If You Can’t Get Into Investment Banking the Real Way, Should You Buy Your Way In?
The other day a reader wrote in with this question:
“I have the opportunity to pay [Large Sum of Money] to get an investment banking internship – should I do it? I don’t know how I can convince my parents.”
I’m not going to name names because there are multiple programs with a similar premise: pay us money, and we’ll get you an internship at a bank (or PE firm, or other financial institution). Sometimes the internships are paid (you might make some money on the deal), and sometimes they’re unpaid (your loss!).
So, how much is an internship at Goldman Sachs worth? $5,000? $10,000? More? And what should you do if you’re in this position?
Wait, How Much?
If someone walked up to you and said, “For only $100, I can get you into the Morgan Stanley M&A Group!” you’d probably say “yes” and hand over the cash immediately before wondering what the “catch” was.
But when $10,000 is on the table, the stakes are a bit different. Students and recent graduates need to think about this decision much differently from anyone who’s been working for awhile.
Students / Recent Graduates
If you’re a student, you’ll almost certainly have to involve your parents in this decision-making process – and they’ll wonder why you’d pay someone thousands of dollars to go work for them 80-100 hours each week for seemingly nothing in return.
So you’ll have an uphill battle convincing them to pay – assuming your parents are not CEO and CFO of a multinational steel conglomerate.
Ok, But Is It Really “Unpaid”?
Even if you don’t “make money” during the internship, your experience and being able to write “Investment Banking Summer Analyst” on your resume are easily worth more in future earnings than what you would have made.
Assuming the rest of your resume is at least passable, you won’t have too much trouble getting interviews elsewhere as you long as you can write “Investment Banking Summer Analyst/Associate.”
Once you get to the interview, of course, it’s all up to you – and if you don’t end up doing anything substantial during your internship, it may actually work against you. So do keep that in mind.
You gain that interview selection advantage regardless of what firm you work at, by the way – yes, Goldman Sachs or Morgan Stanley help more than No-Name Regional Bank, but even No-Name Regional Bank is way better than “Pool Boy.”
So, Should You Do It?
The short answer is, “If you have the money or can convince someone to give you the money, you have nothing lined up as the summer is starting, you’re moving into your final year of school, and you’re 100% certain you want to be in finance, then yes, it’s probably a good idea.”
Ok, that was actually a long answer – with a lot of qualifications.
Timing is important because it’s not worth signing up for this if it’s still February, March, April, or even May – these types of programs should only be last-minute measures you take when all your other plans have fallen through.
Why? Well, just look at one reader who got his full-time offer going into May – there’s rarely such a thing as “too late” until it’s July, you still don’t have an internship, and full-time recruiting is starting in 2 months.
And if you have more than 1 year left (and hence another summer recruiting season left), then it’s also not worth it because your internship just prior to full-time recruiting is more important than anything else on your resume.
Commitment is also important because you don’t want to give up the equivalent of a new (ok, maybe “used”) car only to find out that you don’t want to be an investment banker – but then, if you’re considering this type of program you’re probably serious in the first place.
So if you meet all the conditions above, it’s a good idea.
Professionals / Less-Than-Recent Graduates
If you’re not a university student or recent graduate, then you’re probably thinking about this decision much differently.
You’re not thinking about the investment as an absolute number, but rather in terms of how much time that amount of money costs you – is it 1 months’ salary? 2 months’? To me, time is money and if I would spend 1,000 hours doing it myself, then $5,000 or $10,000 is a pretty good deal.
Of course, not all these programs are open to more experienced candidates – it varies greatly by the program itself and what stage you’re at right now.
But if you’ve already been working for at least a few years and you really want to make the transition into investment banking (or private equity, or anything else in finance), then this type of program is your best bet – unless you have time to cold-call and network for 20 hours a week like a university student might.
It’s especially helpful if you’re thinking of going to business school but don’t have any finance experience – if you can make it happen right before you arrive, you’ll gain a big advantage over everyone else who’s trying to get into finance with no background.
If you want to transition into finance without going to business school, then this is more risky because you’d have to quit your current job (or whatever you’re doing right now) first.
I would probably not do this if you’re in that situation – the risk is too high, and it’s really, really difficult for anyone with significant experience to move into the industry directly right now.
Other Categories
If you’re unemployed right now, whether or not this is “worth it” comes down to your own financial situation: if you have enough saved up and have a safety net, then it’s not a bad idea and it may be your best option if you’re serious about moving into finance.
Similarly, if you’re coming back from a study abroad program, teaching English in Asia, or any other sort of non-study / non-work situation, then this comes down to the question of time vs. money: would you rather spend weeks or months networking and cold-calling, or skip all those hoops and pay money?
As you’ve probably inferred, I prefer investing money rather than spending months of my own time doing something – but then I’m not a student anymore.
Other Considerations
Beyond the time vs. money question, you also need to find out what the program provides in terms of “alumni networking” and post-internship support.
It’s nice to say you had work experience in finance, but it’s much nicer to also say, “And I now have 50 people in the industry who I can ask for help and meet up with when I travel to New York.”
You should also figure out what kind of track record the program has in terms of sending people to work full-time in finance afterward. Some of these are new, but you should inquire as much as you can and not give up until you get a good answer.
Location may also concern you, but it’s less of an issue than the other factors. New York, London, or other financial centers are ideal, but it’s not the end of the world if you’re placed in a regional office – you’ll just have to travel more often to network.
To Pay or Not to Pay?
There’s no simple answer because it depends on what level you’re at, your own financial situation, and where you are in school or work – the best “simple tests” are the questions I listed above.
And as with networking itself, much of this comes down to how badly you want it.
It may sound a bit silly but that’s the truth – if you want to get into finance more than anything and this is your best option, then it’s worth it.
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where can i get more info on these groups? Can anyone toss out a name?
Analyst Exchange has one, but I think all their summer spots are filled. They are the most well-known one, but there are others out there – with varying degrees of reputability.
Would anyone in the Investment Bank know that you “paid your way in”? How are these intern companies able to provide this service, they must have connections on the inside, right?
Thanks
They will know, but it’s not an issue because you typically go through a competitive interview process as well. The more relevant point is that no other companies will know what you did – it stays between you and the firm you interned at.
How would they know that you paid?
Because the bank arranges it with the program that offers this type of training – so at least someone there will know. It may not be everyone, but someone either in HR or one of the MDs will know.
I don’t get it. Why would any bank do this? Do they get some sort of commission for each paid internship? How pathetic would that be!
In a lot of cases these programs will offer something to the banks in return, like discounted training, access to more candidates, etc.
Also, for a bank it’s a good way to pick people who are “serious” because they’ve made it through interviews and also paid a large sum of money – so it’s just another way to pre-qualify people. And especially if it’s unpaid, it’s a win-win situation for them.
M&I,
I’m a rising senior working as a summer analyst at a regional boutique that claims to conduct “Investment Banking” services but from what I’ve seen is all they do is primarily straight up valuation work (mostly for tax purposes, sometimes for private equity funds). I’m getting to work on legitimately 15-20 different valuation engagements and was wondering if you were about to interview for full time IB positions would you:
A.) Be very open about it, say u really only did valuation work for tax purposes basic DCF modeling, Break Up values, ect.
or
B.) Stretch the truth (I know this is not ideal, but this was the best summer job I could get in a tough market)
Thanks
George
Neither one. Say that you “worked at a regional investment bank focused on clients in [xxx - private equity?] industry” and that your “primary role as an intern” was to “assist with valuations, using DCF modeling, break-up values, etc.”
Make it seem like a real bank, but claim that since you were an intern, you mostly did the valuation work and did not do too much “advanced” modeling / client work.
could you provide some color on public finance and its “respectability” within the i-banking world? i’ll be a summer analyst at a regional bank in public finance and am curious about whether it would be looked upon favorably by BBs for next year’s summer analyst positions.
It’s ok, but a considerable step down from normal investment banking / private equity etc. and most bankers do not view it favorably.
It helps more than some random unrelated internship, but not as much as a banking/consulting internship might.
Do the people the people who “buy in” have the ability to receive an offer? how often does it happen? Considering the interview process and competition, how difficult is it to be able to “buy in”?
It can happen, but it is rare because most of the firms don’t have the need for full-timers. Buying your way in is definitely easier than getting in the real way, assuming you have the money to pay for it.
Based on your article and the company website, I would assume that these training firms have some kind of connection with i-banks. My question for you is, I do have the money, and if I buy into these training programs, what is the likelihood of me actually landing a job/internship in the end? Or is it one of those useless things that you can tack onto you resume that does absolutely nothing? I have a BA in econ, have no connections and no industry experience. Buying my way in seems like a good idea right now. I just found out about the Analyst Exchange program, and it cost about $5k for a 10 day training program. In their user testimonial page, there are a lot of people saying that the program helped them get jobs in top tier banks like Morgan, Goldman, UBS, etc., but who knows if those are biased and only represent a small percentage.
The training programs themselves will not help you… it’s really about the internship they set you up with. If there’s no internship or actual placement, they won’t help.
I am considering doing the analyst exchange program this summer.
I am a senior at a non-target(think baruch or fordham). I have a
3.96 GPA and some experience in prime brokerage ops at JPMorgan.
At this point, does it make sense to pay 5k for a program like analyst exchange? do you happen to know people who have done the program and want to share their experiences? On the analyst exchange website, its says the internship is based in a “dedicated firm that provides transaction services to boutique investment banks, hedge funds, and private equity firms.” I would really appreciate your thought on this. Thanks
That’s a tough one – I’d only do it if you have not networked much and do not have time to pound the pavement and cold-call lots of places at this point. I’ve heard of a few people at least going through the interview process, but I’m not sure about the results or how many people get solid internships out of it. I’ve heard mixed reports on the quality, e.g. some people say they are not “real” banks or PE firms.
Thanks for the advice. I am planning on delaying graduation by one year and networking for a summer analyst postiion at one of the BBs if I can. In your experience, does getting the finanical modeling skills that firms, like Analyst Exchange, advertise make you more competitive for the interview process. I have made a lot of contacts in the industry (>50 close contacts), but I am having a hard time securing a summer analyst position becaue I am from a non-target. Of course, paying for an internship would be my final backup. Really appreciate the advice :) Also, do you have any advice on what I should be doing other than networking?
Clearly I cannot give you an impartial view there seeing as I run my own financial modeling training firm. Your interview skills will improve, but in terms of actually getting interviews all you can do is network, think about a Master’s program, or delay graduation to get more time.
Any other programs out there that offer this besides Analyst Exchange? Even at $10,000 this is worth it to me.
Not sure offhand I think that’s the main one, maybe look into more general internship programs that also have IB opps
M&I,
are you talking about the legal opportunities to pay for the internship, or a bribe? If this is the former, do you know about any such opportunities in the UK? For the latter, how can I find the people ready to make this deal?
Regards.
Legal. The bribery theme was a joke, no bank would go for that in real life.
Thanks a lot. By chance, do you know any such schemes in the UK?
Offhand, no – the main one in the US is Analyst Exchange, not sure if they do anything in the UK.
Hi Brian,
I was wondering if you have heard of this program and what you think.
http://www.nycinternships.com/ibanking/
Do you think that this would be a good way to break into banking if you’re in your senior year without much relevant work experience? Cheers
Don’t know much about it so can’t comment directly but if you don’t have other options and don’t want to cold-call boutiques it might be a good bet.
Hi,
I want to work in a Investment Bank in either the Corporate Finance division or in operations supporting the traders. I am a recent graduate with a pre-medical degree and office work experience in pharmaceutical marketing. I only recently decided to pursue IB and have no relevant experience or professional knowledge of finance.
What do you think is the best thing for me to do in my situation.
Thanks in advance
Start contacting alumni, going through referrals and anyone else you can meet and begin networking. Maybe see these articles about moving from middle office to sales & trading or s&t to IB:
http://www.mergersandinquisitions.com/sales-trading-to-investment-banking/
http://www.mergersandinquisitions.com/middle-office-to-sales-trading/
I have a networking event with KPMG on Friday, do you have tips?
Key points:
-It says it’s a speed dating event and they want to get to know any future potential talent over drinks
- says we can find out more about what it’s like to work for KPMG at this event
- says this is our chance to show them our potential
Thanks
There are tips on these types of sessions here: http://www.mergersandinquisitions.com/investment-banking-information-sessions/
Hello Brian,
A quick question please:
Are you aware of such schemes offered in Dubai or The Middle East.
Thanks
No but I believe Analyst Exchange is expanding to other regions soon
this is a really good article on buying an internship. This is my junior summer and I’m pretty much jobless. I was wondering if you had any ideas on this program: http://www.ibcareerpath.com It’s pretty new and it just started. I’m seriously considering this.
Heard nothing about them which is probably a negative sign… Analyst Exchange is the best option
so I am confused after reading the article and post here: is it an actual internship or what?
It is an internship but it’s not exactly one at an investment bank – more like working with several banks and other firms to help with work and deals
but from what I heard, AnEx Program is like working on transactions at their company rather than working at the real firms. Is that true? If I were a recent graduate, do you think it a good idea for me to take this program for the coming Sept? or simply networking with people?
I’m kidda worried about the recruiting timeline: if I were to take this internship, I wouldn’t have time to apply for full-time jobs. Is that true?
Tnanks so much and hope to hearing from you soon.
It is most helpful if you do not have finance experience – if you do, it wouldn’t look as good. I would contact them and ask exactly what it entails because it changes a bit in each session. If you’re applying to full-time jobs it’s not a great idea since you’ll be busy and won’t have time to go around for interviews.
Hi Brian,
One more question, if I were to take the program in Sept, would it affect my fall recruiting?
Yes it will reduce your time for fall recruiting so not the best idea if you’re doing that.
Kind of in a weird situation. I graduate 2 yrs ago from a non-target, have been working in Asia in a MO role and will be going to a top-target MSc program in the UK this fall. I was recently accepted into one of these programs and have the option to do this in the fall part-time or during winter break (too late for the summer session).
The thing is I really feel this program is good for me because I do not have any FO experience on my resume and I get to work on deals. But the main issues are that if I do this program in the fall, this will directly overlap with full-time recruiting season, and if I do this over the winter, this would be after full-time recruiting season for major banks – will only be able to put this on my resume when applying to MM/boutique firms in the Spring/summer.
Given this, how should I strategize? Should I do this in the fall and put this experience on my resume while looking for full-time jobs at the same time? Or should I do this during the winter, while focusing just on recruiting in the fall, and look at more MM/boutique firms in the Spring and Summer?
Because my MSc program is one yr, and I am an international student, my visa will run out in late summer of next year (so I could job hunt in the UK from fall – late summer of next yr).
Please let me know what you think.
Your comments would be appreciated.
Thanks!
I understand the multi-tasking can be tough but I would do the program in fall and attend interviews and info sessions at the same time because its easier to be involved in on-campus recruiting in fall when you are physically at school
How does the Anex enrollment work? Is it just a matter of you being able to put the money up and getting in? OR is it a selective application process? I checked into the website and there seems to be no mention of how the enrollment works.
It really depends – people will still interview you…
I’m in a unique position right now. I secured a position for Investment Banking summer analyst position (3rd year summer) in Korea. However, for full time I would like to preferably work in New York City or Hong Kong. Considering the fact that there may not be “formal training” in Korean offices or as many deals as can be seen in major financial cities, do you think that enrolling in a few weeks of Anex program before the internship in Korea can help with landing a full time offer at NYC or HK? Or should I just rely on the internship in Korea itself to land interviews for full time at different cities?
No I don’t think so. I think you should just rely on the internship in Korea and network intensively w contacts in HK/NY if you want to work in these two places
I would rather do a finance related internship rather than an IB one if it came down to paying, personally.
Win-win for them, but a possible lose-lose for me; paying won’t even secure a spot: I could still lose based on an interview performance.
Mainly for me, and perhaps some others here, the whole ‘paid my way in’ over ‘I got in with my merits’ just makes your skin crawl.
To each his own, I guess.
Are all most banks finished with their summer recruiting? When is it hopeless for me? Should I still be looking searching until April or even May?
Best
Most summer internship deadlines have passed already but you can still keep looking