“Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”
-Niccolo Machiavelli, The Prince
Except with lateral hiring – where “mistakes of ambition” are sometimes just not worth it.
Look Before You Leap: Should You Do It At All?
This is the first question you need to ask yourself. I get about 10 emails per week saying the following:
“I’m set to work at Deutsche Bank / Credit Suisse / JP Morgan / UBS next year and feel like a failure because I did not get an offer at GS or MS. To improve my self esteem and get better exit opportunities, I want to make a lateral move to a better bank 2 years from now. How can I do this?”
This is a flawed plan for at least 2 reasons:
- You won’t necessarily have access to “better” exit opportunities at the top 2 firms – in fact you may be worse off.
- Once you’ve been working for a year, the “prestige” of your firm will be the last thing on your mind – getting more than 2 hours of sleep per night will be priority #1.
There are only a few good reasons to make the move:
It’s difficult to move internally unless you know someone in the location you’re interested in – but if you know someone at a different firm in the location you’re interested in, it may be easier to move there.
It’s especially helpful if you’re trying to move to New York/London from elsewhere, or vice versa.
Your Group Makes You Want to Kill Yourself
There are some groups (and jobs) that are “beyond repair.”
Trying to improve them would be like trying to remove a tumor by applying band-aids: it might look better for awhile, but you’re still going to die.
If you have violent thoughts every moment of the day and fantasize about beheading your MD, it might be time to move on.
Unknown Boutique to Better-Known Boutique / Middle-Market Firm
Regional boutiques are great for getting experience and getting your foot in the door, but they’re not great for finding exit opportunities.
You’ll have much better access to recruiters at well-known boutiques and middle-market firms, and you’ll have access to more co-workers and “alumni.”
Luckily, this type of move is one of the easiest and most useful to make of the possibilities on this list.
Boutique / Middle-Market Firm to Bulge Bracket
Similar to the move above, you’ll get better access to recruiters and large-cap PE firms and hedge funds if you go to a bulge bracket.
Surprisingly, this move makes less of a difference than going from unknown regional boutique to better-known boutique – there you’re going from “almost nothing” to “something,” whereas here it’s just “something” to “something better.”
So Why Not a “Lower” Bulge Bracket to GS/MS?
“I’ll have a much better chance of getting into KKR / Blackstone / TPG because I looked on their website / asked around and saw that they hired FOUR bankers from GS but only ONE from my bank! My chances are 4x higher there!”
But this reasoning is flawed. All these firms hire very few people to begin with – and yes, they might hire “more” from GS/MS but there are also more people from GS/MS applying in the first place.
And they don’t necessarily have a “preference” for certain banks/groups – they want the strongest Analysts overall.
Maybe you have slightly higher “chances” at the top places, but the marginal benefit is not worth pissing off everyone at your current bank, losing potential references, and then having to wait another year for buy-side recruiting.
How to Make the Leap
Once you’ve looked, here’s how you leap.
Wait until near the end of your first year before contacting recruiters and your friends elsewhere, for 3 reasons:
- Even if bonuses suck, you still want to get your money before leaping away.
- Right after year-end bonuses, a lot of Analysts leave and banks scramble around to find new, experienced people.
- You won’t look too impressive with less than a year of experience and no solid transactions to speak of.
You probably want to start this process 2-3 months before the end of your first year – that way you’ll have time to make a good impression and you’ll be on their mind should they suddenly need someone else.
How to Do It
You have 3 routes to getting interviews at another bank:
- Alumni / Referrals
In theory, headhunters should be a good way to do this: they should want to help you out because they get a commission if they place you.
But in practice, large banks don’t rely on headhunters too much – they’re more common on the buy-side, where companies are smaller and where HR departments are non-existent.
So your best bet is to go through friends at other banks, or to go 1 degree further out and use alumni or get referrals via anyone else you know.
Rather than emailing them, call first (assuming you know them decently) and start off by asking what they’ve been up to, talking about recent events, then casually bring it up and say, “By the way, you know if your group is looking for anyone new right now?”
Follow-up is essential in this situation because your own fate is at the bottom of any other banker’s priority list, even if you’re “friends” with them. You need to be more persistent than usual and keep calling them until they outright say, “No, sorry, I really can’t help you at all.”
What If You Don’t Know Anyone At Other Banks?
Your next best bet is to ask around and get referrals from friends, or to go to your alumni directory and see what that turns up.
Cold-calling can work but it’s not the best move – it’s not effective at large banks, and it works better for undergraduates and recent graduates as opposed to full-time bankers.
You could also try getting in touch with HR or recruiters at banks if you really don’t know anyone else.
One advantage of HR: they’ll know with more certainty whether or not the group is hiring. The disadvantage is that they won’t “go to bat for you” in the same way that real bankers would.
You could also try looking online and consider sites like Doostang if you’re coming from a top school and have a solid resume with at least a year of work experience – but don’t rely on this, because talking to people always trumps applying online.
Keeping It Confidential
You might be wondering how you can prevent word of your planned move from leaking.
Should you use fake names on your resume? Set up a wire tap to monitor all communications? Have Chloe monitor conversations, email, and IM at other banks?
The short answer: no matter what you do, people will find out what you’re doing. Rather than worrying about that, just avoid telling others – even “trusted” friends – what you’re doing and use your personal email account if at all possible.
Oh, and don’t use fake names for companies on your resume or you will not get any interviews.
Lateral hiring is even more sensitive to market conditions than normal hiring. Banks always need a certain number of new 1st Year Analysts each year – but whether they need more than they planned for depends on deal flow.
When we’re in a bubble, hopping around is common and relatively easy – but in leaner times, large banks don’t do much lateral hiring unless someone happens to leave unexpectedly.
Lateral Hiring for Associates
For Associates the process is tougher and more selective because fewer people leave unexpectedly – and banks hire fewer Associates to begin with.
The process isn’t much different from what Analysts would go through, but the odds of success are lower and firms make fewer lateral hires all around.
At this level it’s almost pointless to bother with cold-calling or applying online: you really need a friend or referral to the group you’re interested in.
1st Year vs. 2nd Year
This is more applicable for Analysts making the move, but some banks may “demote” you and make you a 1st Year Analyst once again. This is common when you’re making a “big move” – say from an unknown boutique to Goldman Sachs – and less so if you’re jumping from one bulge bracket to another.
You have no leverage to “persuade” them otherwise, but it also doesn’t matter much: no matter what your title is on paper, the real downside to making a lateral move is that you need to wait another year for buy-side recruiting.
If you’re interviewing as a potential lateral hire, interviewers will focus more on your deal experience and on more advanced technical questions than they would for undergraduates/MBAs.
Case studies, modeling tests, and other types of assessments are all possible – but they’re less common in North America compared to other regions.
You also need good answers to the “Why us?” question and you need evidence that you’re sticking around in finance for the long-term – otherwise, why else would you want to make the move?
Ready, Fire, Aim
Before making the leap, you need to spend most of your time thinking about whether or not a lateral move makes sense – because for most bankers it doesn’t.
But if you’ve looked and decided to make the leap, now you know how to do it.