This week’s weekly reader Q&A covers a few of the questions I’ve received from readers and answered in the past week. With summer recruiting season in full-swing, everyone is very focused on their investment banking internships ahead and getting the most out of their time, and this week’s set of questions reflects that.
How To Get Into Investment Banking With A Low GPA
“Thanks for providing such a quality resource for free! I would love to get some more advice regarding investment banking. In the next month, as a junior, I will be applying for the summer analyst positions at all the bulge bracket banks. However, my GPA is a 2.8. What are some ways that I can get my foot in the door to land an interview?”
Inquisitor:
This is a tough one, and I don’t have an easy answer for you. Many banks have a strict cutoff they use to weed out people with low GPAs, and it’s difficult to get past this if you’re put in the same applicant pool as everyone else. Here are some tips on getting around this:
- If you have any special circumstances, e.g. being a Varsity Athlete or having a highly unusual background, you need to make these extremely prominent on your resume. Although banks may still use a GPA cutoff, you at least stand a better chance if your special circumstances are immediately clear and humans are reading your resume.
- Network extensively and use your school’s alumni network - contact alumni, ask them about themselves, briefly introduce yourself and they can help you get past the gatekeepers. GPA only matters for getting your foot in the door; if you are persistent enough you can leverage the alumni network to do the same, and often a recommendation from someone very high up is more useful than a high GPA.
- Keep your options open and consider middle-market and boutique investment banks as well. You can easily leverage this experience into full-time interviews at bulge brackets (seen many people do this and get offers), and they may be easier to get into with a lower GPA.
I wish I had a magic answer that solved your problem here, but this is about the best you can do given how banks run their recruiting processes. The good news is that once you get to superday interviews, it’s all about performance rather than GPA or school background.
Finance Internships For Freshmen
“I have found your blog very helpful and was wondering if you could guide me in the right direction regarding summer opportunities. I’m a freshman and realize that there are very limited finance-related opportunities for me. However, I have found two opportunities at bulge brackets that encourage freshmen to apply - how competitive are these programs? Do you know of any other such opportunities on Wall Street?”
Inquisitor:
It’s very impressive that you’re looking for internship opportunities in finance as a freshman - I don’t think I even knew what banking was until my junior year.
You can apply to the programs you have found, but I think the chances of getting them and getting meaningful work to do as a freshman are fairly low. Most banks only seriously look at juniors and occasionally sophomores for certain programs.
I don’t know of any good opportunities for freshmen offhand. Cold-calling may work, but I would suggest networking with alumni is the better tactic here. To actually get meaningful work experience, you should probably focus on smaller firms and ones where you know people already - as a freshman, the work experience you get is much more valuable than the brand name. Take actual financial analysis at a start-up hedge fund over serving coffee at Goldman Sachs any day of the week.
When contacting alumni, you should introduce yourself as being very eager to learn finance and have a short 3-5 minute pitch in either email or verbal form that gets this point across. Make sure you show an interest in them; most of the conversation should focus on their background/history and at the end you can briefly ask if they know of any opportunities or could pass your name/resume along to friends who might.
And make sure your investment banking resume is perfect before sending out your materials to these alumni.
Saving As An Analyst
“How much can you really save as an Analyst? This past year bonuses were $90K and with a base salary of $60K, I imagine you’d be able to save quite a lot, right?”
Inquisitor:
As an Analyst, your main expense will be apartment rent so it depends greatly on whether you live in New York City or some other high-cost area or somewhere cheaper. If you’re in New York, it’s going to be difficult to pay less than $1500 for rent each month even with a roommate. That immediately uses up $18K per year right there, and with only $35-40K of after tax income, represents nearly half of what you’ll make prior to bonus.
Other places like San Francisco are also more expensive than the middle of nowhere obviously, but at the same time it’s easier to find good deals on apartments. If you can reduce your rent to $1000 or less a month then the numbers are easier… $35K after taxes, $12K spent on rent, maybe $5K or so in other expenses (your bank will cover all food, cell phone bills, etc.).
All in all, you can probably save $15-20K in your first year as an analyst prior to bonuses if you live a frugal lifestyle. If you get bottle service every single weekend obviously this will go down by quite a bit, but it’s do-able if you don’t live in New York.
Although investment banking salaries are high, this amount reflects that base salaries, specifically the investment banking analyst salary, are only average until bonuses are received.
The $15-20K is a nice sum for a 23-year old to have saved up, but I wouldn’t worry too much about being super-frugal, especially if you plan to work in finance for a few years. Saving your bonus and not spending the money on a new car will make far more of a difference than cutting smaller costs here and there.
Questions On Banking? Finance? Resumes? Life?
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Tags: alumni network, apartment rent, boutique investment banks, bulge bracket, financial analysis, frugal lifestyle, investment banking, investment banking summer analyst, investment banking summer internship, middle-market
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