From Top Chef to Top Bank: How to Break Into Investment Banking in Canada
Oh, and none of my debit cards worked correctly either.
Luckily, all places that offer bottle service (which served as my meal 3 times per day) accepted credit cards so it turned out OK.
But this little trip confirmed something that I already knew: finance in Canada is a much different world.
And I’m not just talking about ATMs.
Everything from the finance industry itself to exit opportunities to compensation and deals is… more different than you’d expect.
So today you’re going to learn all about how to gain secret, ninja advantages in interviews – directly from a reader who currently works in investment banking in Canada, and who’s had experience in venture capital and related industries there.
And you might just learn how to make the move from restaurant manager to financier along the way, too.
From Culinary School to… Venture Capital?
Q: Let’s start with your story, since it’s a good one. Walk us through how you got started in finance.
A: Sure. To begin with, I had a ton of family members in the industry – dozens of my cousins were working the finance in some capacity, and the rest were all PhD’s, doctors, or lawyers (which were boring and lower-earning professions, and therefore unappealing to me).
So I was exposed from an early age and each time I attended a family member’s graduation, I became increasingly interested in business.
I went to a top-tier Canadian university (one of the few that banks target here), but completed a biochemistry degree because I hadn’t yet liberated myself from the pre-med path that my parents had brainwashed me into following.
I didn’t want to live at home, so I paid for living expenses myself by working crazy hours at restaurants, ultimately becoming 2nd in command of the kitchen at one restaurant.
But as a result, I didn’t have nearly enough time to study and barely got through university – I passed with a sub-3.0 GPA.
Q: So I’m guessing that The Cooking Channel was a more likely future outcome for you than investment banking when you graduated?
A: Funny that you should mention that, because right after graduating I decided to attend culinary school – after which I ran the kitchen of a very successfully restaurant (one of the most prestigious and popular in my city – the equivalent of Per Se in New York).
And through that experience, I met lots of important people who were regular customers. I saw bankers coming in for closing dinners all the time, and realized then that I also wanted to get into the industry.
So I pursued my MBA with a focus in finance – and then graduated into a horrible recession, with very little going for me in terms of previous experience or credentials.
I thought about using my knowledge of the food & beverage industry to move into a consulting role there or to join a large company doing corporate finance, but hardly anyone was hiring.
Q: At which point you decided to open your own restaurant instead, right?
A: Nope. I decided to leverage my Rolodex rather than going through official recruiting channels, and contacted some of the bankers that I had met back at that kitchen I worked at.
They didn’t have anything at their firms, but they set me up to interview at a local venture capital firm that was looking to expand.
So I joined as an associate and worked for a decent firm with a decent amount of capital (“decent” meaning good for Canada, since the industry is so much smaller here).
It wasn’t a true VC firm because it was actually a very, very wealthy family who invested in everything from startups to huge companies to bonds and equities – so I did a bit of everything there.
I worked there for a while, but then left the VC firm after about 18 months because hiring at banks was picking up once again, and my old banker contacts from the restaurant “poached” me and set me up with an interview there.
They figured that since my old restaurant job involved working 70-80 hours per week and dealing with constant stress, high-maintenance customers, and running an entire organization, I could handle the rigors of banking as well!
Big 5 vs. Bulge Bracket: Death Match
Q: That makes a lot of sense – I think working at a restaurant is actually much closer to what you deal with as an analyst or associate than most normal office jobs.
What about the recruiting process itself? How does it differ in Canada, especially at the Big 5 Canadian banks (RBC, TD, Scotia Bank, BMO, and CIBC)?
A: The biggest difference is size. The industry is so much smaller here that even a top bank like TD sometimes hires fewer than 5 associates per year.
Altogether, you’re looking at maybe 60 – 70 new associates per year at boutique and bulge bracket banks across the entire country.
Another difference is that the hierarchy can be stricter here – analysts are pretty much always undergraduates, and 95% of associates are from the MBA pool.
In terms of the recruiting process itself, here’s what I went through at the Big 5 banks here:
- 5 rounds of interviews, where they tell you the number of people in each round.
- Round 1 consisted of 1,000 people applying for 4 positions, and they gave each person a 5-minute interview.
- Round 2 consisted of 500 people and each person had a 10-minute interview.
- Round 3 had around 150 – 200 people, and each person got a phone interview focusing on why they were interested in that bank, what role they wanted, and what industries they liked.
- Round 4 was very technical and they dove into financial statement questions and the valuation of gold mines and similar natural resource assets. You had 3 chances to answer these types of questions correctly before they booted you.
- Round 5 was similar to the “Superday” interviews you see in the US – around 20 people were left at this point for the 4 remaining positions. Most of the interviews were fit-focused, you would speak with a bunch of Partners, and they had a dinner event for everyone afterward.
Q: It sounds intense – I really want to make a reality TV show about the investment banking recruiting process one of these days and Canada would be a great setting for it.
So just out of curiosity, what types of questions about the valuation of gold mines did they ask you?
A: They said, “If I asked you to value a gold mine, what’s the first question you’d ask?” They gave me 3 chances to get it correct.
I said I would ask what the Proved Reserves are, which was wrong, and then I think I asked what the daily or annual Production was or what commodity prices were – all of which were wrong.
Q: So what was the answer they were looking for?
A: The CapEx of the project. I don’t know their exact rationale, but they claimed it was the most important factor.
And it only got more technical from there – they got into crazy questions about special cases for NAV models, valuing different types of resources, and so on if you passed the first set of screening questions.
Q: So how do you actually prepare for that?
A: The 4 guys that ended up winning those positions all had finance backgrounds. Actually, the top 20 candidates that made it to Superday all had finance backgrounds and had been investment banking analysts before even completing their MBAs.
To compete you need to have a high GPA from one of the top-tier schools for finance here, plus experience working as an analyst at one of the Big 5 banks. A few friends who were engineers before business school also got in, but they were applying to tech groups and knew the industry inside and out.
If you’re targeting the many Metals & Mining groups here, you don’t have a great shot without a really strong finance background.
And to answer the questions themselves, you need to get out there and network with people in the industry – you won’t find answers to these types of questions in books or training programs.
Q: And I’m guessing no banks had food & beverage sectors that matched your background?
A: Nope. So I was up against tough competition, and I broke in mostly because I networked so aggressively with the bankers I had met before business school.
US vs. Canada: Got Respect?
Q: Another common question on recruiting in Canada: how easy it is to break in coming from a US degree program compared to a Canadian one?
What’s your take on this? If you have the option, should you complete a US degree or Canadian degree?
A: At the undergraduate / analyst level, there isn’t a big difference between Canadian and US degrees. And they won’t help you out much with visas at that level either.
At the analyst level, it is much easier to move from the US to Canada than to do the reverse because the visa situation in the US is so difficult.
To win over the US government, banks have to prove that the Canadian person applying is more qualified than anyone else they could possibly find in the US – which is almost impossible to show, especially at the analyst level where everyone’s just a monkey.
It’s easier to move over once you have some experience, and I’ve seen a few people do that. But straight out of undergrad it’s tough.
The NAFTA-related TN1 visa is great for computer scientists or PhD’s, but it’s horribly useless for anything in business.
So you end up needing the H1-B visa, which is super difficult because they’re capped and they mostly go to highly-qualified Master’s and PhD graduates in technical fields.
Q: You mentioned that there isn’t a huge difference between US and Canadian schools at the undergraduate / analyst level – what about at the MBA level?
A: There, you have more of an advantage if you have an MBA from a top US school. I’ve seen lots of people get into the Big 5 banks here by doing that.
I don’t have a rational explanation for it, but the very top US programs (Harvard, Wharton, etc.) are more respected and better-known than most Canadian MBA programs.
Q: So what’s the best way to break into investment banking in Canada if you’re coming from a lesser-known school or you don’t have an impressive internship?
A: At the analyst level, banks only focus on 5 universities here – McGill, Ivey, Queen’s, Rotman, and Schulich. If you’re a native French speaker with a mastery of English and you want to stay in Quebec, Concordia would also be on that list.
If you’re not at one of those schools, it’s very, very difficult to get in without some kind of special edge and/or exhaustive networking.
So if you’re already set to graduate and you can’t transfer or you’ve already graduated, I would just work in an industry you’re interested in, become an expert, get some exposure to M&A, and then go to a top MBA program.
I think it’s generally easier to ninja your way into finance in the US or UK since the finance industry is so much bigger in both those places.
Q: Interesting to hear that one.
Switching gears, I wanted to go into how the finance industry itself is different and talk about some of your experience in venture capital and investment banking in Canada…
A: Wait, isn’t that what part 2 of this interview is for?
Q: Good point – stay tuned until then!
A: Will do.
Finance in Canada – Series:
- Investment Banking in Canada – Overview
- Break Into Investment Banking in Canada (Part 1 of Interview)
- Investment Banking in Canada: On the Job and Exit Opportunities (Part 2 of Interview)
Break Into Investment Banking
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