I am trying to understand how do investment bankers have such stable jobs. It is my understanding that most trades are done by computers these days. So are investment banker0s…. just the male equivalents of pretty female receptionists?
If they are not, how do they have job security. No one knows how stocks will move. So …how?
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There are a few types of investment bankers. Usually we talk about the front office roles, but there’s also some back office roles which deal with operations and tech etc.
M&A advisors make money by providing advice to companies who are buying other companies. That job is not getting replaced by computers any time soon.
Capital markets advisors make the securities, usually by underwriting them – basically advising companies on what terms they should launch stocks / bonds / etc on. Sometimes they don’t advise companies, but rather create certain more structured or bespoke products using the banks own assets.
Sales and Traders make money through market making – which just means they buy and sell securities to ensure that those securities have an active market for other people to buy and sell. For some very liquid securities like Apple stocks which trade massive volumes every day, that can be quite easily automated; but non-liquid products are difficult to automate. For example, if you wanted to trade some convertible bonds, or maybe gigantic blocks of Apple shares – you need Sales people to take and market orders, and you need Traders who are willing to take significant risks on those orders.
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