Decks vs Derivatives: 6 Differences between Consulting and Sales & Trading


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 less 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 did I miss?

Comment away!

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  • Kelvchan77

    Hi, would you be able to comment on market research analysts/consulting work? What are the exit options?

  • Kelvchan77

    Hi, would you be able to comment on market research analysts/consulting work? What are the exit options?

  • jtbb

    My man, honestly, thank you for this. I’m heading off to b-school next year and these are the two career paths I’m most seriously contemplating – not very similar, I know (and normally one compares either MC/S&T with banking, not to each other), but they’re the ones I’m keen on. So this is probably the most personally relevant article in the world right now, in terms of my career interests. Thanks and happy new year!

  • zenchan11

    Hi,

    I have got 2 offers now… one from mck and the another from cs, eq. deriv. trading.

    As a freshgrad I would really want to have a taste of the consulting industry (as I have experienced the trader’s life as an intern, i quite like it but i am guessing i will like the consultant’s work more)

    However I am always worried that I couldn’t switch back to trading as trading is taking less and less b-school grads these year (heard from my colleagues as they said the b-school experience doesnt add any value to their work…) so if i start my career as a consultant and find out that i dont like it… i will definitely regret. and the money matters a lot too… i m pretty sure eq. deriv. traders do earn 100%-300% (including bonus) more than consultants…

    any advice to me? million thanks.

  • Rocky

    Spot on with this article. I’ve worked both jobs, (currently consulting) and I could agree with you more. The exit options for a consultant are what really sealed the deal for me in the end. If you are happy to be sales trading your whole life, it’s a great job, but if you want a little more variety, it’s hard to beat consulting.

  • Lexcoups

    Really good article! I think you’ve covered most of the points on the S&T side in-depth and it provides an accurate insight into the line of work.
    I’m currently working as a Sales Trader but looking to move into Stategy Consulting which I understand will be a mission.
    @Zenchan11 – you should note Point 4 in the article above and Rocky’s comment below. The money in S&T is GREAT – you can’t beat that! But this race that we call a career is a marathon rather than a sprint. Due to the smaller skillset, it’s hard to move out of S&T later on in your career and the work is very repetitive. Having said that, the work atmosphere is vibrant and fast-paced.
    Best of luck to ya’ll!

  • Anonymous

    Belated happy new years to you too. Good luck with the recruiting process. I went through the same process, personally

  • Anonymous

    The money in S&T is indeed great, although there are many jobs (eg, middle & back office, support sales roles, etc) that don’t pay so well in the industry, as just another point of caution

  • Anonymous

    Think about what you want to do 3-5 years from today, and work backwards

  • Anonymous

    Great question, perhaps in a future post

  • DM

    For sales and trading, does the company dicate whether you do sales or trading or do you get to pick?

  • Anonymous

    Classic answer of “it depends.” They have a big say, as do your
    personal preferences and skills.

  • BTV@Griffin

    Could someone describe the stresses of both jobs? I know “burnout” is a buzzword when it comes to traders. How long does the average trader last in such a position?

  • patrick

    what is the expected career path for a trader 10, 20 or even 30 years down the road? do they really just do trading their whole lives?

    also, i’ve heard that trading is risky and you might be fired if you make big losses – but how often does that happen? i.e. if you WANT to be a trader your entire life but you’re just about average, would you be able to remain employed for 10-20 years as a trader?

    thanks kevin!!

  • Anonymous

    patrick, i just don’t know enough to give you a thorough answer. it is
    risky, and you can lose your job based on bad performance. it isn’t a career
    that you should expect to be in for 20 or 30 years though – the job itself
    is a little too intense, but i can’t tell you exactly what people do when
    they leave trading.

  • patrick

    thanks kevin, I will ask around

  • QfMC2011

    Can you move into trading from consulting? If yes, how and when?
    Thanks, Kevin!

  • EventDriven

    I worked in strategy consulting before making the jump to a sell side fixed income shop about a year ago. I’d be lying if I said it was easy. You REALLY have to network. Even then, no guarantees. If you are smart and possess a naturally curious intellect (an attribute I sought when recruiting for my strategy consulting firm), then you can take a lot away from the sell-side as you are learning a lot about different products. If you like math and macroeconomics, you’ll probably be drawn to fixed income instead of equities. For those of you trying to plot a career course, best advice I’ve heard to date: from a prominent macro hedge fund manager I cover and whom I know on a personal level, “I thought I would go work at asset manager X for two years, learn how to manage money, and start my own fund. 19 years later, I started my hedge fund. I’m only 17 years behind plan!” Just something to contemplate.

  • LL

    Could you do an article on Management Consulting vs Sell-side Research? Thanks!

  • jennyrae

    Yes, definitely.

  • Shooting_wishes

    which way is easier? s&t to consulting or vice versa?

  • VCR

    I’m currently 2.5 years into a career in equity trading (institutional desk) – and very ready to find something else. It is very high stress and slow times/bad markets are really tough to work through. It can honestly be depressing day-to-day when everyone is losing money. Hours are depednable/good but very routine and monotonous. The culture is very competitive and mistakes are NOT taken lightly. Money is really the only thing keeping me there until I find something else I can make a decent living in….

  • Pras

    I was a sales guy and I can tell you I loved my job. There’s nothing that compares to the high of being on a trading floor and making money. Its the closest you come to being a sportsperson at a job and making money! Unfortunately the party didn’t last and I’m sucking up and applying to the consults because they are the only jobs in the market. Do I look forward to working 80 hour weeks and travelling from 40 hour work weeks for half the pay – not really. But then markets look shitty and you have to suck up and make your living!

  • Georgiana

    I love this! Great Great quote! Isn’t that the truth for so much!

  • Georgiana

    Great post Kevin! Thank you so much! Been consulting for more than 15 years and considering going the other way. Good insight.

  • Johnny

    How easy is it to move from Consulting to S&T ? Specially for an EM-like level, would it be a possible or impossible move?

  • George Famutimi

    2.5 UG GPA (target for M and BCG, not Bain). D1 athlete in nat’l ranked program for sport, and I did some leadership stuff here and there (ROTC, ran a confessions page, nothing revenue generating). Really want to learn about all of this business info but too broke to afford Economist.

    Currently wasting away in outside marketing (B2B sales) trying to figure out what good industry job would lead into MBB or a top firm where I won’t be penalized for integrity and values (I just found your podcast and am currently knee deep in it). A friend works in Accenture and is really open to help me with case interviews.

    How do I not muck this up