Definition: Front office is the division of the company that has a direct contact with the clients, such as the corporate finance personnel in a financial services company.
What Does Front Office Mean?
What is the definition of front office? In its most broad definition, the FO is responsible for generating a firm’s revenues, and, therefore, it integrates the sales and trading personnel, which may be people who work in the investment banking, private equity, trading floor, etc. depending on the type of the company. Some people argue that the traders should not be considered front as they are not coming in direct contact with the clients.
However, they are generating revenues for the firm. Another special type of front office is the equity research department, which, although is not generating revenues, it has a direct impact on the firm’s revenues with the reports that the analysts produce. So, at the end of the end, it all boils down to the roles that people play in a company and how these roles can positively contribute to the firm’s income.
Let’s look at an example.
Example
Cate works in the sales department of an investment bank. She gets up at 5:30, and during her commute to the bank, she reads Bloomberg and Reuters to news to grasp the vibe of the day. At 7, she is at her desk, preparing for the 8’o clock meeting with the sales and the research department. The meeting involves a wrap-up of what happened in the past hours and the Asian markets.
One of the most important tasks in Cate’s daily schedule is meeting or talking to institutional investors and fund managers, who are investing funds on behalf of pension funds and hedge funds. When a client comes with a certain idea about a call option or a bond, Cate cooperates with the trading department to get a quote for the product and with the research department to make sure that this makes up for a good investment.
When the markets close, Cate goes out with some of her colleagues to celebrate some successful sales. At the end of the day, competition exists in the industry, but it is also all about cooperation.
Summary Definition
Define Front Office: Front office means the department of a company that manages client relations and customer services.
