With all the news over the past few days, I’ve been receiving many panicked emails.
Will banking cease to exist?
Will the “glory days of M&A” ever return?
Is the US really being sold to China once the Fed goes bankrupt?
And most importantly, what should you do?
I don’t have a crystal ball, but I do know what it’s like to go through a recession. Back in 2000-2002, I was in the midst of starting my own Internet company right as… the “Internet economy” collapsed.
And earlier this year, I watched as most of my friends were laid off and forced into “industry.”
I don’t know how severe this crisis will be or when it will be over, but I do know of 5 mistakes you must avoid if you want to work in finance.
1) Give up on your goals.
I’ve been getting a lot of emails similar to the following:
“I’m at [school name] with a GPA of [GPA] and I’ve had previous internships at [various companies]. Can I still get into finance? Should I just give up?”
The short answer?
I don’t know, but if you give up you definitely won’t get in.
If you’re asking, “But will investment banks even exist in the future?” then the answer is simple: yes, but they will look a lot different.
Companies are always buying other companies and always need to raise money, so banks will always be needed.
The remaining independent banks may merge with large commercial banks in the future, but there will still be a need for bankers.
2) Go to business school with no (or minimal) work experience.
This is a bad idea no matter what your logic.
Sure, business schools have been targeting younger candidates… but that doesn’t mean that banks are targeting younger applicants.
You stand a minuscule chance of getting into finance coming out of business school if you go straight from undergrad or with very little (1-2 years) experience . When I reviewed Associate-level resumes at my former office, most had at least 5 years of work experience.
It’s tempting to use an MBA as a way to “shield” yourself against the recession, but you’ll be hurting even more if you graduate from business school and still can’t get into finance because you went prematurely.
3) Stay 100% focused on bulge bracket banks.
With only 2 independent US-based investment banks remaining, you’d be foolish to spend all your time chasing Goldman or Morgan – after all, who knows how much longer they’ll still exist?
It’s a different story if you were a summer intern at a large bank and are now trying to move somewhere else; in that case you can certainly try for the top names, but you should still consider other options.
But for everyone else, unless you’re applying to everything from the smallest boutiques all the way up, you’re wasting your time.
4) Stay 100% focused on investment banking.
This might seem like a contradiction of point number 1 (not giving up).
But I’m referring to short-term focus: if your long-term goal is to work in private equity or at a hedge fund, you don’t necessarily need to follow “The Track” to get there.
You may find that it’s too difficult to break into banking right now, but that you can get something relevant, go to business school and then go through recruiting again when the economy has improved.
So you should consider related fields, such as Transaction Advisory Services at an accounting firm, consulting (still hurting, but not as badly as banking), and even working in finance at a “normal” company.
And a little birdie told me a lot of startups in New York are looking for Wall Street refugees – they’re always desperate for people, even if you have to take a pay cut.
5) Rely on snake oil solutions.
No, sorry, “online degrees” will not get you into the industry. Neither will spending thousands of dollars on financial training courses.
Well, let’s just say I have a bridge in Brooklyn I’d like to sell you…
I don’t mean to disparage paid products and services: they can certainly be a part of your recruiting strategy, but you shouldn’t rely on them.
Surviving the Meltdown
If you want to survive the meltdown, there’s no magical solution: keep doing what I’ve been suggesting all along, broaden your options, and don’t fall prey to one of these 5 market meltdown mistakes.
And most importantly, in the immortal words of The Hitchhiker’s Guide To The Galaxy: