Interview Question: Why Sales and Trading?
When it comes to sales and trading interviews, there's a wide diversity of potential questions you can get. However, you can rest assured that you will almost invariably be asked "Why sales and trading?" at some point in the interview process.
Many think that this is a bit of a gimme question. One that has no real right or wrong answer so long as you show a certain level of enthusiasm for S&T.
The reality is that a large reason why this question is asked in the majority of interviews is that it's a way to suss out whether you actually understand what sales and trading is all about.
In a traditional superday setting an interviewer will normally interview around six applicants give or take. At least a few of them will give such poor answers to this question that it'll raise serious red flags (if not ding them entirely).
With this question, there are some things that you should absolutely include in your answer and some things you absolutely should not include. So let's do a bit of a deep dive into how to approach answering the question.
How to Prepare Your Answer
Because "Why sales and trading?" is such a common question, you should take the time to write out your answer and practice verbalizing it a bit.
Here are a few broad things to keep in mind about your answer.
1. Keep Your Answer Under Three Minutes
This is rather self explanatory. Ideally, I'd say your answer should be around two minutes in length. But if you feel you absolutely cannot cram everything you want to say into just 120 seconds, then you can extend it out to three minutes.
Keep in mind that if you say something of interest to the interviewer, they'll ask a follow up question about it later in the interview. There's no need to explain every part of your answer in-depth. You can leave a few cliff hangers.
It's very important to practice verbalizing your answer and to notice the pace of your speech. Often times folks will come into interviews and rush through their answer to this question so quickly that you can barely understand what they're saying.
Take your time, speak at your normal speed, and don't try to cram everything in that possible. As with nearly everything in life, narrative matters. Try to paint a good story for your interest that is easy to follow and doesn't have too many diversions (even if that means keeping out some interesting anecdotes or facts).
2. Show Contextual Understanding of S&T
It's vitally important to remember what I said in the introduction: this question is primarily asked to see whether or not you really know what you're getting into by joining the S&T division of a major investment bank.
Your interviewer will have heard dozens of "why sales and trading?" answers over their career. Trust me, they all blend together after awhile and no matter how interesting you think your personal story is, it probably won't make much of an impression.
The best way to stand out - because it will make you the most unique - is to incorporate little tidbits in your answer that should you understand what sales and trading is really all about.
For example, you can do this by quickly talking about your interest in certain more esoteric trading desks (e.g., CLOs, distressed debt, MBS). Or you could talk your interest in being able to facilitate the actions of large institutional clients, getting to understand how prominent hedge funds, pension funds, etc. are thinking about markets through making markets for them.
I would say the majority of folks who get to a superday - whether at Goldman Sachs, JPM, MS, etc. - have a very fuzzy or non-existent understanding of the difference between proprietary trading and market making.
For this reason, talking about how excited you'd be to see how others think about markets, and facilitating what they're doing, is a way for you to implicitly show your interviewer that you understand that all desks in modern sales and trading are market making desks (where the proprietary part is a consequence of hedging out risk and facilitating anticipated future client demand).
Bringing this up would be highly impressive and would absolutely be noted by your interviewer as it shows you really have an understanding of what the role of folks within S&T is.
3. Show Contextual Understanding of the Program You're Applying to
Another thing to keep in mind is to be aware of the nature of the program you're applying to and tilt your answer in that direction.
For example, if you're applying to Goldman Sachs for a summer analyst position, then you absolutely shouldn't say anything about having an area of the trading floor you definitely want to join (because they run a rotational program where you'll sample three different desks). Instead you should speak broadly about your interest in S&T and that you have a few particular areas of interest, but understand that you couldn't possibly know which area is right for you until beginning, which is what makes the rotational program so fantastic.
However, if you're applying to JPM for a summer analyst position, you will be more settled into one desk. So it's perfectly fine to say you have a few particular areas of interest and think that the JPM program is fantastic for getting you significant, continued exposure to one desk for the duration of your time as a summer analyst.
Once again, the reason why including these little tidbits in your answer is important is that you demonstrate to your interviewer that you're prepared. You know what you're getting into, both at the industry level and as it pertains to the particular role you're applying for.
Things to Avoid in Your Answer
1. Personal Stories
When many think of what their answer to "Why sales and trading?" should be, they immediately think of giving an overly personal story.
The reality is if you have a good story to tell, then that's fine. But talking about how you got interested in stocks at age 12, etc. doesn't necessarily communicate to the interviewer what they really want to know (that you know what S&T is all about and you want to break into the industry because it'll be a good fit).
If your interest in the industry primarily stems from having been in an investment club in college or something, then that's perfectly fine. But just remember what you really should be trying to communicate through your answer here and don't get too wrapped up in a story that doesn't really communicate whether you know the difference between a day-trader and someone working on the floor at GS.
2. Personal Trading
Closely associated with the first point is talking about your personal trading in an interview setting.
My general rule is to just not talk about it at all. It's great if you have an interest in markets and have done well. However, talking about your personal trading gives off an impression of not really appreciating what S&T is all about.
Remember that the vast majority of desks within S&T are not in equities and that within equities very few work in straight cash equities. So when candidates come into a superday talking about their 20% annualized returns over the past three years it can give off the impression - especially to more cynical interviewers - of being hubristic and not at all relevant. Not least because no one is making discretionary bets on single-name equites in S&T.
It also, most importantly, doesn't show an appreciation for the fact that managing a personal equities portfolio is not going to be overly well correlated for how you do as a junior trader or sales person on the MBS, FX, IG credit, etc. desk.
3. An Emphasis on Equities
Finally, as I covered briefly in the last point, try to steer clear of having an answer that overly emphasizes equities at all.
One of the things that raises eyebrows, especially when interviewing at banks that have rotational programs, is when candidates speak a lot about equities. This is because it raises the obvious question of if you realize that most folks in S&T aren't working in equities.
Example Answer: Why Sales and Trading?
Let's go over an example answer that would work very well. Of course, you should craft your own answer to this question incorporating in your own interests and backstory. However, this should give you a good feel for the structure and approach.
Sure. Well I've always had quite an interest in markets - insofar as anyone my age really can have one - and it seems to be that obviously working in S&T allows one to be much closer to markets than areas like investment banking or equity research.
While I'm not entirely sure what desk would be exactly right for me, which is why I think the rotational program is great, one of the appeals of S&T to me is the ability to potentially work within markets that you otherwise wouldn't have the opportunity to easily be able to. For example, I've been reading quite a bit about the treasury, MBS, interest rate swaps markets and find them absolutely fascinating. So, obviously, as a young person looking to potentially get exposure and learn about these areas, there's no better place to begin than on the sell-side on one of these desks.
I also find the role of someone within S&T fascinating on both the trading and the sales side (although I do think I lean a bit more toward the trading side). I think having the ability to see how large institutional clients think about and interact with markets and then trying to facilitate what they want to do is incredibly interesting.
Ultimately, I just view being in S&T as being a phenomenal learning opportunity that will provide a level of access and insight that's really unparalleled. I've tried my best to talk to as many people in the industry as possible to try to learn the pros and cons, so while it's impossible for me to have a truly informed opinion on whether this is right for me, I really do think that S&T fits my skillset, interests, and is something I'd enjoy doing long term if given the opportunity.
Hopefully this has helped shed a bit of light on how to answer this question. Since you'll almost certainly get asked this question in a sales and trading interview, you should take the time to craft an answer on your own.
I don't want to be overly prescriptive here. So if you have a great personal backstory - such as a family member being in S&T in the past who ignited your interest in the industry - then feel free to include that.
But as you craft your answer, try to keep the do's and don't's listed above in mind.
If you're gearing up for an interview, I've compiled a long list of sales and trading interview questions. Plus I've put together a course, Sales and Trading Interviews, to try to help shed more light on the industry (which has over 300 interview questions and dedicated desk guides), which you may enjoy