How to Break Into Investment Banking as an Engineer
“It’s something very personal, a very important thing. Hell! It’s a family motto. Are you ready Jerry? I wanna make sure you’re ready, brother. Here it is: Show me the money. SHOW! ME! THE! MONEY! Jerry, it is such a pleasure to say that! Say it with me one time, Jerry.”
-Rod Tidwell, Jerry Maguire
If you’re like Rod here, you’ve come to the right place.
You’ve done engineering or you come from a technical background, but now you want to break into finance. Show me the money!
So here’s how you break into the industry:
What You’re Up Against
Every recruiting effort is a battle – sometimes you have advantages over the enemy, and sometimes you’re at a disadvantage.
Here’s what other professions are up against:
- Lawyers: They can work long hours and deal with annoying clients all day, but can they count?
- Accountants: They can do mind-numbingly boring work and they know accounting/finance, but can they work long hours?
- Consultants: They understand how to work with clients and how the corporate world works, but can they work banker hours and avoid using the mouse in Excel?
- Liberal Arts Majors: They can communicate, but can they crunch numbers and burn the midnight oil?
And here’s your key challenge as an engineer:
“I know you’re good at math and making calculations, but can you talk to people? Do you have any social skills? Are you actually interested in finance? Are you willing to work 100 hours a week rather than the 50-60 you’d get at Google, Facebook, or Twitter?”
You need good answers to those, and your interview performance needs to be polished to a waxy shine – otherwise you’ll come across as the engineer who doesn’t know what he or she is getting into.
In Your Favor
But it’s not all bad news. There are some things working in your favor:
- They won’t doubt your quantitative skills or your attention to detail.
- Depending on your experience, you can prove that you can work long hours relatively easily.
- You have options outside of investment banking that other professionals like lawyers and accountants don’t have access to.
Telling Your Story
“I started off being interested in [Engineering / Technical Field] back [Before College / In College If You’ve Graduated], and thought I would do that for a few years.
But after getting exposed to [Your Finance “Spark” – Meeting Someone, An Event, Student Group, Internship], I realized that I was much more interested in pursuing business because I want to make an impact and work in something much faster-paced.
Since then, I’ve done some research on my own and also [Hopefully Done More Finance-Related Work / Activities], and I’ve realized that starting out in investment banking would be the best fit for me. In the long-term I want to be an investor or trusted advisor to companies, and I see banking as the ideal path to getting there.”
You might expand that in interviews or shorten it if you’re networking, but that’s the basic idea.
If you’re an engineer, you’ll have a much easier time telling your story if you’re applying to groups with a technology focus – whether they’re in banking, PE, or anything else.
It makes it much easier to use the Background In One Field + Finance Experience = Long-Term Success formula discussed in Why Investment Banking.
There’s not too much specific to engineers when it comes to networking: if you’re a student, go through alumni, your friends, family, peers, classmates, anyone in your fraternity or sorority, and so on.
Cold-calling also works well with local boutiques, and some regions – like Silicon Valley – have a high concentration of tech-focused boutique investment banks, so you may have more success there.
If you’re already working, you can go to your co-workers, former co-workers, clients, and former clients for networking purposes as well: just be careful to not say too much too early.
Should you go for bulge bracket banks or target middle-market / boutique firms exclusively?
It depends on how old you are and what you’ve done up to this point. Some rough guidelines:
- Already Working Full-Time: Forget about bulge brackets unless you have a killer connection – go for smaller places.
- Graduating Soon, With No Relevant Internships: See above.
- You’re Applying for Internships in Your 2nd or 3rd Year at School: It’s worth spreading your net wide if you’re still at this stage, though you’ll have more luck with large banks if you’re at a well-known school.
Other Options: Hedge Funds, Prop Trading, Sales & Trading, and Middle/Back Office Roles
I mentioned above that engineers have options available to them that others don’t, because of their quantitative background.
There are 2 main categories here:
- Trading: Hedge Funds, Prop Trading Firms, and Sales & Trading at large banks.
- IT / Support Roles: Referred to as the “middle office” or “back office” at banks.
You stand a good shot of getting these jobs because they look for people with quantitative and technical backgrounds.
Even if you’re not doing algorithmic trading or any programming, you still need good math and probability skills to succeed in trading.
And if you’re in an IT or support role, programming is essential and you have a huge leg-up with your background.
But there are a few things to watch out for:
- Even if the work you’re doing is more technical, having a demonstrated interest in finance is still critical. Especially at top schools, engineers are all very, very good at math – but they’re not all genuinely interested in finance.
- You should avoid IT / support roles unless you truly have no other options – transitioning to the front office is quite tough unless you want to get into sales & trading rather than investment banking.
- The main disadvantage of all these options is that your exit opportunities are more limited: you either stick with trading or you move into an entirely different industry if you get tired of it.
So they’re not right for everyone, but you should at least consider them and do some networking in these areas if you’re coming from an engineering background.
Spinning Your Resume
So you have your “story” set and you’ve planned out your recruiting strategy, which firms you’ll contact, and what fields of finance you’re most interested in.
Next, you need to craft a winning resume – because almost everyone will ask for it. Here’s how you do that:
Step 2: Pick the 3-4 experiences you want to highlight – these should be what you’ve done full-time, your summer or school-year internships, or major activities where you’ve held leadership roles.
Step 3: Remove technical jargon and engineer / programming-lingo from your resume and re-frame everything in terms of business rather than C++.
Here’s a poor way to word an example bullet on your resume:
“Inspected client’s customer support code and assisted with migration from Linux 2.4 to Linux 2.6 by implementing support for 64-bit multi-core processors in assembly code as well as support for threaded processes in operating system kernel.”
No one aside from programming geeks knows what the hell that means – so you need to write about the business results instead:
“Reviewed client’s customer support system and found room to optimize process by 20%; recommended and implemented changes, which saved client $10,000 and 10 hours of labor per week over first year.”
Please don’t write about multi-core processors – write about the time or money you saved people, or the additional revenue you brought in as a result of what you did.
Interviewers will focus on the key questions we referenced above:
- Are you genuinely interested in finance? Do you have a demonstrated track record of interest?
- Have you learned enough about accounting and finance to answer basic technical questions?
- Do you have the stamina to work 100-hour weeks?
- Can you talk to people? Comb your hair? Dress properly?
Here’s how you can answer these “objections”:
- The 100-hour week one is probably easiest: just talk about all the lab work you had to do, all the last-minute projects you worked on, or any time you hit “crunch time” in your internships or full-time jobs.
- To prove your interest in finance, pick a few interesting tech (or other) stocks or companies to discuss. Avoid Google, Apple, Twitter, Facebook, etc. as everyone will talk about those. Also talk about any investing you’ve done or any recent tech market news.
- To answer technical questions, there are interview guides and financial modeling programs that will teach you everything you need to know. You can also go through accounting / finance textbooks or ask your friends for a crash-course.
The last point – proving your social skills – is tough to explain in words, but you need to be polished and you can’t hesitate when you answer questions.
The best way to get good at this one is to practice with any friends who are smooth talkers and imitate them as much as possible.
Also, make brevity a habit – many engineers ramble on endlessly about technical details, but in interviews you want to keep 90% of your answers to 2-3 sentences at the most. If they want more, let them ask.
Since you don’t have a finance background, bankers will have lower expectations when it comes to technical questions.
But that doesn’t mean you can just ignore them: at the very minimum, you need to know the fundamental accounting and valuation questions – the 3 financial statements, how they link together, how to walk through changes to the statements, and how to value a company.
You could get questions on more advanced topics like merger models and LBO models, but these are more common if you’ve had some type of finance experience: definitely know the basic concepts, but don’t spend time learning every single obscure detail.
If you’re in a time crunch, your best bet here is a comprehensive, concise interview guide that lays out everything in plain and simple terms.
Plan B Options
So you networked your butt off, you spun your resume as best you could, and you nailed your interviews.
But you came out of it with no offers.
What are your options?
1. Consider Finance Roles Outside of Investment Banking
See the section above on hedge funds, trading, and middle / back office roles. While these have some disadvantages compared to investment banking, they’re still much better than sitting around watching TV all day.
You could also think about asset management, private wealth management, consulting, or anything else that takes you closer to business – investment banking is not the be-all end-all that some would have you believe.
2. Business School
Just make sure you get into a top MBA program, that you do some kind of pre-MBA internship, and that you have a few years of full-time work experience first.
3. Keep At It
This one is only applicable if you’re working full-time: if you’re in school, you have deadlines.
But if you’re already out and working, keep in mind that the job search process takes a long time even if you’re spending 8 hours a day on it.
Expect to spend 6-9 months looking before you find anything – and it might take a year or longer in a poor economy.
So don’t throw in the towel until you’ve exhausted Plans B, C, and D.
Series: Career Transitions
Break Into Investment Banking
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