3 Reasons Why Your Investment Banking Cover Letter is Making You Look Like a Fool and What to Do About It
“I have read Monkey Business, Liar’s Poker, and When Genius Failed each 3 times and consider them my collective bible. I know I have the eye for perfection and artistic vision to create truly immaculate pitch books. I am a Microsoft Certified in Excel, and I know all the shortcut keys (alt-i then r, that will insert a new row).”
-RE: Lehman Brothers Recruiting, The Leveraged Sellout
Despite my claims that “we never read cover letters,” some readers have pointed out that almost all banks require them. And some places might even pay attention to them.
I’ve seen lots of cover letters from customers lately – and nearly all of them suffer from the same problems.
Here’s how to avoid these common mistakes and how to structure your cover letters properly, so you can avoid looking like The Joker.
Let’s Set the Record Straight: Who Actually Reads Them?
In 99% of cases, only small boutiques (or small private equity firms) actually care about cover letters.
Big banks don’t have the time to go through stacks of cover letters. Remember the 30-second rule: if only 30 seconds are spent reviewing your resume and making a yes/no decision, you can imagine how much time is spent on the cover letter.
Small places care more because 1) “Fit” is extremely important when there are only 4 people in the office and 2) They actually have time to read cover letters (occasionally).
The True Purpose of Cover Letters
Cover letters are similar to GPA / test scores: a great one doesn’t help you much, but a poor one can kill your chances if someone happens to notice it.
From the ones I’ve seen (both as a banker and as part of my business), there are a few mistakes that come up repeatedly – no matter who you are or what you’re applying to.
Mistake #1: Writing a Life Story, Not a Cover Letter
I’ve seen some really long cover letters before. Keep it to 1 page – 500 words or less – and ideally 300 words or less.
Yes, I’m sure you have a very interesting life story about how you were abandoned by your parents and raised by wolves on the outskirts of a tribal village, but please don’t tell me any of this.
Get to the point – who you are, what you’ve done, and why we should pay attention to you.
Mistake #2: Telling Me Your Favorite Book is Monkey Business
Microsoft Certified in Excel? Extra in American Psycho? Know the bank’s market share in Mongolian M&A deals?
Great, but don’t waste my time with this trivia. All I care about is whether you can do the work.
If you have a relevant skill, such as fluency in another language, that’s ok to bring up. But almost every other Skill/Activity/Interest is pointless.
Mistake #3: Writing The Sound and the Fury, Not a Cover Letter
Logic is key when you’re selling someone on yourself – and that’s what a cover letter does.
So don’t write a letter using stream of consciousness.
An amazing number of cover letters skip around and don’t present the applicant’s background coherently.
Just like any other type of writing, you need an introduction, a body, and a conclusion.
The Ideal Cover Letter
So how do you actually write a solid cover letter?
You use the structure below.
I was tempted to post a Word template, but I don’t want 5,000 daily visitors to copy it and to start using the same exact cover letter.
The Information at the Top
Nothing too fancy here. Your name and contact information could go on the right side, and the recruiter’s / firm’s name and contact information could go on the left.
If you don’t have a name, don’t panic – just use the company name and address instead. Yes, it’s better to have a real name and send it to a real person, but it’s not a deal-breaker.
Similarly, “Dear so-and-so” works better if the “so-and-so” is someone’s name but if you don’t have it, “Dear Sir or Madam” is acceptable.
Paragraph 1: Introduction
Here’s where you say who you are and how you learned of the opportunity – from networking, from an event, from a friend or however else you found out. Then you say what attracts you to the company and the specific position.
Keep this short – 2 to 3 sentences is best.
Paragraph 2: Your Background
This is usually your longest paragraph. Start out by writing what you’re currently doing, and then give the relevant internships/jobs you’ve had. Focus on useful skills (e.g. financial analysis) and whatever you did that’s applicable to banking, trading, or whatever you’re applying for.
A reverse chronological structure works well because most of the time, your most relevant experience will also be the most recent.
I would use no more than 5 sentences for this one.
Paragraph 3: Why You’re a Good Fit
This is a shorter paragraph. You should explain why your skills / experiences match whatever you’re applying for and re-iterate what makes you interested.
If you have anything unique (for example, you’re applying to a middle-market private equity firm after having run your own middle-market company), you may also want to mention it here as another selling point.
Paragraph 4: Conclusion
Remind them that your resume is enclosed, give your contact information and say that you look forward to hearing from them soon. Keep this to a few short sentences.
Exceptions
Sometimes this exact structure doesn’t work – if you’ve had more extensive experience (i.e. you’re not just out of undergraduate or business school) or have unusual circumstances, you may want to write something slightly different.
Let’s say you’re applying to investment management firms in China and you grew up there, having moved abroad when you were 10 – in that case you probably want to use 1 paragraph for your “finance experience” and another paragraph for your “China experience” rather than just writing 1 “background” paragraph.
No matter what your background, though, keep your cover letter brief, logical and relevant.
Otherwise you look like a fool.
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Wow, i’ve been looking around for something like this for months.
Glad to help. I never get any comments on educational posts. :)
We’re all too busy re-writing out resumes/cover letters whenever you make one of these posts.
Your fault really.
I’m currently going through summer internship applications and was wondering if you could help clear up the difference between funds management/ investment management/ asset management/wealth management. What are the relevant exit opps for such career paths?
Keep up the good work on the site,
Honestly, I’m not an expert in this area because I have not worked in any of those fields before. My understanding is that wealth management is more focused on individuals, and the others are more focused on institutional investors… “asset management” is usually a broad term that encompasses everything.
I’m not sure specifically what’s better/worse but generally most people in those fields go into hedge funds / trading.
If recruiters don’t really look at cover letters, what’s the best way to convey to them my interest in a certain industry/product group or geographic location? Do they usually ask my preferences during the interviews?
Thanks.
Yeah usually you should indicate in interviews or on the online form they have you fill out. Speaking with them beforehand also helps.
Does this template work for summer internship applications? I was thinking of the “Background” part. What can an undergraduate student with almost no prior work experience write? My “background” consists of two years of college in France (social sciences), then one year as an exchange student in the US (UC Berkeley…is it considered a good university?), then my fourth year here in France (I’ve only started to study finance this year -yes in France this is five years, so I’m graduating in 2010, with a major in finance). I’ve only had one internship (3 months, public sector), so there is not much to say about my work experience. However I have been involved in several extra-curricular projects and associations within my school (including the finance club but I don’t know if it is relevant). So I really don’t know which “useful skills” to emphasize! I feel like I have no experience and nothing to prove that I have “useful skills”… Any help?
Then write about your experience with activities, and say how it’s only your second year in school. Emphasize how you’ve led groups and teams and worked on projects, and how you’ve developed your analytical abilities through classes and projects.
I love your advice! I had no idea that I was breaking some of the cardinal rules – but I was! I was able to correct these gaffes and I bet I will be more successful because of it.
Well, keep in mind cover letters are relatively unimportant next to resumes/CVs. And there are rarely 100% hard-and-fast rules, these are just the guidelines I use.
Glad you found them helpful.
I really like your website, it gives very good guidance. I am a JD/MBA student who believes that the legal aspect of the world will help my decision making abilities as I move up the ladder in investment banking. I do not have much business experience and only completed my first semester of law school, but have not started the MBA program. I feel that as much business experience as possible is vital for me. I am looking for an internship at the undergraduate level (summer analyst) and am wondering if you believe this will be difficult considering my situation, or if you have any advice for how I may go about the process that may be different from most. Thank you.
Yeah it will be difficult to get into an undergraduate summer internship if you’ve already at law school.
I would suggest meeting with them face-to-face and explaining your situation and how you’re fine taking something “below your level.”
I would also suggest focusing exclusively on smaller, local firms as they will be far more receptive to this type of arrangement than bulge brackets would be.
Thanks for all your help. I’m applying to summer internships as well. I was wondering whether I should have industry or product groups in mind already. I prefer M&A because I’d like to see a variety of industries and because M&A deals are the most interesting to me. But I beleive Goldman for example has only industry groups, so which ones do you suggest? Thanks.
I would just pick whichever ones you’re interested in… don’t do too much thinking about it, just go for industry groups that interest you personally. All of Goldman’s groups are quite good and people/group dynamics change very quickly so it’s hard to be very specific about which are better/worse.
Will summer analysts intern applicants even have their cover letters read? I only ask because I have been applying for positions and realized one of my cover letters, though well written and grammatically correct had a line mentioning my interest in capital markets being a result one of my family members. I guess it could be viewed as unprofessional or maybe I’m just overly-critical and paranoid. What do you think?
Thanks,
Colby N.
I wouldn’t worry about something as small as that – there’s not really anything unprofessional about it.
Hi, I am applying for a summer internship. In the cover letter can I mention that I trade stocks myself and that it helped be learn more about the market. The only experience I have is research placement in biotech research at uni.
That’s fine
I am trying to break into IB. I have previous interned at fund of hedge funds, and currently interning at an international bank in the global corporate department doing a lot credit analysis for fortunate 500 companies. Have recently graduated and completed CFA level II examination, what are my odds of getting into any bulge bracket? Or should I target for another internship at a maybe smaller boutique?
I would spread your net wide because it’s very tough to get in if you’ve already graduated. Aim for smaller companies.
I will be finishing my MBA from a non-target school in Europe. Do you think I should aply for analyst roles rather than associate roles(considering that I have no finance experience before MBA + my B-school is not that well known)? Or will this tactic backfire because they will question my motivation to apply for analyst roles rather than associate role after doing an MBA?
Thanks,
You can’t do that, at the MBA level you can no longer apply to Analyst roles.
What about just MSc in Business???
Thx
You could if it’s just a normal Master’s program
Hi. This topic isn’t covered much so I think this site is a great resource. This may be a stupid question but it was not covered in the article. Is it acceptable to simply send a cover letter in the body of an email of should I properly format it as a Word document or PDF and attach it (so that it is easier to print). I realise it probably doesn’t matter a great deal but I’m just another undergrad going through that pedantic stage so any insider knowledge is comforting. :)
Thank you
Andy
I would just send it in the body of your email if you’re emailing it to the person directly. Keep it short.
Thanks!
“So don’t write a letter using stream of consciousness.” -
this is hilarious
Hi Brian,
Ive read before that it is important to mention what you know, or at least give some indication of what you know about a company when you send them a cover letter. Would I mention specific deals or transactions in the third paragraph? Or do Ibankers not care, and more interested in purely what you can do?
Thanks
Daanish
You can mention those points, but keep it brief (no more than a sentence or two). Large banks ignore cover letters, and even smaller places barely read them – cover letters have the lowest impact of anything on recruiting.
Would you say the same thing applies to investment management firms as well?
Yes. Never spend a lot of time on cover letters, just do the bare minimum.
And all along i was told that cover letters are the first thing they read as a welcome party to your resume..
Does this include company-specific questions that are included in the application form as well? Almost all the investment banks have about 3 of these.
It’s really about networking and your resume… some banks may actually look at cover letters / other questions but not much weight is placed on them
M&I-
Thanks for all your work on this website, it’s been extremely helpful. Question coming from a late bloomer:
I’m one of those idiots who took college lightly and ended up with a below par gpa that would scare away most firms, do i bring this up in my cover letter if i feel that my gpa is not indicative of what i know im capable of and how i actually have my act together, even if may be too late? Thanks for your time.
I wouldn’t bring it up as it would just draw attention to your lower GPA
Hi,
Thank you for such an amazing website. Is it possible for someone like me, to win an investment banking interview or opportunity, who has been unemployed for almost two years. However, I carry the following credentials: 1) 9 years of progressive and international experience in corporate/commercial banking (business development, relationship management, deal structuring and financial analysis) 2) MBA in finance 3) Currently working on professional designation plus completed a training course on investment banking.
Thanks
It’s possible but it does get more difficult the longer you’ve been out of work.
If as you say they don’t really read cover letters, then how do they choose who to invite to interview? Considering the applicant/interview ratio is very low and CV’s are generally considered strong (top university, some sort of work experience), I was under the impression that the cover letter was what made the difference. Hope you can clear this up for me and thanks in advance.
Networking, networking, networking, networking… it’s all about who you know. Read the rest of this site.
I am from an Asian country who’s been studying in America since high school and am fluent in both languages. I would feel comfortable conducting the interview in my “Asian language” and I could write a 10-page research paper in the language.
Do you suggest I put bilingual in English and (Asian language)or just fluent in (Asian language)? Which do you think looks better? Also, does the language even matter for trading? I know networking is probably much much much more important than any of these small details…
For trading it doesn’t matter much, you can just say Native Speaker of [Language Name]… don’t write Fluent in English on an English-language resume as it’s already assumed.
Hi Brain,
I heard that you must include “why this bank and this division” in the covering letter, hence the research of the firm is important.
What do you think? (As you mentioned above, the Introduction which includes ‘what attracts me to apply’ is better keep at 2-3 sentences.)
Can we skip either one? (bank/division)
Many Thanks
It doesn’t matter, include it if you want but as mentioned here hardly anyone reads the cover letter anyway.
What are your thoughts on a bullet-point cover letter? With each bullet points emphasizing one idea/skill/fit and containing 3 to 5 for sentences.
No. See the template: http://www.mergersandinquisitions.com/investment-banking-cover-letter-template/
Brian- I just realized that in the resume I sent out, the comma in one of the sentences is bold while the rest is not. Will this be a big deal? I know this sounds crazy silly, but you know bankers they’re definitely obsessed with details :(
no