Because an earlier article on investment banking versus consulting was so well-received, I decided to write another one on sales & trading (aka S&T).

In general, both S&T and management consulting are great career options. They’re both meritocratic, well-compensated, and have better lifestyles than investment banking.

They both provide optionality if you decide to choose another career.

Two disclaimers:
1. My experience was primarily in equity derivatives trading, so this is a mashup of personal experience, anecdotes, and feedback from friends and former colleagues.
2. There are exceptions to every rule. I’m trying to make a point, not writing a scientific paper

What are the biggest differences?

1. Lifestyle – S&T wins

Sales & trading wins because their hours are fixed, and generally no travel is required. On a sales desk, you can expect to travel a bit to see clients, but it’s not comparable to spending 3 months in Dearborn, Michigan on an insurance turnaround project.

Now to the details.

Location – generally S&T is centered around a few hubs (New York, London, Hong Kong, and San Francisco). When you start a hedge fund, you’re more than welcome to pick any city, but until then, if you’re serious about sales & trading most likely you’ll be in one of those 4 cities. Consultants are located in more cities so you have greater flexibility in where you want to live and where you can relocate while staying in the same industry.

Travel – consultants travel more frequently and for longer durations. While this is all expensed and you’re generally comfortable, it’s a fact of life unless you’re at a boutique like Slalom or are senior enough to pick your engagements (and even this is only partially true).

There is some degree of travel in S&T, particularly if you’re on a sales desk, an international desk, or working at somewhere like a hedge fund or prime brokerage company.

Hours – S&T has better, and more structured, hours. Consultants do not work significantly longer hours, but the nature of it is more unpredictable, there’s more weekend work, and it does not get significantly better over time.

S&T is more similar to investment banking – as you become more senior, your hours can get better because much of the work can be delegated to junior folks.

It is also dependent more or less on market hours – so when the market closes, much of your work is done (especially if you’re market making, flow trading, etc).

This can be a downside, however – you can’t just ask the markets to close for 2 weeks so you can take that Thai beach vacation

2. Compensation – S&T wins

In general, S&T is compensated better over time, particularly at the top. This is because compensation is directly tied to the bottom line – if you’re making your company a ton of money, you can expect to be paid accordingly. The connection in consulting is looser.

S&T is compensated similar to investment banking – a respectable base salary, and a large annual bonus.

As a trader, you can expect to start around the low 6 figures, and hit 7 figures 5-7 years into your tenure (please see disclaimers above). In sales, the timeframe can be longer to hit 7 figures, depending on the type of security you sell (eg, bonds, foreign currency, derivatives) and the type of firm you work at.

While the difference isn’t pronounced in your early years (eg, after college, after MBA), it can be quite substantial as you become more senior. Top traders like Jim Simons (generally, those at hedge funds and prop shops) can make hundreds of millions – your most senior BCG partner won’t even come close.

*The median in both industries is probably comparable – I’m simply noting the outliers

Your perks in consulting (eg, expensed meals, sponsored parties, schwag) are better – but that’s also because you spend more time in the office and more time traveling.

Your benefits in consulting (eg, healthcare, retirement) are also better – for example, I haven’t heard of anyone in S&T getting automatic contributions to their 401(K). I’ve also seen S&T healthcare benefits at Goldman Sachs and McKinsey’s is definitely better.

3. Exit Options – Consulting wins

Consulting comes out the clear winner here – they simply have more flexibility to jump into entirely different industries and career functions (eg, government, non-profit).

I’ve explained exit opportunities from consulting before, but let me cover sales & trading a bit.

From S&T, your most likely exit options will be:

• Hedge fund
• Private equity
• Intra-firm (eg, moving from sales to trading, from market making to proprietary trading, from one security to another)

You may have a few more options if you’re on the sales side of the business – for example, you could join a prime brokerage (basically, a broker for hedge funds).

*This doesn’t include the options available to anyone (eg, business school, starting a company)

4. Skillsets – Consulting wins

Consultants learn more varied skills than S&T.

The incentives are simply different – in S&T, you’re rewarded for becoming an expert on a very specific thing (for example, fixed income interest rates in European countries) and doing that over and over as you make a ton of money.

In consulting, your goal is to acquire a broad set of skills that make you a good business leader (although, in my opinion, lacking on the execution side). This includes everything from content knowledge (eg, knowing the latest developments in the automotive industry) to process knowledge (eg, knowing how to lead teams and influence clients).

In addition, consulting firms provide more formal training (both pre-job and on-the-job) and more educational resources (eg, dedicated communications coaches, online and in-person classes).

S&T has a strong informal on-the-job training ethic, but this is highly dependent on the desk, the firm, and your boss/team culture.

5. Culture and People – Consulting wins

Both #5 and #6 are very subjective and personality-dependent, so I’m appealing to the “average person”.

On average, the people who work in consulting tend to have stronger interpersonal skills and more diverse backgrounds.

On average, the culture at management consulting firms is more employee-friendly, more tolerant of mistakes, and puts more effort into cultivating an enjoyable working atmosphere.

On average, people tend to enjoy working with their colleagues in consulting better and have more positive things to say about their firm culture(s).

6. Type Of Work – Toss-up depending on your personality

This is partially covered in #4.

In consulting, your day can vary widely – there is no easy way to predict a typical consulting day (even though I tried, hah!). Everything from your hours to projects to people you interact with vary on a daily basis.

In S&T, your day is fairly structured – click here for a good rundown of a typical S&T day. Your hours are the same, the people you interact with don’t vary significantly, and the type of work you do is consistent (for a trader, that’s identifying and executing transactions; in sales, that’s building relationships with clients and handling their requests).

Now that you know the major differences, are you more or less interested in consulting?

If you’re a current sales or trader, what’d I miss?

Comment away!

This is an important issue when recruiting for a business consulting job. In finance, most people think you must work for the biggest – the Goldman-Sachs-or-bust mentality. And while the big management consulting firms (like McKinsey and Bain) get the lions share of media attention, there are many successful and well-respected boutique consulting firms (like Katzenbach Partners, LEK, and Marakon) that I would recommend prospective applicants consider.

So what are the differences between the two? First, I’ll start with the similarities:

1) Consulting travel will usually be a component
2) You’ll work in teams, interacting closely with clients
3) As an analyst/associate/consultant, your focus will be on data gathering, analysis, and presentation. In plain English, this means you’ll receive lots of data from your client, do calculations in Excel, combine that with thorough Internet research and some interviews, and put it into slides to share at meetings

But the differences are very important:

1) While the fundamentals of your work will be the same, the application of that work can vary. Boutique companies like Kurt Salmon typically focus on narrower questions and in fewer industries. At a Big 3 consulting firm (Bain, BCG, McKinsey) you receive exposure to different industries and functions (eg, strategy, operations, organization). In boutiques your exposure is more narrow – at Kurt Salmon, your primary focus would be on retail and consumer goods companies. This is both a pro (you start building expertise) and a con (what if you decide the retail sector is not for you?).

But again, the day-to-day will look very similar. The difference is in the longer-term.

2) As for travel – it depends. Some boutiques do a lot of traveling if they have an industry focus (Kurt Salmon is a well-regarded expert in the retail/consumer goods space, with clients spread throughout the US and internationally). But other boutiques have a more local focus (eg, Slalom Consulting) and thus you may travel very little – most of your work would be with area clients with whom your firm has developed a lasting relationship

3) While you’re guaranteed to work in teams and with clients, both the types of team members, types of clients and nature of interaction could be different. Boutiques have less coverage for clients overall, which could mean you’ll see significantly more client interaction from an early stage, and with more senior members (this is the norm – but I have heard of smaller consulting firms like ATKearney with enormous teams at the client, so it can vary). Your teams will usually be smaller, often with you and maybe one other person as the only real day-to-day presence at your clients. Each of these comes with its own set of pros and cons.

Further reading: Interview with an ATKearney Shanghai consultant

4) Culture can be vastly different

I use the example of a small liberal arts college (Brown) vs a large, public institution (UCLA).

Brown offers greater personalization and support, everyone knows your name, you’re a big fish in a small pond. At UCLA, its harder to standout. The support network is not personalized and easily accessible. While there are more opportunities, it’s up to you to seize them. You’re a small fish in a big pond, but the upside can be higher.

The analogy also applies to large city offices versus satellite/smaller city offices (for example, Bain’s San Francisco office versus their satellite offices in Texas. A great discussion of consulting office selection can be found in my interview with Marquis)

5) Future jobs/exit options. In particular I need to put a disclaimer here, because your situation is largely within your control and the actual situations vary widely. But when we discuss the ACCESS that you have to exit opportunities across industries and job functions, larger firms (like Boston Consulting Group) are the clear winner. Much larger alumni networks, more internally shared recruiting emails and advice, greater brand recognition, the list goes on. Boutiques, given their strong reputation in particular niches, offer plenty of opportunities in the same space – but are distinctly behind in offering opportunities to enter unrelated career paths. These corporate paths usually include (and this is not counting the many who enter graduate school):