How to Get a Career on Wall Street

How to get a career on Wall Street starts with understanding more about how Wall Street really works.  Wall Street professionals are part of the institutional market making universe which develops investment ideas, brings companies public, and places large blocks of stock into hedge funds and mutual funds.  If the idea of working on Wall Street appeals to you, let’s look at institutional broker dealers in respect to planning your career path.

Institutional broker dealers are the big names on Wall Street:  Goldman Sachs, Merrill Lynch, JP Morgan and the like.  Their core product is research on public companies.  Analysts with industry specialties publish research reports that “follow” a company and its related industry.  In general, jobs within broker dealers include Investment Banker, Syndicate Sales, Analyst, Research Sales, Trading and Sales Trading.

Investment bankers perform research and analysis on private companies looking to go public.  They develop relationships with the management and create a comprehensive report including a valuation that represents the expected market price of the company in the public market.

The syndicate team then comes in and calls on institutional money managers (hedge funds and institutions) to collect orders for the stock once it goes public.

The day a stock goes public, a trading acronym is posted to the exchange on which the stock will trade (NYSE or NASDAQ).  At this point, institutional holders of the stock may hold or sell their positions.  The trading desk (NASDAQ) or specialist (NYSE) makes a market in the stock and takes long and short proprietary positions to facilitate trading.

The traders’ job is to reduce risk while maximizing profits from buying the stock low from sellers and selling high to buyers.  When a trader buys or sells any stock, they report that trade immediately right from their computer and it is posted on the ticker tape.

How does the trading desk find large blocks of stock to buy and sell?  They rely on their sales traders who sit behind them on the desk.  Sales traders have established relationships with a number of hedge funds and institutions who are interested in a position in that “name”.  They solicit orders to buy or sell and if they get the order, then their trading desk gets to pocket the spread.

There used to be a lot of small, regional institutional broker dealers across the country, but in the 1990’s a period of massive consolidation began.  Today, most are located in New York with a select few primarily limited to Chicago or San Francisco.  New York City is really the heart of institutional market making, so if you are interested in any of these roles, say hello to the Big Apple!

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Julie LaCroix, M.A.,  has a private practice in Newport Beach, CA,  which serves adults of all ages looking for help with how they got “stuck” in their careers.  Maybe it’s the wrong job, maybe it’s the wrong field altogether.  Or maybe you just don’t know what else is out there.  Her practice is designed to help you, wherever you are in your career journey. She earned a B.A. in Psychology from UCI and an M.A. in Educational Clinical Counseling from Azusa Pacific University.  Email Julie at www.julielacroix.com.