So you are heading to college. Maybe you have finished your first year. You have read Advice on College, and you are fired up to get that Wall Street job. If you’ve ever been to an investment bank’s on-campus presentation, you know how many students feel the same way. In this post, I will give some practical pointers to help you stand out from the crowd, plus some background on the industry.
Investment banks perform a number of roles in the economy. (1) They provide financial advice for corporations (how much is that business worth? How can I borrow this money at the least expense?). (2) They help companies raise money through the public markets – equity, from selling shares of ownership, and debt, from selling bonds or notes. (3) They execute security trades for institutional clients (e.g. mutual funds, pension plans), as well as their own accounts. (4) They publish research on publicly traded securities and economic sectors. Housing all of these functions in one firm is a rich source of conflict and scandal.
For your purposes, there are two kinds of I-banks: bulge bracket and boutique. Bulge brackets are huge, diversified, publicly-traded financial institutions, which your parents have heard of and whose earnings are reported in the Wall Street Journal. Their headquarters are in New York, London, or Zürich. Boutiques can be located anywhere, have a few hundred or thousand employees, and specialize by service and industry. Your classmates have not heard of the boutiques, but they can sometimes provide a better lifestyle and better learning than bulge brackets. “Private client,” “wealth management,” and “commercial banking” are not investment banking. Arguably “equity research” isn’t either.
Investment banks hire undergraduates to work as analysts. Generally this is a two-year job. Analysts work long hours and do a lot of the nitty gritty research and analysis for clients. It’s a great job right out of undergraduate, because
(1) you will learn that one person can do the work of four, (2) you will get a serious crash course in accounting and finance, (3) you will learn how business leaders think and how to talk to them, (4) afterwards, you can probably get any job you like, and (5) you will make enough money to take the summer off when you are done.
These jobs are tough to get. Here are some ways to improve your chances.
Know your audience. Interviewers and HR people are risk-averse. They don’t want to hire goof-offs, slow learners, people who can’t consistently work 90 hours a week, complainers, people who don’t like finance, people with annoying personalities or mannerisms, or bad grammarians. Your job, especially in your resume and interviews, is to make them highly confident that you are absolutely not any of those things, but a star performer.
Start early. You need a solid GPA (3.5+, or a good story) to be competitive. You need a relevant major (economics, finance) or a major that demonstrates brains (engineering, philosophy).
Show your enthusiasm. Join your school’s investment club or banking club. Talk to alumni in the industry. Learning about the job ahead of time is the best thing you can do to make yourself stand out because it makes you less risky in the eyes of the hiring manager.
Your resume must sing. Your resume must make your qualifications crystal clear at a glance. One page only. “Career objective” is optional, most people don’t use it. When HR first sees your resume, it will literally be in a pile with 600 others, and they’ll evaluate it in under 5 seconds (no joke). The reader will seize any excuse at all to bin your resume, because it makes the pile smaller. The best-case reaction to your resume is “This person can clearly do the job; unfortunately we can’t ding her without talking to her.”
Your resume must be perfect. In investment banking, perfection equals consistency. Don’t use spaces to right justify; figure out how to make tab stops. Put the same number of spaces between each sentence. Use periods, or don’t – but don’t dust them on randomly. Spelling, grammar, punctuation.
Interview prep. Take advantage of your school’s career center, do mock interviews, and practice with your friends. Interviews are semi-ritualized; when the interviewer says, “Tell me a little about yourself,” he or she is looking for a very specific concise answer: a 90-second resume summary that ends by explaining why you want this job and how well prepared you are. Make sure you know what interviewers expect and package answers for common questions. Also, do your homework.
Interview homework. You need to demonstrate some knowledge of the industry, the job, and the firm you are interviewing with – especially how it is different from its competitors. Here are some good places to look:
- 10-K. Search for “Business Segments” and you will find a required footnote that spells out revenue (at least) by line of business and by geographic region. Compare to their competitors: how is revenue distributed around the world? across business segments? What is operating profit as a percentage of revenue? How much revenue and profit per employee? Wherever you find differences, ask yourself, “What causes this?”
- Equity research. Possibly available at your university library via the service Thomson Research (formerly Investext). You want two things: the last 10 or 20 reports (2-10 pages) and as many “Initiating Coverage” reports as you can find (search for keyword “initiating”).
- Current events. Google Business News, the Wall Street Journal, and about 50,000 other online sources. Also, get a transcript of the last few “earnings calls” (see the Investor Relations section of the website). When companies announce their earnings, usually the CEO and CFO have a conference call with investors and take questions. Information comes out here that isn’t available anywhere else.
Initiative. Perhaps the worst analyst is one who does exactly and only what he has been told. This analyst is a huge drain on his supervisor’s time. To convince your interviewer that you are a go-getter, prepare some answers about times you have taken charge or completed a task without guidance. Your presentation in the interview is just as important. Make eye contact, smile, use good posture, listen carefully, don’t ramble. Show your confidence and enthusiasm.
Buy a great suit. Not the second-cheapest suit, but the second most expensive. It costs an extra $800, which you will earn back about 6 days into your analyst job.
PREVIOUSLY: Advice on College
COMING SOON: What to do once you get that job.
MORE: An IB analyst blog: Mergers and Inquisitions – see How to Write an Investment Banking Resume and How Investment Bankers Read Your Resume. Also this entertaining but entirely plausible day in the life of an analyst.