Coders who trade: Wall Street designs its staff for the future

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(Bloomberg) -- Goldman Sachs Group Inc. realized it had a problem.

For years, the investment bank recruited top coders to help its army of traders execute strategies with software, a role that’s becoming ever more important in a new era of automation. But the technology gurus seen as the future kept quitting while traditional traders stayed.

The firm’s solution: Register coders as full traders and hand them control of their desks. That move already is shaping who will run the trading division for decades to come.

Senior Wall Street executives preparing to roll out new tech -- from Goldman’s Adam Korn to Bank of America Corp.’s Cathy Bessant -- are making decisions with big implications for the size and shape of their industry’s workforce. On one side, efforts to harness artificial intelligence and other advances will boost careers for people with cutting-edge skills. On the other, managers are just starting to figure out how to help people with traditional financial pedigrees keep up -- if possible.

Strategies for that may vary widely.

Citigroup Inc. is pushing thousands of employees to learn how to innovate. Consulting firm EY, an adviser to companies throughout finance, is experimenting with its own staff -- encouraging consultants to teach themselves about AI and related topics so they can stay relevant. Other big employers including Bank of America and Wells Fargo & Co. say they’re mulling how to help personnel evolve.

What’s clear is that few if any jobs in finance will be untouched as firms build computer systems capable of handling everything from routine tasks to trading and investing.

“Tech is going to be an important part of people’s jobs,” said Vasant Dhar, a professor at New York University’s Stern School of Business. “People who do things the traditional way -- who don’t look for more efficient ways to do what they were doing or don’t incorporate technology effectively -- those are all going to be disadvantages.”

At Goldman Sachs, coders have been playing an increasingly important role for years -- but the shift is accelerating. The bank is snapping up applicants with technology and quantitative backgrounds, people known within the firm as “strats.”

Initially, as traditional traders handed over more of the work, the engineers discovered it was tough to advance above them. Regulations require that trading supervisors hold certifications, which blocked coders from running desks. Executives soon found themselves struggling to recruit and retain the best talent.

“Frankly, we couldn’t figure out why people that we would extend what we thought were really exciting job opportunities would turn us down,” said Korn, who leads a group within Goldman Sachs overseeing digital strategy for the securities division. “Well, this was the reason -- it wasn’t clear what the career path would be if they joined.”

Coders’ Plight

Korn understands that struggle. He joined the bank in 2002 to research market microstructure and moved up within the strats organization. Now a partner, the firm’s highest rank, he’s trying to make it easier for his colleagues to prosper.

A few years ago he helped Goldman Sachs start a pilot program that offered certifications to strats, increasing their potential to earn more money or advance. Some within the bank dub the new breed “traders who code,” though it makes more sense to flip that to “coders who trade.” Either way, fewer are quitting, and more are scoring promotions. Eighteen are now enrolled in the program, including Korn.

It presents a few benefits. It helps Goldman ensure people using its trading system understand how it works, in case something goes awry. Regulators welcome that too. But retention was a big theme.

“To keep our most talented engineers at Goldman Sachs, this is something we had to do,” Korn said.

‘Stay Relevant’

At Citigroup, employees are being pushed to think differently about how they approach their jobs and help clients, according to Vanessa Colella, chief innovation officer and head of its venture-investing unit.

About two years ago it launched a program called Discover 10X asking employees to suggest new products or innovations. Some have been honed through an intense process of workshops, pitches and viability studies, with the best ideas getting additional funding. While it’s not designed as training, it helps employees “explore and get a window into a different way of thinking,” Colella said. “That tends to snowball.”

Employees at EY will soon be able to earn “badges” showing they can work with new technologies. The professional-services firm plans to debut the program in November at offices in more than 150 countries. Employees will be able to demonstrate four levels of expertise in “future-focused” topics, such as artificial intelligence.

“The fear factor of ‘What happens if my job is automated and goes away?’ can be high if you don’t replace it with ‘Here’s how you can stay relevant,’” said Nancy Altobello, the firm’s global vice chair of talent.

A catalog will steer workers to lessons online and in classrooms. Afterward, they will have to demonstrate their knowledge through activities, such as volunteering for a panel, coaching colleagues or writing an article.

Since EY announced the program in August, clients have been asking how they can offer it to their own staffs. “I expect there will be a market interest in it, not necessarily us having to go to people and tell them about it,” Altobello said.

Many big firms are still working out their approaches. Sherrie Littlejohn, head of Wells Fargo’s internal innovation strategies, told a conference in June that busy employees will need help adapting.

“We’re going to need new skills,” she said. Yet, “we’re so busy operationally trying to keep things running that we haven’t seen a way to kind of make room for us to learn and train and teach -- and be curious about how to make this new world come to fruition.”

Bessant’s View

Bank of America has stressed that firms have an obligation to prepare their staff for a tech-dominated world.

“Those of us in leadership roles know what’s coming, we’re helping to drive it and know what skill sets we need,” said Bessant, the company’s chief operations and technology officer. “We have a responsibility to guide that well and learn from lessons of the past.”

Yet Bessant is skeptical that on-the-job training will be enough.

“The kind of skills that we’ll need have to be taught beginning at a much earlier age,” she said. “Whether you can train the same worker at the same time you’re changing their job remains to be seen.”

--With assistance from Saijel Kishan

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