is first impressions and you want to stand out, always turn up smart be clear and coherent with your questions and answers. Take an interest, before I have interviewed people who, when I have asked them what has gone on in the market place this week, have got no idea, so if you want to come into the industry, do a bit of research do a lot of reading buy the paper, read the business parts of it, find out what is going on around the world, where is the growth, where isn’t there growth. So I think that to have a very good understanding about what is going on in that particular industry that you are coming to an interview for, because you will be amazed how many people go into an interview and they think they have got a first class honours degree from Cambridge but they haven’t got a clue of what has gone on in the world of finance in the last couple of months so that does happen so I think to be coherent and also to have done some research about exactly what is going on in the macro environment, at that particular stage.

What's the career progress and how quickly can you move up the career ladder?

You come in as an analyst, you are reviewed on a six monthly basis, as I understand it but it is always changing. You then, within two years depending on your speed and how quickly you are attuned to your business area, I think you come off the analyst programme and then you will become part of the industry group. As you go through you just end up taking more and more responsibility, so to start with a lot of your time will be accessing news flow and collating news flow and pushing that to our customers and then as time goes on and you become more confident in what you do, you will be giving your view points on various pieces of research, whether you think it is a good piece of research, you might think it is rubbish and that is what customers want to hear, they don’t just want the research necessarily verbatim, this is a buy bla bla, they don’t want to hear that, they do want to hear you know it is a buy but I think it should be a sale and then that sort of process is going to happen as your confidence gains, and as your confidence gains you will be given more responsibilities, you will, within two years be interviewing people and be involved in the interview process so the first interviews the firm gives you will be involved in that process. A lot of that sifting out in the first interview is done by people who have been in here for two or three years.

Where do you see the industry going?

There are certain economies that look like they are heading for recession, there has been an awful lot of money lost within the credit markets in the sub prime, that looks like it is abating, but there is some big holes that has created. At the moment I can’t believe there are going to be a lot of jobs in Fixed Income at the moment and the industry will be shedding, so getting smaller in the short term. But an area that has grown incredibly quickly in an area that is growing is Commodities - while I trade stocks and shares, people that trade oil and copper and all these food commodities, you can see in your weekly food bill that food pricing is going up and I think wheat has double over the past year and oil has doubled over the past year - and it was only eight years ago that oil was trading at eleven dollars a barrel and it is now trading at a hundred dollars a barrel. So that is an area that has exploded and it has predominantly been a result of the likes of China, which have grown quickly and they are not big producers of all of this, so they have had to buy it in from the world. So that is an area which is expanding at a huge rate - whether it continues to do so in the future, I don’t know but it is certainly a hot spot at the moment.

Is there scope for movement during or after this career?

One side of my job is effectively running part of the firm’s money - so could I conceivably go and work at a hedge fund? Yes, perhaps I could in the future, so there are areas you can move into. but I couldn’t then move into advertising as it is a whole new skill set. I think perhaps a salesperson could, but from my perspective it doesn’t set you up for being able to move across to being a lawyer or doctor.

What are the industry resources that someone interested in joining must know about?

A lot of my time is spend reading, from the minute I get on the train I am reading; you can get a lot of technology these days and read, you have got the internet, Bloomberg, you have got emails, so I spend a whole hour of the train reading in the morning. There are so many news websites at the moment that we subscribe to whereby we get specialised data and news flow. There is another website we subscribe to whereby if you have got a particular industry group you are interested in, so for instance I am interested in consumer and retail and those sort of things, there is a website now whereby it filters all those stories out of the press so it will get all the retail stories out of the FT and all the retail stories out of the Telegraph and the Time and any other broadsheet, the Wall Street Journal, and it will collate them, and you can access those stores and read them. So an awful lot of my time is spent reading research reading the press what they have got to say about what is going on in the world so yes a lot of sites you can access you can do it all from home on your computer.

The FT is a great website you can log on to and also the Telegraph and Times, the Wall Street Journal you can log on to, if you go on to Reuters there will be a certain amount you can read on the Reuters main website at the end of the day it is a news agency and again with Bloomberg.com so you can do an awful lot of work and research just by using the web and the news wires that come through.