Aspiring financiers are often blindsighted by the reality that banking is, ultimately, a people job—that is to say, an industry in which relationships, connections, and interacting with customers, clients, and vendors is the most valuable skill of them all.
Urban legends of famously skillful analysts and traders going to work in jeans and a t-shirt while their co-workers are forced into uncomfortable suits, and then getting paid 10x more than their peers while being courted by competing firms are just that: legends. Stories of the unique genius of a particular analyst or trader inevitably become the brand of an individual (see Bill Gross or Warren Buffett for popular examples), and that brand then attracts more people to the individual, which gives them more market power to then improve their performance. But without ever attracting those connections, these unique geniuses could not make significant money.
The reality of the high-paid banker is very different. When considering how a partner at Goldman Sachs has survived the vicious battle up the ranks to get to an 8-figure income, the least important details are his or her ability to make a DCF model or calculate WACC for an investment. Technical skills are often moribund with senior bankers—a fact that many in Wall Street are a bit embarrassed to discuss. In reality, those once junior-analysts climbed up the ranks because they made important, valuable connections with real and potential clients that in turn gave them a mini-brand within a certain sphere that they leveraged to move up the ladder.
“I trust this guy” or “He’s good—he worked with X” are common refrains on Wall Street, where your ability to attract more and more clients ultimately depends not so much on your technical skills but on the clients’ ability to trust you. And trust is easiest achieved through a personal reference. If you are well known by friends of the potential client, and those friends give you an endorsement, your ability to win that client when competing with an entirely unknown math genius should be self evident.
So how do you develop the people skills to win on Wall Street?
Most importantly is finding the niche and understanding your role in the broader ecosystem. If you can convince a core group of people that you provide a unique service or have a unique position no one else has, your ability to leverage that through personal connections is tremendous. For instance, let’s saw you’re a junior analyst in 2010, and you just happened to go to Harvard and saw Facebook grow in its earlier years. You can use that “unique insight” to convince your bosses to let you work on the social media beat, which you can then leverage into a powerful and lucrative career covering social media stocks as that particular sector grows. Even if, in reality, your unique insight at the beginning was extremely limited, if really there at all.
This isn’t to say that investment banking is fraudulent or dishonest—that’s further from the truth. Rather, investment banking involves individual bankers developing specialisms and a brand that puts them at the center of a budding or established ecosystem as quickly as possible so that, in the future, they will increasingly have more and more unique perspectives to leverage for the benefit of the bank and the client. Developing that brand and that perspective early on is key for a budding banker.
So how do you do it? After you discover the niche you want to focus on (or, more likely, you are thrown into it by a manager), you need to work as hard as you can networking within that niche in a way that provides a value or a service to every person that you meet within that niche. The more valuable you appear to everyone in that field, the more valuable you will really become (value, after all, is in the eye of the beholder), which will ultimately make you more liked, more valuable, more important, and better paid.